UNITED
STATES


SECURITIES
AND EXCHANGE COMMISSION


Washington,
D.C. 20549





FORM
10-Q





þ
            QUARTERLY REPORT PURSUANT TO
      SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
      1934.


For
the quarterly period ended June 30, 2010





OR





 ̈
            TRANSITION REPORT PURSUANT TO
      SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
      1934.





Commission
File Number: 001-33693





DUFF
& PHELPS CORPORATION


(Exact
name of registrant as specified in its charter)





DELAWARE
              20-8893559(State
      of other jurisdiction or
                incorporation
      or organization)
              (I.R.S.
      employer
                identification
      no.)





55
East 52nd Street,
31st
Floor


New
York, New York  10055


(Address
of principal executive offices)


(Zip
code)





(212) 871-2000


(Registrant’s
telephone number, including area code)





Indicate
by check mark whether the registrant (1) has filed all reports required to
be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934
during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days.  Yes þ  No  ̈





Indicate
by check mark whether the registrant has submitted electronically and posted on
its corporate Web site, if any, every Interactive Data File required to be
submitted and posted pursuant to Rule 405 of Regulations S-T (§232.405 of this
chapter) during the preceding 12 months (or for such shorter period that the
registrant was required to submit and post such files).  Yes  ̈  No
 ̈





Indicate
by check mark whether the registrant is a large accelerated filer, an
accelerated filer, a non-accelerated filer, or a smaller reporting
company.  See the definitions of “large accelerated filer,” “accelerated
filer” and “smaller reporting company” in Rule 12b-2 of the Exchange
Act.


Large
accelerated filer  ̈
    Accelerated filer þ
    Non-accelerated filer  ̈Smaller reporting
company  ̈





Indicated
by check mark whether the registrant is a shell company (as defined in Rule
12b-2 of the Exchange Act.) Yes  ̈ No
þ





The
number of shares outstanding of the registrant’s Class A common stock, par value
$0.01 per share, was 28,176,493 as of July 15, 2010.  The number of shares
outstanding of the registrant’s Class B common stock, par value $0.0001 per
share, was 12,908,923 as of July 15, 2010.










DUFF
& PHELPS CORPORATION


AND
SUBSIDIARIES





TABLE
OF CONTENTS





Part
      I.
                Financial
      InformationItem 1.
                Financial
      Statements
                1Item 2.
                Management’s
      Discussion and Analysis of Financial Condition and Results of
      Operations.
                26Item 3.
                Quantitative
      and Qualitative Disclosures About Market Risk.
                54Item 4.
                Controls
      and Procedures.
                54Part II.
                Other
      InformationItem 1.
                Legal
      Proceedings
                55Item 1A.
                Risk
      Factors
                55Item 2.
                Unregistered
      Sales of Equity Securities and Use of Proceeds
                55Item 3.
                Defaults
      Upon Senior Securities
                56Item 4.
                (Removed
      and Reserved)
                56Item 5.
                Other
      Information
                56Item 6.
                Exhibits
                56Signatures
                57





PART
I – FINANCIAL INFORMATION





Item
1.  Financial Statements.





DUFF
& PHELPS CORPORATION AND SUBSIDIARIES


CONDENSED
CONSOLIDATED STATEMENTS OF INCOME


(In
thousands, except per share amounts)


(Unaudited)





Three Months Ended
                    
                    
                    Six Months EndedJune
      30,
                    
                    
                    June
      30,
                    
                    
                    June
      30,
                    
                    
                    June
      30,2010
                    
                    
                    2009
                    
                    
                    2010
                    
                    
                    2009Revenues
                    
                    $
                    88,742
                    
                    
                    $
                    90,053
                    
                    
                    $
                    177,906
                    
                    
                    $
                    179,318Reimbursable
      expenses
                    
                    
                    1,962
                    
                    
                    
                    2,626
                    
                    
                    
                    4,760
                    
                    
                    
                    4,663Total
      revenues
                    
                    
                    90,704
                    
                    
                    
                    92,679
                    
                    
                    
                    182,666
                    
                    
                    
                    183,981Direct
      client service costsCompensation
      and benefits (includes $4,215 and $5,075 of equity-based compensation for
      the three months ended June 30, 2010 and 2009, respectively, and $7,932
      and $9,338 for the six months ended June 30, 2010 and 2009,
      respectively)
                    
                    
                    50,415
                    
                    
                    
                    51,698
                    
                    
                    
                    99,013
                    
                    
                    
                    102,828Other
      direct client service costs
                    
                    
                    1,881
                    
                    
                    
                    1,543
                    
                    
                    
                    3,869
                    
                    
                    
                    2,847Reimbursable
      expenses
                    
                    
                    2,039
                    
                    
                    
                    2,637
                    
                    
                    
                    4,893
                    
                    
                    
                    4,65254,335
                    
                    
                    
                    55,878
                    
                    
                    
                    107,775
                    
                    
                    
                    110,327Operating
      expensesSelling,
      general and administrative (includes $2,005 and $1,665 of equity-based
      compensation for the three months ended June 30, 2010 and 2009,
      respectively, and $3,458 and $3,556 for the six months ended June 30, 2010
      and 2009, respectively)
                    
                    
                    26,304
                    
                    
                    
                    24,488
                    
                    
                    
                    50,388
                    
                    
                    
                    49,428Depreciation
      and amortization
                    
                    
                    2,350
                    
                    
                    
                    2,556
                    
                    
                    
                    4,843
                    
                    
                    
                    5,118Charge
      from impairment of certain intangible assets (Note 11)
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    674
                    
                    
                    
                    -Merger
      and acquisition costs
                    
                    
                    321
                    
                    
                    
                    -
                    
                    
                    
                    321
                    
                    
                    
                    -28,975
                    
                    
                    
                    27,044
                    
                    
                    
                    56,226
                    
                    
                    
                    54,546Operating
      income
                    
                    
                    7,394
                    
                    
                    
                    9,757
                    
                    
                    
                    18,665
                    
                    
                    
                    19,108Other
      expense/(income), netInterest
      income
                    
                    
                    (53
                    )
                    
                    
                    (3
                    )
                    
                    
                    (77
                    )
                    
                    
                    (17
                    )Interest
      expense
                    
                    
                    76
                    
                    
                    
                    333
                    
                    
                    
                    168
                    
                    
                    
                    988Loss
      on early extinguishment of debt
                    
                    
                    -
                    
                    
                    
                    1,737
                    
                    
                    
                    -
                    
                    
                    
                    1,737Other
      expense
                    
                    
                    247
                    
                    
                    
                    70
                    
                    
                    
                    232
                    
                    
                    
                    87270
                    
                    
                    
                    2,137
                    
                    
                    
                    323
                    
                    
                    
                    2,795Income
      before income taxes
                    
                    
                    7,124
                    
                    
                    
                    7,620
                    
                    
                    
                    18,342
                    
                    
                    
                    16,313Provision
      for income taxes
                    
                    
                    2,506
                    
                    
                    
                    2,421
                    
                    
                    
                    6,156
                    
                    
                    
                    4,533Net
      income
                    
                    
                    4,618
                    
                    
                    
                    5,199
                    
                    
                    
                    12,186
                    
                    
                    
                    11,780Less:  Net
      income attributable to noncontrolling interest
                    
                    
                    2,111
                    
                    
                    
                    3,465
                    
                    
                    
                    5,406
                    
                    
                    
                    8,281Net
      income attributable to Duff & Phelps Corporation
                    
                    $
                    2,507
                    
                    
                    $
                    1,734
                    
                    
                    $
                    6,780
                    
                    
                    $
                    3,499Weighted
      average shares of Class A common stock outstandingBasic
                    
                    
                    25,058
                    
                    
                    
                    17,356
                    
                    
                    
                    25,022
                    
                    
                    
                    15,428Diluted
                    
                    
                    25,754
                    
                    
                    
                    18,111
                    
                    
                    
                    25,903
                    
                    
                    
                    16,045Net
      income per share attributable to stockholders of Class A common stock of
      Duff & Phelps Corporation (Note 5)Basic
                    
                    $
                    0.10
                    
                    
                    $
                    0.10
                    
                    
                    $
                    0.26
                    
                    
                    $
                    0.21Diluted
                    
                    $
                    0.09
                    
                    
                    $
                    0.09
                    
                    
                    $
                    0.25
                    
                    
                    $
                    0.20Cash
      dividends declared per common share
                    
                    $
                    0.06
                    
                    
                    $
                    0.05
                    
                    
                    $
                    0.11
                    
                    
                    $
                    0.05





See
accompanying notes to the condensed consolidated financial
statements.


1


DUFF
& PHELPS CORPORATION AND SUBSIDIARIES


CONDENSED
CONSOLIDATED BALANCE SHEETS


(In
thousands, except per share amounts)


(Unaudited)





June
      30,
                          
                          
                          December 31,2010
                          
                          
                          2009ASSETSCurrent
      assetsCash
      and cash equivalents
                          
                          $
                          79,231
                          
                          
                          $
                          107,311Restricted
      cash (Note 4)
                          
                          
                          3,156
                          
                          
                          
                          -Accounts
      receivable (net of allowance for doubtful accounts of $1,279 at June 30,
      2010 and $1,690 at December 31, 2009)
                          
                          
                          51,812
                          
                          
                          
                          55,079Unbilled
      services
                          
                          
                          27,743
                          
                          
                          
                          22,456Prepaid
      expenses and other current assets
                          
                          
                          8,962
                          
                          
                          
                          6,100Net
      deferred income taxes, current
                          
                          
                          566
                          
                          
                          
                          4,601Total
      current assets
                          
                          
                          171,470
                          
                          
                          
                          195,547Property
      and equipment (net of accumulated depreciation of $23,111 at June 30, 2010
      and $20,621 at December 31, 2009)
                          
                          
                          28,387
                          
                          
                          
                          27,413Goodwill
                          
                          
                          129,636
                          
                          
                          
                          122,876Intangible
      assets (net of accumulated amortization of $18,603 at June 30, 2010 and
      $16,881 at December 31, 2009)
                          
                          
                          30,818
                          
                          
                          
                          27,907Other
      assets
                          
                          
                          2,889
                          
                          
                          
                          3,218Investments
      related to deferred compensation plan (Note 10)
                          
                          
                          20,295
                          
                          
                          
                          17,807Net
      deferred income taxes, non-current
                          
                          
                          111,221
                          
                          
                          
                          112,265Total
      non-current assets
                          
                          
                          323,246
                          
                          
                          
                          311,486Total
      assets
                          
                          $
                          494,716
                          
                          
                          $
                          507,033LIABILITIES
      AND STOCKHOLDERS' EQUITYCurrent
      liabilitiesAccounts
      payable
                          
                          $
                          2,038
                          
                          
                          $
                          2,459Accrued
      expenses
                          
                          
                          5,805
                          
                          
                          
                          11,609Accrued
      compensation and benefits
                          
                          
                          18,345
                          
                          
                          
                          35,730Deferred
      revenues
                          
                          
                          3,683
                          
                          
                          
                          3,633Other
      current liabilities
                          
                          
                          170
                          
                          
                          
                          993Current
      portion due to noncontrolling unitholders
                          
                          
                          4,303
                          
                          
                          
                          4,303Total
      current liabilities
                          
                          
                          34,344
                          
                          
                          
                          58,727Liability
      related to deferred compensation plan, less current portion (Note
      10)
                          
                          
                          20,237
                          
                          
                          
                          18,051Other
      long-term liabilities
                          
                          
                          15,715
                          
                          
                          
                          15,400Due
      to noncontrolling unitholders, less current portion
                          
                          
                          101,382
                          
                          
                          
                          101,098Total
      non-current liabilities
                          
                          
                          137,334
                          
                          
                          
                          134,549Total
      liabilities
                          
                          
                          171,678
                          
                          
                          
                          193,276Commitments
      and contingencies (Note 12)Stockholders'
      equityPreferred
      stock (50,000 shares authorized; zero issued and
    outstanding)
                          
                          
                          -
                          
                          
                          
                          -Class
      A common stock, par value $0.01 per share (100,000 shares authorized;
      28,208 and 27,290 shares issued and outstanding at June 30, 2010 and
      December 31, 2009, respectively)
                          
                          
                          282
                          
                          
                          
                          273Class
      B common stock, par value $0.0001 per share (50,000 shares authorized;
      12,909 and 12,974 shares issued and outstanding at June 30, 2010 and
      December 31, 2009, respectively)
                          
                          
                          1
                          
                          
                          
                          1Additional
      paid-in capital
                          
                          
                          213,921
                          
                          
                          
                          207,210Accumulated
      other comprehensive income/(loss)
                          
                          
                          (1,395
                          )
                          
                          
                          693Retained
      earnings
                          
                          
                          10,381
                          
                          
                          
                          6,709Total
      stockholders' equity of Duff & Phelps Corporation
                          
                          
                          223,190
                          
                          
                          
                          214,886Noncontrolling
      interest
                          
                          
                          99,848
                          
                          
                          
                          98,871Total
      stockholders' equity
                          
                          
                          323,038
                          
                          
                          
                          313,757Total
      liabilities and stockholders' equity
                          
                          $
                          494,716
                          
                          
                          $
                          507,033





See
accompanying notes to the condensed consolidated financial
statements.


2


DUFF
& PHELPS CORPORATION AND SUBSIDIARIES


CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS


(In
thousands)


(Unaudited)





Six
      Months EndedJune
      30,
                        
                        
                        June
      30,2010
                        
                        
                        2009Cash
      flows from operating activities:Net
      income
                        
                        $
                        12,186
                        
                        
                        $
                        11,780Adjustments
      to reconcile net income to net cash provided by operating
      activities:Depreciation
      and amortization
                        
                        
                        4,843
                        
                        
                        
                        5,118Equity-based
      compensation
                        
                        
                        11,390
                        
                        
                        
                        12,894Bad
      debt expense
                        
                        
                        809
                        
                        
                        
                        1,362Net
      deferred income taxes
                        
                        
                        5,364
                        
                        
                        
                        5,784Charge
      from impairment of certain intangible assets
                        
                        
                        674
                        
                        
                        
                        -Loss
      on early extinguishment of debt
                        
                        
                        -
                        
                        
                        
                        1,674Other
                        
                        
                        127
                        
                        
                        
                        (357
                        )Changes
      in assets and liabilities providing/(using) cash:Accounts
      receivable
                        
                        
                        5,316
                        
                        
                        
                        (5,189
                        )Unbilled
      services
                        
                        
                        (4,823
                        )
                        
                        
                        (8,936
                        )Prepaid
      expenses and other current assets
                        
                        
                        (1,699
                        )
                        
                        
                        1,515Other
      assets
                        
                        
                        728
                        
                        
                        
                        (1,221
                        )Accounts
      payable and accrued expenses
                        
                        
                        (6,901
                        )
                        
                        
                        (2,019
                        )Accrued
      compensation and benefits
                        
                        
                        (18,704
                        )
                        
                        
                        (21,329
                        )Deferred
      revenues
                        
                        
                        (121
                        )
                        
                        
                        1,226Other
      liabilities
                        
                        
                        (27
                        )
                        
                        
                        -Net
      cash provided by operating activities
                        
                        
                        9,162
                        
                        
                        
                        2,302Cash
      flows from investing activities:Purchase
      of property and equipment
                        
                        
                        (3,561
                        )
                        
                        
                        (3,872
                        )Business
      acquisitions, net of cash acquired
                        
                        
                        (11,807
                        )
                        
                        
                        -Purchase
      of investments for deferred compensation plan
                        
                        
                        (2,975
                        )
                        
                        
                        (5,684
                        )Net
      cash used in investing activities
                        
                        
                        (18,343
                        )
                        
                        
                        (9,556
                        )Cash
      flows from financing activities:Repurchases
      of Class A common stock
                        
                        
                        (8,177
                        )
                        
                        
                        (740
                        )Increase
      in restricted cash
                        
                        
                        (3,156
                        )
                        
                        
                        (4,043
                        )Dividends
                        
                        
                        (3,141
                        )
                        
                        
                        (1,197
                        )Distributions
      and other payments to noncontrolling unitholders
                        
                        
                        (2,135
                        )
                        
                        
                        (12,370
                        )Proceeds
      from exercises of IPO Options
                        
                        
                        82
                        
                        
                        
                        343Other
                        
                        
                        (3
                        )
                        
                        
                        -Net
      proceeds from sale of Class A common stock
                        
                        
                        -
                        
                        
                        
                        111,871Redemption
      of noncontrolling unitholders
                        
                        
                        -
                        
                        
                        
                        (67,112
                        )Repayments
      of debt
                        
                        
                        -
                        
                        
                        
                        (42,763
                        )Fees
      associated with early extinguishment of debt
                        
                        
                        -
                        
                        
                        
                        (63
                        )Net
      cash used in financing activities
                        
                        
                        (16,530
                        )
                        
                        
                        (16,074
                        )Effect
      of exchange rate on cash and cash equivalents
                        
                        
                        (2,369
                        )
                        
                        
                        535Net
      decrease in cash and cash equivalents
                        
                        
                        (28,080
                        )
                        
                        
                        (22,793
                        )Cash
      and cash equivalents at beginning of period
                        
                        
                        107,311
                        
                        
                        
                        81,381Cash
      and cash equivalents at end of period
                        
                        $
                        79,231
                        
                        
                        $
                        58,588





See
accompanying notes to the condensed consolidated financial
statements.


3


DUFF
& PHELPS CORPORATION AND SUBSIDIARIES


CONDENSED
CONSOLIDATED STATEMENT OF STOCKHOLDERS’ EQUITY


AND
COMPREHENSIVE INCOME/(LOSS)


(In
thousands)


(Unaudited)





Stockholders
      of Duff & Phelps CorporationAccumulatedTotal
                                                
                                                
                                                
                                                
                                                
                                                
                                                
                                                
                                                
                                                
                                                
                                                
                                                
                                                OtherStockholders'
                                                
                                                Comprehensive
                                                
                                                Common
      Stock - Class A
                                                
                                                Common
      Stock - Class B
                                                
                                                Additional
                                                
                                                Comprehensive
                                                
                                                Retained
                                                
                                                NoncontrollingEquity
                                                
                                                Income
                                                
                                                Shares
                                                
                                                Dollars
                                                
                                                Shares
                                                
                                                Dollars
                                                
                                                Paid-in-Capital
                                                
                                                Income/(Loss)
                                                
                                                Earnings
                                                
                                                InterestBalance
      as of December 31, 2009
                                                
                                                $
                                                313,757
                                                
                                                
                                                
                                                
                                                27,290
                                                
                                                $
                                                273
                                                
                                                
                                                12,974
                                                
                                                $
                                                1
                                                
                                                $
                                                207,210
                                                
                                                $
                                                693
                                                
                                                $
                                                6,709
                                                
                                                $
                                                98,871Comprehensive
      incomeNet
      income for the six months ended June 30, 2010
                                                
                                                
                                                12,186
                                                
                                                $
                                                12,186
                                                
                                                
                                                -
                                                
                                                
                                                -
                                                
                                                
                                                -
                                                
                                                
                                                -
                                                
                                                
                                                -
                                                
                                                
                                                -
                                                
                                                
                                                6,780
                                                
                                                
                                                5,406Currency
      translation adjustment
                                                
                                                
                                                (3,083
                                                )
                                                
                                                (3,083
                                                )
                                                
                                                -
                                                
                                                
                                                -
                                                
                                                
                                                -
                                                
                                                
                                                -
                                                
                                                
                                                -
                                                
                                                
                                                (2,106
                                                )
                                                
                                                -
                                                
                                                
                                                (977
                                                )Amortization
      of post-retirement benefits
                                                
                                                
                                                27
                                                
                                                
                                                27
                                                
                                                
                                                -
                                                
                                                
                                                -
                                                
                                                
                                                -
                                                
                                                
                                                -
                                                
                                                
                                                -
                                                
                                                
                                                18
                                                
                                                
                                                -
                                                
                                                
                                                9Total
      comprehensive income
                                                
                                                
                                                9,130
                                                
                                                $
                                                9,130
                                                
                                                
                                                -
                                                
                                                
                                                -
                                                
                                                
                                                -
                                                
                                                
                                                -
                                                
                                                
                                                -
                                                
                                                
                                                (2,088
                                                )
                                                
                                                6,780
                                                
                                                
                                                4,438Sale
      of Class A common stock
                                                
                                                
                                                (3
                                                )
                                                
                                                
                                                
                                                
                                                -
                                                
                                                
                                                -
                                                
                                                
                                                -
                                                
                                                
                                                -
                                                
                                                
                                                (3
                                                )
                                                
                                                -
                                                
                                                
                                                -
                                                
                                                
                                                -Issuance
      of Class A common stock for acquisitions
                                                
                                                
                                                1,204
                                                
                                                
                                                
                                                
                                                
                                                93
                                                
                                                
                                                1
                                                
                                                
                                                -
                                                
                                                
                                                -
                                                
                                                
                                                827
                                                
                                                
                                                -
                                                
                                                
                                                -
                                                
                                                
                                                376Exchange
      of New Class A Units
                                                
                                                
                                                -
                                                
                                                
                                                
                                                
                                                
                                                43
                                                
                                                
                                                -
                                                
                                                
                                                (43
                                                )
                                                
                                                -
                                                
                                                
                                                -
                                                
                                                
                                                -
                                                
                                                
                                                -
                                                
                                                
                                                -Net
      issuance of restricted stock awards
                                                
                                                
                                                (2,483
                                                )
                                                
                                                
                                                
                                                
                                                1,336
                                                
                                                
                                                14
                                                
                                                
                                                -
                                                
                                                
                                                -
                                                
                                                
                                                (1,713
                                                )
                                                
                                                -
                                                
                                                
                                                -
                                                
                                                
                                                (784
                                                )Adjustment
      to Tax Receivable Agreement as a result of the exchange of New Class A
      Units
                                                
                                                
                                                61
                                                
                                                
                                                
                                                
                                                
                                                -
                                                
                                                
                                                -
                                                
                                                
                                                -
                                                
                                                
                                                -
                                                
                                                
                                                61
                                                
                                                
                                                -
                                                
                                                
                                                -
                                                
                                                
                                                -Issuance
      for exercises of IPO Options
                                                
                                                
                                                66
                                                
                                                
                                                
                                                
                                                
                                                4
                                                
                                                
                                                -
                                                
                                                
                                                -
                                                
                                                
                                                -
                                                
                                                
                                                45
                                                
                                                
                                                -
                                                
                                                
                                                -
                                                
                                                
                                                21Forfeitures
                                                
                                                
                                                (2
                                                )
                                                
                                                
                                                
                                                
                                                (174
                                                )
                                                
                                                (2
                                                )
                                                
                                                (22
                                                )
                                                
                                                -
                                                
                                                
                                                -
                                                
                                                
                                                -
                                                
                                                
                                                -
                                                
                                                
                                                -Equity-based
      compensation
                                                
                                                
                                                11,928
                                                
                                                
                                                
                                                
                                                
                                                -
                                                
                                                
                                                -
                                                
                                                
                                                -
                                                
                                                
                                                -
                                                
                                                
                                                8,169
                                                
                                                
                                                -
                                                
                                                
                                                -
                                                
                                                
                                                3,759Income
      tax benefit on equity-based compensation
                                                
                                                
                                                72
                                                
                                                
                                                
                                                
                                                
                                                -
                                                
                                                
                                                -
                                                
                                                
                                                -
                                                
                                                
                                                -
                                                
                                                
                                                72
                                                
                                                
                                                -
                                                
                                                
                                                -
                                                
                                                
                                                -Distributions
      to noncontrolling unitholders
                                                
                                                
                                                (2,135
                                                )
                                                
                                                
                                                
                                                
                                                -
                                                
                                                
                                                -
                                                
                                                
                                                -
                                                
                                                
                                                -
                                                
                                                
                                                (1,462
                                                )
                                                
                                                -
                                                
                                                
                                                -
                                                
                                                
                                                (673
                                                )Change
      in ownership interests between periods
                                                
                                                
                                                -
                                                
                                                
                                                
                                                
                                                
                                                -
                                                
                                                
                                                -
                                                
                                                
                                                -
                                                
                                                
                                                -
                                                
                                                
                                                4,103
                                                
                                                
                                                -
                                                
                                                
                                                -
                                                
                                                
                                                (4,103
                                                )Deferred
      tax asset effective tax rate conversion
                                                
                                                
                                                (147
                                                )
                                                
                                                
                                                
                                                
                                                -
                                                
                                                
                                                -
                                                
                                                
                                                -
                                                
                                                
                                                -
                                                
                                                
                                                253
                                                
                                                
                                                -
                                                
                                                
                                                -
                                                
                                                
                                                (400
                                                )Repurchases
      of Class A common stock pursuant to publicly announced
    program
                                                
                                                
                                                (5,302
                                                )
                                                
                                                
                                                
                                                
                                                (384
                                                )
                                                
                                                (4
                                                )
                                                
                                                -
                                                
                                                
                                                -
                                                
                                                
                                                (3,641
                                                )
                                                
                                                -
                                                
                                                
                                                -
                                                
                                                
                                                (1,657
                                                )Dividends
      on Class A common stock
                                                
                                                
                                                (3,108
                                                )
                                                
                                                
                                                
                                                
                                                -
                                                
                                                
                                                -
                                                
                                                
                                                -
                                                
                                                
                                                -
                                                
                                                
                                                -
                                                
                                                
                                                -
                                                
                                                
                                                (3,108
                                                )
                                                
                                                -Balance
      as of June 30, 2010
                                                
                                                $
                                                323,038
                                                
                                                
                                                
                                                
                                                
                                                28,208
                                                
                                                $
                                                282
                                                
                                                
                                                12,909
                                                
                                                $
                                                1
                                                
                                                $
                                                213,921
                                                
                                                $
                                                (1,395
                                                )
                                                $
                                                10,381
                                                
                                                $
                                                99,848





See
accompanying notes to the condensed consolidated financial
statements.


4


DUFF
& PHELPS CORPORATION AND SUBSIDIARIES


CONDENSED
CONSOLIDATED STATEMENT OF STOCKHOLDERS’ EQUITY


AND
COMPREHENSIVE INCOME/(LOSS)


(In
thousands)


(Unaudited)





Stockholders
      of Duff & Phelps CorporationAccumulated
                                              
                                              RetainedTotal
                                              
                                              
                                              
                                              
                                              
                                              
                                              
                                              
                                              
                                              
                                              
                                              
                                              
                                              Other
                                              
                                              Earnings/Stockholders'
                                              
                                              Comprehensive
                                              
                                              Common
      Stock - Class A
                                              
                                              Common
      Stock - Class B
                                              
                                              Additional
                                              
                                              Comprehensive
                                              
                                              (Accumulated
                                              
                                              NoncontrollingEquity
                                              
                                              Income
                                              
                                              Shares
                                              
                                              Dollars
                                              
                                              Shares
                                              
                                              Dollars
                                              
                                              Paid-in-Capital
                                              
                                              Income
                                              
                                              Deficit)
                                              
                                              InterestBalance
      as of December 31, 2008
                                              
                                              $
                                              237,759
                                              
                                              
                                              
                                              
                                              14,719
                                              
                                              $
                                              147
                                              
                                              
                                              20,889
                                              
                                              $
                                              2
                                              
                                              $
                                              100,985
                                              
                                              $
                                              122
                                              
                                              $
                                              (1,127
                                              )
                                              $
                                              137,630Comprehensive
      incomeNet
      income for the six months ended June 30, 2009
                                              
                                              
                                              11,780
                                              
                                              $
                                              11,780
                                              
                                              
                                              -
                                              
                                              
                                              -
                                              
                                              
                                              -
                                              
                                              
                                              -
                                              
                                              
                                              -
                                              
                                              
                                              -
                                              
                                              
                                              3,499
                                              
                                              
                                              8,281Currency
      translation adjustment
                                              
                                              
                                              534
                                              
                                              
                                              534
                                              
                                              
                                              -
                                              
                                              
                                              -
                                              
                                              
                                              -
                                              
                                              
                                              -
                                              
                                              
                                              -
                                              
                                              
                                              498
                                              
                                              
                                              -
                                              
                                              
                                              36Amortization
      of post-retirement benefits
                                              
                                              
                                              16
                                              
                                              
                                              16
                                              
                                              
                                              -
                                              
                                              
                                              -
                                              
                                              
                                              -
                                              
                                              
                                              -
                                              
                                              
                                              -
                                              
                                              
                                              9
                                              
                                              
                                              -
                                              
                                              
                                              7Total
      comprehensive income/(loss)
                                              
                                              
                                              12,330
                                              
                                              $
                                              12,330
                                              
                                              
                                              -
                                              
                                              
                                              -
                                              
                                              
                                              -
                                              
                                              
                                              -
                                              
                                              
                                              -
                                              
                                              
                                              507
                                              
                                              
                                              3,499
                                              
                                              
                                              8,324Sale
      of Class A common stock
                                              
                                              
                                              111,840
                                              
                                              
                                              
                                              
                                              
                                              8,050
                                              
                                              
                                              81
                                              
                                              
                                              -
                                              
                                              
                                              -
                                              
                                              
                                              111,759
                                              
                                              
                                              -
                                              
                                              
                                              -
                                              
                                              
                                              -Allocation
      of noncontrolling interest in D&P Acquisitions
                                              
                                              
                                              -
                                              
                                              
                                              
                                              
                                              
                                              -
                                              
                                              
                                              -
                                              
                                              
                                              -
                                              
                                              
                                              -
                                              
                                              
                                              (62,153
                                              )
                                              
                                              -
                                              
                                              
                                              -
                                              
                                              
                                              62,153Issuance
      of Class A common stock
                                              
                                              
                                              180
                                              
                                              
                                              
                                              
                                              
                                              10
                                              
                                              
                                              -
                                              
                                              
                                              -
                                              
                                              
                                              -
                                              
                                              
                                              78
                                              
                                              
                                              -
                                              
                                              
                                              -
                                              
                                              
                                              102Net
      issuance of restricted stock awards
                                              
                                              
                                              (726
                                              )
                                              
                                              
                                              
                                              
                                              1,230
                                              
                                              
                                              13
                                              
                                              
                                              -
                                              
                                              
                                              -
                                              
                                              
                                              (323
                                              )
                                              
                                              -
                                              
                                              
                                              -
                                              
                                              
                                              (416
                                              )Redemption
      of New Class A Units
                                              
                                              
                                              (67,112
                                              )
                                              
                                              
                                              
                                              
                                              -
                                              
                                              
                                              -
                                              
                                              
                                              (4,550
                                              )
                                              
                                              -
                                              
                                              
                                              (29,060
                                              )
                                              
                                              -
                                              
                                              
                                              -
                                              
                                              
                                              (38,052
                                              )Adjustment
      to Tax Receivable Agreement as a result of the redemption of New Class A
      Units
                                              
                                              
                                              (543
                                              )
                                              
                                              
                                              
                                              
                                              -
                                              
                                              
                                              -
                                              
                                              
                                              -
                                              
                                              
                                              -
                                              
                                              
                                              (543
                                              )
                                              
                                              -
                                              
                                              
                                              -
                                              
                                              
                                              -Exercises
      of IPO Options
                                              
                                              
                                              312
                                              
                                              
                                              
                                              
                                              
                                              20
                                              
                                              
                                              -
                                              
                                              
                                              -
                                              
                                              
                                              -
                                              
                                              
                                              161
                                              
                                              
                                              -
                                              
                                              
                                              -
                                              
                                              
                                              151Forfeitures
                                              
                                              
                                              -
                                              
                                              
                                              
                                              
                                              
                                              (105
                                              )
                                              
                                              (2
                                              )
                                              
                                              (91
                                              )
                                              
                                              -
                                              
                                              
                                              2
                                              
                                              
                                              -
                                              
                                              
                                              -
                                              
                                              
                                              -Equity-based
      compensation
                                              
                                              
                                              13,821
                                              
                                              
                                              
                                              
                                              
                                              -
                                              
                                              
                                              -
                                              
                                              
                                              -
                                              
                                              
                                              -
                                              
                                              
                                              6,782
                                              
                                              
                                              -
                                              
                                              
                                              -
                                              
                                              
                                              7,039Income
      tax benefit on equity-based compensation
                                              
                                              
                                              (71
                                              )
                                              
                                              
                                              
                                              
                                              -
                                              
                                              
                                              -
                                              
                                              
                                              -
                                              
                                              
                                              -
                                              
                                              
                                              (71
                                              )
                                              
                                              -
                                              
                                              
                                              -
                                              
                                              
                                              -Distributions
      to noncontrolling unitholders
                                              
                                              
                                              (12,370
                                              )
                                              
                                              
                                              
                                              
                                              -
                                              
                                              
                                              -
                                              
                                              
                                              -
                                              
                                              
                                              -
                                              
                                              
                                              (5,915
                                              )
                                              
                                              -
                                              
                                              
                                              -
                                              
                                              
                                              (6,455
                                              )Change
      in ownership interests between periods
                                              
                                              
                                              -
                                              
                                              
                                              
                                              
                                              
                                              -
                                              
                                              
                                              -
                                              
                                              
                                              -
                                              
                                              
                                              -
                                              
                                              
                                              51,648
                                              
                                              
                                              (125
                                              )
                                              
                                              -
                                              
                                              
                                              (51,523
                                              )Adjustment
      to due to noncontrolling unitholders
                                              
                                              
                                              (3,579
                                              )
                                              
                                              
                                              
                                              
                                              -
                                              
                                              
                                              -
                                              
                                              
                                              -
                                              
                                              
                                              -
                                              
                                              
                                              (3,579
                                              )
                                              
                                              -
                                              
                                              
                                              -
                                              
                                              
                                              -Deferred
      tax asset effective tax rate conversion
                                              
                                              
                                              2,243
                                              
                                              
                                              
                                              
                                              
                                              -
                                              
                                              
                                              -
                                              
                                              
                                              -
                                              
                                              
                                              -
                                              
                                              
                                              2,243
                                              
                                              
                                              -
                                              
                                              
                                              -
                                              
                                              
                                              -Dividends
      on Class A common stock
                                              
                                              
                                              (1,189
                                              )
                                              
                                              
                                              
                                              
                                              -
                                              
                                              
                                              -
                                              
                                              
                                              -
                                              
                                              
                                              -
                                              
                                              
                                              -
                                              
                                              
                                              -
                                              
                                              
                                              (1,189
                                              )
                                              
                                              -Balance
      as of June 30, 2009
                                              
                                              $
                                              292,895
                                              
                                              
                                              
                                              
                                              
                                              23,924
                                              
                                              $
                                              239
                                              
                                              
                                              16,248
                                              
                                              $
                                              2
                                              
                                              $
                                              172,014
                                              
                                              $
                                              504
                                              
                                              $
                                              1,183
                                              
                                              $
                                              118,953





See
accompanying notes to the condensed consolidated financial
statements.


5


DUFF
& PHELPS CORPORATION AND SUBSIDIARIES


NOTES
TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS


(In
thousands, except per share amounts)


(Unaudited)





Note
1   -  DESCRIPTION OF BUSINESS





Duff
& Phelps Corporation (the “Company”) is a leading provider of independent
financial advisory and investment banking services.  Its mission is to help
its clients protect, maximize and recover value by providing independent advice
on issues involving highly technical and complex assessments in the areas of
valuation, transactions, financial restructuring, disputes and taxation. 
The Company believes that the Duff & Phelps brand is associated with
experienced professionals who give trusted guidance in a responsive
manner.  The Company serves a global client base through offices in 24
cities, comprised of offices in 17 U.S. cities, including New York, Chicago,
Dallas and Los Angeles, and seven international offices located in Amsterdam,
London, Munich, Paris, Shanghai, Tokyo and Toronto.





Note
2   -  BASIS OF PRESENTATION





Basis
of Presentation





The
accompanying unaudited condensed consolidated financial statements have been
prepared in accordance with accounting principles generally accepted in the
United States of America and with the rules and regulations of the United States
Securities and Exchange Commission (“SEC”) for interim financial reporting, and
include all adjustments which are, in the opinion of management, necessary for a
fair presentation.  The financial statements require the use of management
estimates and include the accounts of the Company, its controlled subsidiaries
and other entities consolidated as required by accounting principles generally
accepted in the United States of America (“GAAP”).  References to the
“Company,” “its” and “itself,” refer to Duff & Phelps Corporation and its
subsidiaries, unless the context requires otherwise.





The
balance sheet at December 31, 2009 was derived from audited financial
statements, but does not include all disclosures required by (“GAAP”). 
Accordingly, certain information and footnote disclosures normally included in
financial statements prepared in accordance with GAAP have been condensed or
omitted pursuant to such rules and regulations.  In management’s opinion,
all adjustments necessary for a fair presentation are reflected in the interim
periods presented.  All significant intercompany accounts and transactions
have been eliminated in consolidation.





Recently
Issued Accounting Pronouncements





In
October 2009, the Financial Accounting Standards Board (“FASB”) issued
Accounting Standards Update (“ASU”) No. 2009-13, Multiple-Deliverable Revenue
Arrangements.  ASU 2009-13 supersedes certain guidance in FASB
Accounting Standards Codification (“ASC”) 605-25, Revenue Recognition–Multiple-Element
Arrangements and requires an entity to allocate arrangement consideration
at the inception of an arrangement to all of its deliverables based on their
relative selling prices (the relative-selling-price method). 
ASU 2009-13 eliminates the use of the residual method of allocation in
which the undelivered element is measured at its estimated selling price and the
delivered element is measured as the residual of the arrangement consideration,
and requires the relative-selling-price method in all circumstances in which an
entity recognizes revenue for an arrangement with multiple deliverable subject
to ASU 2009-13.  ASU 2009-13 must be adopted no later than the
beginning of the first fiscal year beginning on or after June 15, 2010,
with early adoption permitted through either prospective application for revenue
arrangements entered into, or materially modified, after the effective date or
through retrospective application to all revenue arrangements for all periods
presented.  The Company is currently evaluating the impact that the
adoption of ASU 2009-13 will have on its consolidated financial
statements.





Critical
Accounting Policies





Except
for the implementation of a stock repurchase program, there have been no
significant changes in new accounting pronouncements or in our critical
accounting policies and estimates from those that were disclosed in our Annual
Report on Form 10-K for the year ended December 31, 2009.  In
conjunction with the stock repurchase program, repurchased shares are retired
and recorded as a reduction to additional paid-in capital.


6


DUFF
& PHELPS CORPORATION AND SUBSIDIARIES


NOTES
TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS


(In
thousands, except per share amounts)


(Unaudited)





The
Company believes that the disclosures herein are adequate so that the
information presented is not misleading; however, it is suggested that these
financial statements be read in conjunction with the financial statements and
the notes thereto in our Annual Report on Form 10-K for the year ended December
31, 2009.  The financial data for the interim periods may not necessarily
be indicative of results to be expected for the year.





Note
3   -   NONCONTROLLING INTEREST





The
Company has sole voting power in and controls the management of D&P
Acquisitions, LLC and its subsidiaries (“D&P Acquisitions”), which
collectively represent the operating subsidiaries of the Company.  As a
result, the Company consolidates the financial results of D&P Acquisitions
and records noncontrolling interest for the economic interest in D&P
Acquisitions held by the existing unitholders to the extent the book value of
their interest in D&P Acquisitions is greater than zero.  The Company’s
economic interest in D&P Acquisitions totaled 68.6% at June 30, 2010. 
The noncontrolling unitholders’ interest in D&P Acquisitions totaled 31.4%
at June 30, 2010.





Net
income attributable to the noncontrolling interest on the statement of
operations represents the portion of earnings or loss attributable to the
economic interest in D&P Acquisitions held by the noncontrolling
unitholders.  Noncontrolling interest on the balance sheet represents the
portion of net assets of D&P Acquisitions attributable to the noncontrolling
unitholders based on the portion of total units of D&P Acquisitions owned by
such unitholders (“New Class A Units”).  The ownership of the New Class A
Units is summarized as follows:





Duff
      &
                    
                    
                    Non-Phelps
                    
                    
                    controllingCorporation
                    
                    
                    Unitholders
                    
                    
                    TotalDecember
      31, 2009
                    
                    
                    27,290
                    
                    
                    
                    12,974
                    
                    
                    
                    40,264Issuance
      of Class A common stock for acquisitions
                    
                    
                    93
                    
                    
                    
                    -
                    
                    
                    
                    93Exchange
      to Class A common stock
                    
                    
                    43
                    
                    
                    
                    (43
                    )
                    
                    
                    -Net
      issuance of restricted stock awards
                    
                    
                    1,336
                    
                    
                    
                    -
                    
                    
                    
                    1,336Issuance
      for exercises of IPO Options
                    
                    
                    4
                    
                    
                    
                    -
                    
                    
                    
                    4Repurchases
      of Class A common stock pursuant to publicly announced
    program
                    
                    
                    (384
                    )
                    
                    
                    -
                    
                    
                    
                    (384
                    )Forfeitures
                    
                    
                    (174
                    )
                    
                    
                    (22
                    )
                    
                    
                    (196
                    )June
      30, 2010
                    
                    
                    28,208
                    
                    
                    
                    12,909
                    
                    
                    
                    41,117Percent
      of totalDecember
      31, 2009
                    
                    
                    67.8
                    %
                    
                    
                    32.2
                    %
                    
                    
                    100
                    %June
      30, 2010
                    
                    
                    68.6
                    %
                    
                    
                    31.4
                    %
                    
                    
                    100
                    %


7


DUFF
& PHELPS CORPORATION AND SUBSIDIARIES


NOTES
TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS


(In
thousands, except per share amounts)


(Unaudited)





A
reconciliation from “Income before income taxes” to “Net income attributable to
the noncontrolling interest” and “Net income attributable to Duff & Phelps
Corporation” is detailed as follows:





Three
      Months Ended
                      
                      
                      Six
      Months EndedJune
      30,
                      
                      
                      June
      30,
                      
                      
                      June
      30,
                      
                      
                      June
      30,2010
                      
                      
                      2009
                      
                      
                      2010
                      
                      
                      2009Income
      before income taxes
                      
                      $
                      7,124
                      
                      
                      $
                      7,620
                      
                      
                      $
                      18,342
                      
                      
                      $
                      16,313Less:  provision
      for income taxes for entities other than Duff & Phelps
      Corporation(a)(b)
                      
                      
                      (410
                      )
                      
                      
                      (292
                      )
                      
                      
                      (1,330
                      )
                      
                      
                      (672
                      )Income
      before income taxes, as adjusted
                      
                      
                      6,714
                      
                      
                      
                      7,328
                      
                      
                      
                      17,012
                      
                      
                      
                      15,641Ownership
      percentage of noncontrolling interest(d)
                      
                      
                      31.4
                      %
                      
                      
                      47.3
                      %
                      
                      
                      31.8
                      %
                      
                      
                      52.9
                      %Net
      income attributable to noncontrolling interest
                      
                      
                      2,111
                      
                      
                      
                      3,465
                      
                      
                      
                      5,406
                      
                      
                      
                      8,281Income
      before income taxes, as adjusted, attributable to Duff & Phelps
      Corporation
                      
                      
                      4,603
                      
                      
                      
                      3,863
                      
                      
                      
                      11,606
                      
                      
                      
                      7,360Less:  provision
      for income taxes of Duff & PhelpsCorporation(a)(c)
                      
                      
                      (2,096
                      )
                      
                      
                      (2,129
                      )
                      
                      
                      (4,826
                      )
                      
                      
                      (3,861
                      )Net
      income attributable to Duff & Phelps Corporation
                      
                      $
                      2,507
                      
                      
                      $
                      1,734
                      
                      
                      $
                      6,780
                      
                      
                      $
                      3,499


_________________________________


(a)
              The
      consolidated provision for income taxes is equal to the sum of (i) the
      provision for income taxes for entities other than Duff & Phelps
      Corporation and (ii) the provision for income taxes of Duff & Phelps
      Corporation.  The consolidated provision for income taxes totaled
      $2,506 and $2,421 for the three months ended June 30, 2010 and 2009,
      respectively, and $6,156 and $4,533 for the six months ended June 30, 2010
      and 2009, respectively.(b)
              The
      provision for income taxes for entities other than Duff & Phelps
      Corporation represents taxes imposed directly on Duff & Phelps, LLC, a
      wholly-owned subsidiary of D&P Acquisitions, and its subsidiaries,
      such as taxes imposed on certain domestic subsidiaries (e.g., Rash &
      Associates, L.P.), taxes imposed by certain foreign jurisdictions, and
      taxes imposed by certain local and other jurisdictions (e.g., New York
      City).  Since Duff & Phelps, LLC is taxed as a partnership and a
      flow-through entity for U.S. federal and state income tax purposes, there
      is no provision for these taxes on income allocable to the noncontrolling
      interest.


(c)
            The
      provision of income taxes of Duff & Phelps Corporation includes all
      U.S. federal and state income
taxes.


(d)
            Income
      before income taxes, as adjusted, is allocated to the noncontrolling
      interest based on the total New Class A Units vested for income tax
      purposes (“Tax-Vested Units”) owned by the noncontrolling interest as a
      percentage of the aggregate amount of all Tax-Vested Units.  This
      percentage may not necessarily correspond to the total number of New Class
      A Units at the end of each respective
period.





Distributions
and Other Payments to Noncontrolling Unitholders





The
following table summarizes distributions and other payments to noncontrolling
unitholders, as described more fully below:


8


DUFF
& PHELPS CORPORATION AND SUBSIDIARIES


NOTES
TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS


(In
thousands, except per share amounts)


(Unaudited)





Six
      Months EndedJune
      30,
                    
                    
                    June
      30,2010
                    
                    
                    2009Distributions
      for taxes
                    
                    $
                    708
                    
                    
                    $
                    11,714Other
      distributions
                    
                    
                    1,427
                    
                    
                    
                    656Payments
      pursuant to the Tax Receivable Agreement
                    
                    
                    -
                    
                    
                    
                    -$
                    2,135
                    
                    
                    $
                    12,370





Distributions for
taxes


As a
limited liability company, D&P Acquisitions does not incur significant
federal or state and local taxes, as these taxes are primarily the obligations
of the members of D&P Acquisitions.  As authorized by the Third Amended
and Restated LLC Agreement of D&P Acquisitions, D&P Acquisitions is
required to distribute cash, generally, on a pro rata basis, to its members to
the extent necessary to provide funds to pay the members' tax liabilities, if
any, with respect to the earnings of D&P Acquisitions.  The tax
distribution rate has been set at 45% of each member’s allocable share of
taxable income of D&P Acquisitions.  D&P Acquisitions is only
required to make such distributions if cash is available for such purposes as
determined by the Company.  The Company expects cash will be available to
make these distributions.  Upon completion of its tax returns with respect
to the prior year, D&P Acquisitions may make true-up distributions to its
members, if cash is available for such purposes, with respect to actual taxable
income for the prior year.  The decrease in tax distributions between
periods primarily resulted from the timing of quarterly payments.  The
decrease in payments for the distributions for taxes between the six months
ended June 30, 2010 and 2009 primarily resulted from the timing of
payments.  The distributions for each member’s estimated tax liability from
taxable income of D&P acquisitions during the fourth quarter of 2008 was
primarily made during the first quarter of 2009.  The corresponding
distribution to members for taxable income of D&P acquisitions during the
fourth quarter of 2009 was primarily made during the quarter ended December 31,
2009.





Other
distributions


During
the six months ended June 30, 2010, the Company distributed $1,427 to holders of
New Class A Units, other than Duff & Phelps Corporation.  Concurrent
with the payment of the dividend to shareholders of record, holders of New Class
A Units received a $0.05 and $0.06 distribution per vested unit on March 16,
2010 and May 28, 2010, respectively.  These amounts totaled $1,265 and will
be treated as a reduction in basis of each member’s ownership interests. 
Pursuant to the terms of the Third Amended and Restated LLC Agreement of D&P
Acquisitions, a corresponding amount per unvested unit was deposited into a
segregated account and will be distributed once a year with respect to units
that vested during that year.  During the six months ended June 30, 2010,
the Company distributed $162 to members whose units vested during 2009. 
Any amounts related to unvested units that forfeit are returned to the
Company.





Payments pursuant to the Tax
Receivable Agreement


As a
result of the Company’s acquisition of New Class A Units of D&P
Acquisitions, the Company expects to benefit from depreciation and other tax
deductions reflecting D&P Acquisitions' tax basis for its assets. 
Those deductions will be allocated to the Company and will be taken into account
in reporting the Company’s taxable income.  Further, as a result of a
federal income tax election made by D&P Acquisitions applicable to a portion
of the Company’s acquisition of New Class A Units of D&P Acquisitions, the
income tax basis of the assets of D&P Acquisitions underlying a portion of
the units the Company has and will acquire (pursuant to the exchange agreement)
will be adjusted based upon the amount that the Company has paid for that
portion of its New Class A Units of D&P Acquisitions.





The
Company has entered into a tax receivable agreement (“TRA”) with the existing
unitholders of D&P Acquisitions (for the benefit of the existing unitholders
of D&P Acquisitions) that provides for the payment by the Company to the
unitholders of D&P Acquisitions of 85% of the amount of cash savings, if
any, in U.S. federal, state and local income tax that the Company realizes (i)
from the tax basis in its proportionate share of D&P Acquisitions' goodwill
and similar intangible assets that the Company receives as a result of the
exchanges and (ii) from the federal income tax election referred to above. 
D&P Acquisitions expects to make future payments under the TRA to the extent
cash is available for such purposes.


9


DUFF
& PHELPS CORPORATION AND SUBSIDIARIES


NOTES
TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS


(In
thousands, except per share amounts)


(Unaudited)





As of
June 30, 2010, the Company recorded a liability of $105,685, representing the
payments due to D&P Acquisitions’ unitholders under the TRA (see current and
non-current portion of “Due to noncontrolling unitholders” on the Company’s
Condensed Consolidated Balance Sheets).


10


DUFF
& PHELPS CORPORATION AND SUBSIDIARIES


NOTES
TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS


(In
thousands, except per share amounts)


(Unaudited)





Within
the next 12 month period, the Company expects to pay $4,303 of the total
amount.  The basis for determining the current portion of the payments due
to D&P Acquisitions’ unitholders under the TRA is the expected amount of
payments to be made within the next 12 months.  The long-term portion of
the payments due to D&P Acquisitions’ unitholders under the tax receivable
agreement is the remainder.  Payments are anticipated to be made annually
over 15 years, commencing from the date of each event that gives rise to the TRA
benefits, beginning with the date of the closing of the IPO on October 3,
2007.  The payments are made in accordance with the terms of the TRA. 
The timing of the payments is subject to certain contingencies including Duff
& Phelps Corporation having sufficient taxable income to utilize all of the
tax benefits defined in the TRA.





To
determine the current amount of the payments due to D&P Acquisitions’
unitholders under the TRA, the Company estimated the amount of taxable income
that Duff & Phelps Corporation has generated over the previous fiscal
year.  Next, the Company estimated the amount of the specified TRA
deductions at year end.  This was used as a basis for determining the
amount of tax reduction that generates a TRA obligation.  In turn, this was
used to calculate the estimated payments due under the TRA that the Company
expects to pay in the next 12 months.  These calculations are performed
pursuant to the terms of the TRA.





Obligations
pursuant to the TRA are obligations of Duff & Phelps Corporation.  They
do not impact the noncontrolling interest.  These obligations are not
income tax obligations and have no impact on the tax provision or the allocation
of taxes.  Furthermore, the TRA has no impact on the allocation of the
provision for income taxes to the Company’s net income.  In general, items
of income and expense are allocated on the basis of member’s ownership interests
pursuant to the Third Amended and Restated Limited Liability Company Agreement
of Duff & Phelps Acquisitions, LLC.





Note  4  -  ACQUISITIONS





On June
15, 2010, a subsidiary of the Company acquired Cole Valuation Partners Limited
(“Cole”), a Canadian-based independent financial advisory firm. 
Headquartered in Toronto, Cole specializes in financial litigation support,
business valuation, corporate finance advisory, and forensic and investigative
accounting.  Cole has five managing directors and 31 total employees
located in its Toronto office.  The purchase price was not material to the
Company’s consolidated financial statements.  Cole operates as part of the
Financial Advisory segment.  Pursuant to the terms of the acquisition
agreement, the Company placed $3,156 of cash into an escrow account which is
included as “Restricted cash” on our Condensed Consolidated Balance
Sheets.  The Company recognized $547 of revenue from Cole during the three
and six months ended June 30, 2010.





Note  5  -  EARNINGS
PER SHARE





Basic
earnings per share (“EPS”) measures the performance of an entity over the
reporting period.  Diluted earnings per share measures the performance of
an entity over the reporting period while giving effect to all potentially
dilutive common shares that were outstanding during the period.  The
treasury stock method is used to determine the dilutive potential of stock
options, restricted stock awards, restricted stock units, and D&P
Acquisitions’ units and Class B common stock that are exchangeable into D&P
Class A common stock.





In
accordance with FASB ASC 260, Earnings Per Share,all
outstanding unvested share-based payments that contain rights to non-forfeitable
dividends participate in the undistributed earnings with the common stockholders
and are therefore participating securities.  Companies with participating
securities are required to apply the two-class method in calculating basic and
diluted net income per share.


11


DUFF
& PHELPS CORPORATION AND SUBSIDIARIES


NOTES
TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS


(In
thousands, except per share amounts)


(Unaudited)





Our
restricted stock awards are considered participating securities as they receive
non-forfeitable dividends at the same rate as our common stock.  The
computation of basic and diluted net income per share is reduced for a presumed
hypothetical distribution of earnings to the holders of our unvested restricted
stock.  Accordingly, the effect of the allocation reduces earnings
available for common stockholders.





The
following is a reconciliation of the numerator and denominator used in the basic
and diluted EPS calculations:





Three
      Months Ended
                                                
                                                
                                                Six
      Months EndedJune
      30,
                                                
                                                
                                                June
      30,
                                                
                                                
                                                June
      30,
                                                
                                                
                                                June
      30,2010
                                                
                                                
                                                2009
                                                
                                                
                                                2010
                                                
                                                
                                                2009Basic
      and diluted net income per share:NumeratorNet
      income available to holders of Class A common stock
                                                
                                                $
                                                2,507
                                                
                                                
                                                $
                                                1,734
                                                
                                                
                                                $
                                                6,780
                                                
                                                
                                                $
                                                3,499Earnings
      allocated to participating securities
                                                
                                                
                                                (97
                                                )
                                                
                                                
                                                (65
                                                )
                                                
                                                
                                                (393
                                                )
                                                
                                                
                                                (266
                                                )Earnings
      available for common stockholders
                                                
                                                $
                                                2,410
                                                
                                                
                                                $
                                                1,669
                                                
                                                
                                                $
                                                6,387
                                                
                                                
                                                $
                                                3,233Denominator
      for basic net income per share of Class A common stockWeighted
      average shares of Class A common stock
                                                
                                                
                                                25,058
                                                
                                                
                                                
                                                17,356
                                                
                                                
                                                
                                                25,022
                                                
                                                
                                                
                                                15,428Denominator
      for diluted net income per share of Class A common stockWeighted
      average shares of Class A common stock
                                                
                                                
                                                25,058
                                                
                                                
                                                
                                                17,356
                                                
                                                
                                                
                                                25,022
                                                
                                                
                                                
                                                15,428Add
      dilutive effect of the following:Restricted
      stock awards and units
                                                
                                                
                                                696
                                                
                                                
                                                
                                                755
                                                
                                                
                                                
                                                881
                                                
                                                
                                                
                                                617Assumed
      conversion of New Class A Units for Class A common stock(a)
                                                
                                                
                                                -
                                                
                                                
                                                
                                                -
                                                
                                                
                                                
                                                -
                                                
                                                
                                                
                                                -Dilutive
      weighted average shares of Class A common stock
                                                
                                                
                                                25,754
                                                
                                                
                                                
                                                18,111
                                                
                                                
                                                
                                                25,903
                                                
                                                
                                                
                                                16,045Basic
      income per share of Class A common stock
                                                
                                                $
                                                0.10
                                                
                                                
                                                $
                                                0.10
                                                
                                                
                                                $
                                                0.26
                                                
                                                
                                                $
                                                0.21Diluted
      income per share of Class A common stock
                                                
                                                $
                                                0.09
                                                
                                                
                                                $
                                                0.09
                                                
                                                
                                                $
                                                0.25
                                                
                                                
                                                $
                                                0.20______________________________(a)
      The following shares were anti-dilutive and excluded from this
      calculation:Weighted
      average New Class A Units outstanding
                                                
                                                
                                                12,927
                                                
                                                
                                                
                                                18,669
                                                
                                                
                                                
                                                12,947
                                                
                                                
                                                
                                                19,773Weighted
      average IPO Options outstanding
                                                
                                                
                                                1,771
                                                
                                                
                                                
                                                1,926
                                                
                                                
                                                
                                                1,791
                                                
                                                
                                                
                                                1,959





Anti-dilution
is the result of (i) the allocation of income or loss associated with the
exchange of New Class A Units for Class A common stock and (ii) options listed
above exceeding those outstanding under the treasury stock method.





Shares of
Class B common stock do not share in the earnings of the Company and are
therefore not participating securities.  Accordingly, basic and diluted
earnings per share of Class B common stock have not been presented.


12


DUFF
& PHELPS CORPORATION AND SUBSIDIARIES


NOTES
TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS


(In
thousands, except per share amounts)


(Unaudited)





Note
6  -   EQUITY-BASED COMPENSATION





For a
detailed description of past equity-based compensation activity, please refer to
the Company’s Annual Report on Form 10-K for the year ended December 31,
2009.  There have been no significant changes in the Company’s equity-based
compensation accounting policies and assumptions from those that were disclosed
in the Company’s Annual Report on Form 10-K for the year ended December 31,
2009.





Equity-based
compensation with respect to (a) grants of units of D&P Acquisitions prior
to the recapitalization transaction that were effectuated in conjunction with
the IPO (“Legacy Units”), (b) options to purchase shares of the Company’s Class
A common stock granted in connection with the IPO (“IPO Options”) and (c)
restricted stock awards and units issued in connection with the Company’s
ongoing long-term compensation program (“Ongoing RSAs”) is detailed in the table
below:





Three
      Months Ended
                              
                              
                              Three
      Months EndedJune
      30, 2010
                              
                              
                              June
      30, 2009Client
                              
                              
                              
                              
                              
                              
                              
                              
                              ClientService
                              
                              
                              SG&A
                              
                              
                              Total
                              
                              
                              Service
                              
                              
                              SG&A
                              
                              
                              TotalLegacy
      Units
                              
                              $
                              298
                              
                              
                              $
                              587
                              
                              
                              $
                              885
                              
                              
                              $
                              2,828
                              
                              
                              $
                              649
                              
                              
                              $
                              3,477IPO
      Options
                              
                              
                              338
                              
                              
                              
                              271
                              
                              
                              
                              609
                              
                              
                              
                              720
                              
                              
                              
                              284
                              
                              
                              
                              1,004Ongoing
      RSAs
                              
                              
                              3,579
                              
                              
                              
                              1,147
                              
                              
                              
                              4,726
                              
                              
                              
                              1,527
                              
                              
                              
                              732
                              
                              
                              
                              2,259Total
                              
                              $
                              4,215
                              
                              
                              $
                              2,005
                              
                              
                              $
                              6,220
                              
                              
                              $
                              5,075
                              
                              
                              $
                              1,665
                              
                              
                              $
                              6,740Six
      Months Ended
                              
                              
                              Six
      Months EndedJune
      30, 2010
                              
                              
                              June
      30, 2009Client
                              
                              
                              
                              
                              
                              
                              
                              
                              
                              
                              ClientService
                              
                              
                              SG&A
                              
                              
                              Total
                              
                              
                              Service
                              
                              
                              SG&A
                              
                              
                              TotalLegacy
      Units
                              
                              $
                              563
                              
                              
                              $
                              919
                              
                              
                              $
                              1,482
                              
                              
                              $
                              4,527
                              
                              
                              $
                              1,288
                              
                              
                              $
                              5,815IPO
      Options
                              
                              
                              671
                              
                              
                              
                              424
                              
                              
                              
                              1,095
                              
                              
                              
                              1,353
                              
                              
                              
                              565
                              
                              
                              
                              1,918Ongoing
      RSAs
                              
                              
                              6,698
                              
                              
                              
                              2,115
                              
                              
                              
                              8,813
                              
                              
                              
                              3,458
                              
                              
                              
                              1,703
                              
                              
                              
                              5,161Total
                              
                              $
                              7,932
                              
                              
                              $
                              3,458
                              
                              
                              $
                              11,390
                              
                              
                              $
                              9,338
                              
                              
                              $
                              3,556
                              
                              
                              $
                              12,894





Restricted
stock awards and restricted stock units are granted as a form of incentive
compensation and are accounted for similarly.  Corresponding expense is
recognized based on the fair market value of the Company’s Class A common stock
on the date of grant over the service period.  Restricted stock units are
generally contingent on continued employment and are converted to common stock
when restrictions on transfer lapse after three years.





During
the six months ended June 30, 2010, the Company issued 1,643 Ongoing RSAs
related to annual bonus incentive compensation, performance incentive
initiatives, promotions and recruiting efforts.  The restrictions on
transfer and forfeiture provisions are generally eliminated after three years
for all awards granted to non-executives with certain exceptions related to
retiree eligible employees and termination of employees without
cause.





Of the
1,643 Ongoing RSAs granted, 120 awards were granted to executives on March 10,
2010.  The restrictions on transfer and forfeiture provisions are
eliminated annually over three years based on ratable vesting for grants made to
executives.  In addition, 23 awards were granted to members of the board of
directors on May 6, 2010.  The restrictions on transfer and forfeiture
provisions are eliminated annually over four years based on ratable vesting for
grants made to members of the board of directors.


13


DUFF
& PHELPS CORPORATION AND SUBSIDIARIES


NOTES
TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS


(In
thousands, except per share amounts)


(Unaudited)





Below is
a summary of restricted stock award activity during the six months ended
June 30, 2010:





Weighted
                  
                  
                  
                  
                  
                  WeightedRestricted
                  
                  
                  Average
                  
                  
                  Restricted
                  
                  
                  AverageStock
                  
                  
                  Grant Date
                  
                  
                  Stock
                  
                  
                  Grant DateAwards
                  
                  
                  Fair
      Value
                  
                  
                  Units
                  
                  
                  Fair
      ValueBalance
      as of December 31, 2009
                  
                  
                  2,340
                  
                  
                  $
                  14.11
                  
                  
                  
                  173
                  
                  
                  $
                  13.43Granted
                  
                  
                  1,489
                  
                  
                  
                  16.94
                  
                  
                  
                  154
                  
                  
                  
                  16.92Converted
      to Class A common stock upon lapse of restrictions
                  
                  
                  (358
                  )
                  
                  
                  16.18
                  
                  
                  
                  -
                  
                  
                  
                  13.84Forfeited
                  
                  
                  (174
                  )
                  
                  
                  14.97
                  
                  
                  
                  (1
                  )
                  
                  
                  14.84Balance
      as of June 30, 2010
                  
                  
                  3,297
                  
                  
                  $
                  15.16
                  
                  
                  
                  326
                  
                  
                  $
                  15.07Vested
                  
                  
                  -
                  
                  
                  
                  
                  
                  
                  
                  -Unvested
                  
                  
                  3,297
                  
                  
                  
                  
                  
                  
                  
                  326





Below is
a summary of option activity during the six months ended June 30,
2010:





WeightedAverageIPO
                  
                  
                  Grant DateOptions
                  
                  
                  Fair
      ValueBalance
      as of December 31, 2009
                  
                  
                  1,815
                  
                  
                  $
                  7.33Granted
                  
                  
                  -
                  
                  
                  
                  -Exercised
                  
                  
                  (4
                  )
                  
                  
                  7.33Forfeited
                  
                  
                  (78
                  )
                  
                  
                  7.33Balance
      as of June 30, 2010
                  
                  
                  1,733
                  
                  
                  $
                  7.33Vested
                  
                  
                  919Unvested
                  
                  
                  814Weighted
      average exercise price
                  
                  $
                  16.00Weighted
      average remaining contractual term
                  
                  
                  7.25Total
      intrinsic value of exercised options
                  
                  $
                  3Total
      fair value of options vested
                  
                  $
                  6,739Aggregate
      intrinsic value
                  
                  $
                  -Options
      expected to vest
                  
                  
                  1,631Aggregate
      intrinsic value of options expected to vest
                  
                  $
                  -





Forfeitures
for Legacy Units, IPO Options and Ongoing RSAs are estimated at the time an
award is granted and revised, if necessary, in subsequent periods if actual
forfeitures differ from those estimates.  Pre-vesting forfeitures were
estimated to be between 2% and 21% as of June 30, 2010 based on historical
experience and future expectations.


14


DUFF
& PHELPS CORPORATION AND SUBSIDIARIES


NOTES
TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS


(In
thousands, except per share amounts)


(Unaudited)





The
following table summarizes activity for New Class A Units attributable to
equity-based compensation during the six months ended June 30,
2010:





NewClass
      A UnitsAttributable toEquity-BasedCompensationBalance
      as of December 31, 2009
                    
                    
                    3,231Forfeited
                    
                    
                    (22
                    )Exchanged
                    
                    
                    (43
                    )Balance
      as of June 30, 2010
                    
                    
                    3,166Vested
                    
                    
                    2,077Unvested
                    
                    
                    1,089





The total
unamortized compensation cost related to all non-vested awards was $30,045 at
June 30, 2010.  A tax benefit of $1,074 and $1,385 was recognized for the
stock options issued in conjunction with the IPO and Ongoing RSAs for the six
months ended June 30, 2010 and 2009, respectively.


15


DUFF
& PHELPS CORPORATION AND SUBSIDIARIES


NOTES
TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS


(In
thousands, except per share amounts)


(Unaudited)





Note  7  -   FAIR
VALUE MEASUREMENTS





The
following table presents assets and liabilities measured at fair value on a
recurring basis as of June 30, 2010:





Quoted
      Pricesin
      Active
                      
                      
                      SignificantMarkets for
                      
                      
                      Other
                      
                      
                      SignificantIdentical
                      
                      
                      Observable
                      
                      
                      UnobservableAssets
                      
                      
                      Inputs
                      
                      
                      InputsDescription
                      
                      (Level
      1)
                      
                      
                      (Level
      2)
                      
                      
                      (Level
      3)
                      
                      
                      TotalInvestments
      held in conjunction with deferred compensation plan(1)
                      
                      $
                      -
                      
                      
                      $
                      20,295
                      
                      
                      $
                      -
                      
                      
                      $
                      20,295Total
      assets
                      
                      $
                      -
                      
                      
                      $
                      20,295
                      
                      
                      $
                      -
                      
                      
                      $
                      20,295Benefits
      payable in conjunction with deferred compensation plan(1)
                      
                      $
                      -
                      
                      
                      $
                      20,237
                      
                      
                      $
                      -
                      
                      
                      $
                      20,237Interest
      rate swap(2)
                      
                      
                      -
                      
                      
                      
                      94
                      
                      
                      
                      -
                      
                      
                      
                      94Total
      liabilities
                      
                      $
                      -
                      
                      
                      $
                      20,331
                      
                      
                      $
                      -
                      
                      
                      $
                      20,331


____________________________


(1)
            The
      investments held and benefits payable to participants in conjunction with
      the deferred compensation plan were primarily based on quoted prices for
      similar assets in active markets.  Changes in the fair value of the
      investments are recognized as an increase or decrease in compensation
      expense.  Changes in the fair value of the benefits payables to
      participants are recognized as a corresponding offset to compensation
      expense.  The net impact of changes in fair value is not
      material.  The deferred compensation plan is further discussed in
      Note 10.


(2)
            The
      fair value of the interest rate swap was based on quoted prices for
      similar assets or liabilities in active markets.  The Company’s
      interest rate swap is further discussed in Note
  8.





The
Company does not have any material financial assets in a market that is not
active.


16


DUFF
& PHELPS CORPORATION AND SUBSIDIARIES


NOTES
TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS


(In
thousands, except per share amounts)


(Unaudited)





Note  8  -   LONG-TERM
DEBT





On July
15, 2009, Duff & Phelps, LLC entered into a credit agreement with Bank of
America, N.A., as administrative agent and the lenders from time to time party
thereto ("Credit Agreement"), providing for a $30,000 senior secured revolving
credit facility (“Credit Facility”), including a $10,000 sub-limit for the
issuance of letters of credit.  The proceeds of the facility are permitted
to be used for working capital, permitted acquisitions and general corporate
purposes.  The maturity date is July 15, 2012 and amounts borrowed may be
voluntarily prepaid at any time without penalty or premium, subject to customary
breakage costs.





There
were no amounts outstanding under the Credit Facility at June 30, 2010 or
through the filing date of this Quarterly Report on Form 10-Q.  As of June
30, 2010, the Company had $4,472 of outstanding letters of credit of which
$4,085 were issued against the Credit Facility.  There was $387 of cash
deposited into a restricted account to serve as deposits to secure the remaining
letters of credit.  These letters of credit were issued in connection with
real estate leases.





Loans
under the Credit Facility will, at the Company's option, bear interest on the
principal amount outstanding at either (a) a rate equal to LIBOR, plus an
applicable margin or (b) a base rate, plus an applicable margin.  The
applicable margin rate will be based on the Company's most recent consolidated
leverage ratio and ranges from 1.75% to 2.50% per annum depending on the
Company's consolidated leverage ratio.  In addition, the Company is
required to pay an unused commitment fee on the actual daily amount of the
unutilized portion of the commitments of the lenders at a rate ranging from
0.25% to 0.50% per annum, based on the Company's most recent consolidated
leverage ratio.  Based on the Company’s consolidated leverage ratio at June
30, 2010, the Company qualified for the 1.75% applicable margin and 0.25% unused
commitment fee.





The
Credit Agreement contains customary representations and warranties and customary
affirmative and negative covenants, including, among others, limitations on (a)
the incurrence of liens, (b) the incurrence of indebtedness, (c) the ability to
make dividends and distributions, as well as redeem and repurchase equity
interests, and (d) acquisitions, mergers, consolidations and sales of
assets.  In addition, the Credit Agreement contains financial covenants
that do not permit (a) a total leverage ratio of greater than 2.75 to 1.00 until
the quarter ending September 30, 2010, and 2.50 to 1.00 thereafter and (b) a
consolidated fixed charge coverage ratio of less than 2.00 to 1.00.  The
financial covenants are tested on the last day of each fiscal quarter based on
the last four fiscal quarter periods.  Management believes that the Company
was in compliance with all of its covenants as of June 30, 2010.  The
Credit Agreement permits dividend payments or other distributions in the
Company’s common stock or other equity interests subject to certain
limitations.





The
obligation of the Company to pay amounts outstanding under the Credit Facility
may be accelerated upon the occurrence of an "Event of Default" as defined in
the Credit Agreement.  The Company's obligations under the Credit Agreement
are guaranteed by D&P Acquisitions, and certain domestic subsidiaries of the
Company (collectively, the "Guarantors").  The Credit Agreement is secured
by a lien on substantially all of the personal property of the Company and each
of the Guarantors.





Interest
Rate Swap





The
Company has an $8,400 notional amount interest rate swap that effectively
converted floating rate LIBOR payments to fixed payments at 4.94%.  As a
result of the termination of the Company’s former credit facility with General
Electric Capital Corporation, the underlying floating rate obligation is no
longer outstanding.  The swap agreement terminates September 30,
2010.  The Company elected not to apply hedge accounting to this
instrument.  The estimated fair value of the interest rate swap is based on
quoted market prices.  The gain or loss is recorded in “Other expense” and
has a non-cash impact on the Company’s operations.  At June 30, 2010, the
liability resulting from the interest rate swap was included in “Other current
liabilities.”


17


DUFF
& PHELPS CORPORATION AND SUBSIDIARIES


NOTES
TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS


(In
thousands, except per share amounts)


(Unaudited)





The
following table summarizes the estimated fair value and the gain or loss
recorded for the change in fair value of the interest rate swap.





Three
      Months Ended
                  
                  
                  Six
      Months EndedJune
      30,
                  
                  
                  June
      30,
                  
                  
                  June
      30,
                  
                  
                  June
      30,2010
                  
                  
                  2009
                  
                  
                  2010
                  
                  
                  2009Gain
      resulting from change in fair value of interest rate swap
                  
                  $
                  103
                  
                  
                  $
                  135
                  
                  
                  $
                  227
                  
                  
                  $
                  326Estimated
      fair value – (liability)
                  
                  $
                  (94
                  )
                  
                  $
                  (604
                  )
                  
                  $
                  (94
                  )
                  
                  $
                  (604
                  )


18


DUFF
& PHELPS CORPORATION AND SUBSIDIARIES


NOTES
TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS


(In
thousands, except per share amounts)


(Unaudited)





Note  9  -  INCOME
TAXES





The
Company’s effective tax rate is summarized in the following table:





Three
      Months Ended
                  
                  
                  Six
      Months EndedJune
      30,
                  
                  
                  June
      30,
                  
                  
                  June
      30,
                  
                  
                  June
      30,2010
                  
                  
                  2009
                  
                  
                  2010
                  
                  
                  2009Provision
      for income taxes
                  
                  $
                  2,506
                  
                  
                  $
                  2,421
                  
                  
                  $
                  6,156
                  
                  
                  $
                  4,533Effective
      income tax rate
                  
                  
                  35.2
                  %
                  
                  
                  31.8
                  %
                  
                  
                  33.6
                  %
                  
                  
                  27.8
                  %





The tax
provision for the current year period is based on our estimate of the Company’s
annualized income tax rate.  The effective tax rate is calculated by
dividing the provision for income taxes by income before income
taxes.





The
Company's effective tax rate includes a rate benefit attributable to the fact
that the Company’s subsidiaries operate as a series of limited liability
companies and other flow-through entities which are not subject to federal
income tax.  Accordingly, a portion of the Company's earnings are not
subject to corporate level taxes.  This favorable impact is partially
offset by the impact of certain permanent items, primarily attributable to
certain compensation related expenses that are not deductible for tax
purposes.





The
Company accounts for uncertainties in income tax positions in accordance with
FASB ASC 740, Income
Taxes.   A reconciliation of the beginning and ending
amount of unrecognized tax benefit is summarized as follows:





Balance
      as of December 31, 2009
                    
                    $
                    548Additional
      based on tax positions related to the current year
                    
                    
                    61Balance
      as of June 30, 2010
                    
                    $
                    609





The
Company recognizes interest income and expense related to income taxes as a
component of interest expense and penalties as a component of selling, general
and administrative expenses.





The
Company and its subsidiaries file income tax returns in the U.S. federal
jurisdiction and various states and foreign jurisdictions.  Duff &
Phelps, LLC and D&P Acquisitions are open for federal income tax purposes
from 2006 forward.  These entities are not subject to federal income
taxes as they are flow-through entities.  The Company is open for
federal income tax purposes beginning in 2007.





With
respect to state and local jurisdictions and countries outside of the United
States, the Company and its subsidiaries are typically subject to examination
for four to five years after the income tax returns have been
filed.  Although the outcome of tax audits is always uncertain, the
Company believes that adequate amounts of tax, interest and penalties have been
provided for in the accompanying consolidated financial statements for any
adjustments that might be incurred due to state, local or foreign
audits.


19


DUFF
& PHELPS CORPORATION AND SUBSIDIARIES
 NOTES
TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
 (In
thousands, except per share amounts)
 (Unaudited)
 
 Note
10  - DEFERRED COMPENSATION PLAN
 
 The
Company maintains the Duff & Phelps Deferred Compensation Plan (“Deferred
Compensation Plan”) for key employees.  This plan is detailed further
in our Annual Report on Form 10-K for the year ended December 31,
2009.
 
 Under the
terms of the plan, the Company established a “rabbi trust” as a vehicle for
accumulating assets to pay benefits under the plan.  Payments under
the plan may be paid from the general assets of the Company or from the assets
of any such rabbi trust.  Payment from any such source reduces the
obligation owed to the participant or beneficiary.  The rabbi trust
invests in an investment vehicle structured as a corporate-owned life insurance
(“COLI”) policy with a cash surrender value that mirrors the payable to the
participants of the plan and tracks the value of the plan
assets.  Participants can earn a return on their deferred compensation
that is based on hypothetical investment funds.  The policy is
redeemable on demand in an amount equal to the cash surrender
value.  The cash surrender value approximates fair value.
 
 The
following table summarizes the fair market value of the rabbi trust and the
corresponding liability owed to participants:
 
 June 30,
                                
                                
                                December 31,2010
                                
                                
                                2009Fair
      market value of investments in rabbi trust
                                
                                $
                                20,295
                                
                                
                                $
                                17,807Payable
      to participants of the plan
                                
                                
                                20,237
                                
                                
                                
                                18,051
 
 (1)
                          The
      fair market value of investments in rabbi trust held in conjunction with
      the deferred compensation plan excludes approximately $0 and $251 which is
      included in cash and cash equivalents at June 30, 2010 and December 31,
      2009,
respectively.
 
 The fair
market value of the investments in the rabbi trust is included in “Investments
related to the deferred compensation plan” with the corresponding deferred
compensation obligation included in “Current portion of liability related to
deferred compensation plan” and “Liability related to deferred compensation
plan, less current portion” on the Condensed Consolidated Balance
Sheets.  Changes in the fair value of the investments are recognized
as compensation expense (or credit).  Changes in the fair value of the
benefits payables to participants are recognized as a corresponding offset to
compensation expense (or credit).  The net impact of changes in fair
value is not material.
 
 Note
11  -  IMPAIRMENT OF CERTAIN INTANGIBLE ASSETS
 
 The
impairment of certain intangible assets resulted from a onetime charge incurred
to impair certain intangible assets that originated from our acquisition of
World Tax Services US, LLC (“WTS”) in July 2008.  WTS operated as part
of the Financial Advisory segment.  The impairment resulted from the
departure of the two managing directors who ran the practice and associated
staff in March 2010.
 
 Note
12  -  COMMITMENTS AND CONTINGENCIES
 
 The
Company is involved in various claims or disputes arising in the normal course
of business.  Management does not believe that these matters would
have a material adverse effect on the Company's financial position, results of
operations or liquidity.
  20
  DUFF
& PHELPS CORPORATION AND SUBSIDIARIES
 NOTES
TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
 (In
thousands, except per share amounts)
 (Unaudited)
 
 Note
13  - CHARGE FROM REALIGNMENT OF SENIOR MANAGEMENT
 
 On April
22, 2010, the Company announced the departure of its former president and one of
its segment leaders.  The Company incurred a onetime charge associated
with these changes of approximately $3,550 in the three months ended June 30,
2010 related to cash severance and the accounting impact of accelerated vesting
of equity-based awards.  Approximately $540 of this amount is included
in direct client service costs as a component of compensation and benefits and
approximately $3,010 in operating expenses as a component of selling, general
and administrative expenses.  These charges were not allocated to any
of the Company’s segments or associated with a restructuring, exit or disposal
activity.
  21
  DUFF
& PHELPS CORPORATION AND SUBSIDIARIES
 NOTES
TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
 (In
thousands, except per share amounts)
 (Unaudited)
 
 Note
14  - SEGMENT INFORMATION
 
 The
Company provides services through three segments:  Financial Advisory,
Corporate Finance Consulting and Investment Banking.  The Financial
Advisory segment provides services associated with valuation advisory, tax, and
dispute and legal management consulting.  The Corporate Finance
Consulting segment provides services related to portfolio valuation, financial
engineering, strategic value advisory and due diligence.  The
Investment Banking segment provides restructuring advisory services, transaction
opinions, and merger and acquisition advisory services.
 
 Three Months Ended
                        
                        
                        Six Months EndedJune 30,
                        
                        
                        June 30,
                        
                        
                        June 30,
                        
                        
                        June 30,2010
                        
                        
                        2009
                        
                        
                        2010
                        
                        
                        2009Financial
      AdvisoryRevenues
      (excluding reimbursables)
                        
                        $
                        54,234
                        
                        
                        $
                        57,906
                        
                        
                        $
                        108,116
                        
                        
                        $
                        118,797Segment
      operating income
                        
                        $
                        8,449
                        
                        
                        $
                        10,339
                        
                        
                        $
                        15,987
                        
                        
                        $
                        20,688Segment
      operating income margin
                        
                        
                        15.6
                        %
                        
                        
                        17.9
                        %
                        
                        
                        14.8
                        %
                        
                        
                        17.4
                        %Corporate
      Finance ConsultingRevenues
      (excluding reimbursables)
                        
                        $
                        13,319
                        
                        
                        $
                        14,978
                        
                        
                        $
                        28,255
                        
                        
                        $
                        29,594Segment
      operating income
                        
                        $
                        1,177
                        
                        
                        $
                        3,178
                        
                        
                        $
                        4,159
                        
                        
                        $
                        6,430Segment
      operating income margin
                        
                        
                        8.8
                        %
                        
                        
                        21.2
                        %
                        
                        
                        14.7
                        %
                        
                        
                        21.7
                        %Investment
      BankingRevenues
      (excluding reimbursables)
                        
                        $
                        21,189
                        
                        
                        $
                        17,169
                        
                        
                        $
                        41,535
                        
                        
                        $
                        30,927Segment
      operating income
                        
                        $
                        5,050
                        
                        
                        $
                        3,288
                        
                        
                        $
                        10,107
                        
                        
                        $
                        4,831Segment
      operating income margin
                        
                        
                        23.8
                        %
                        
                        
                        19.2
                        %
                        
                        
                        24.3
                        %
                        
                        
                        15.6
                        %TotalRevenues
      (excluding reimbursables)
                        
                        $
                        88,742
                        
                        
                        $
                        90,053
                        
                        
                        $
                        177,906
                        
                        
                        $
                        179,318Segment
      operating income
                        
                        $
                        14,676
                        
                        
                        $
                        16,805
                        
                        
                        $
                        30,253
                        
                        
                        $
                        31,949Net
      client reimbursable expenses
                        
                        
                        (77
                        )
                        
                        
                        (11
                        )
                        
                        
                        (133
                        )
                        
                        
                        11Equity-based
      compensation from Legacy Units and IPO Options
                        
                        
                        (1,494
                        )
                        
                        
                        (4,481
                        )
                        
                        
                        (2,577
                        )
                        
                        
                        (7,734
                        )Depreciation
      and amortization
                        
                        
                        (2,350
                        )
                        
                        
                        (2,556
                        )
                        
                        
                        (4,843
                        )
                        
                        
                        (5,118
                        )Charge
      from impairment of certain intangible assets
                        
                        
                        -
                        
                        
                        
                        -
                        
                        
                        
                        (674
                        )
                        
                        
                        -Charge
      from realignment of senior management (not included in equity-based
      compensation from LegacyUnits
      and IPO Options above)(Note 13)
                        
                        
                        (3,040
                        )
                        
                        
                        -
                        
                        
                        
                        (3,040
                        )
                        
                        
                        -Merger
      and acquisition costs
                        
                        
                        (321
                        )
                        
                        
                        -
                        
                        
                        
                        (321
                        )
                        
                        
                        -Operating
      income
                        
                        $
                        7,394
                        
                        
                        $
                        9,757
                        
                        
                        $
                        18,665
                        
                        
                        $
                        19,108
 
 Revenues
excluding reimbursable expenses attributable to geographic area are summarized
as follows:
 
 Three Months Ended
                      
                      
                      Six Months EndedJune 30,
                      
                      
                      June 30,
                      
                      
                      June 30,
                      
                      
                      June 30,2010
                      
                      
                      2009
                      
                      
                      2010
                      
                      
                      2009North
      America
                      
                      $
                      78,846
                      
                      
                      $
                      81,596
                      
                      
                      $
                      155,917
                      
                      
                      $
                      162,904Europe
                      
                      
                      8,875
                      
                      
                      
                      6,949
                      
                      
                      
                      20,082
                      
                      
                      
                      13,831Asia
                      
                      
                      1,021
                      
                      
                      
                      1,508
                      
                      
                      
                      1,907
                      
                      
                      
                      2,583Revenues
      (excluding reimbursables)
                      
                      $
                      88,742
                      
                      
                      $
                      90,053
                      
                      
                      $
                      177,906
                      
                      
                      $
                      179,318
 
 There
were no intersegment revenues during the periods presented.  The
Company does not maintain separate balance sheet information by
segment.
  22
  DUFF
& PHELPS CORPORATION AND SUBSIDIARIES
 NOTES
TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
 (In
thousands, except per share amounts)
 (Unaudited)
 
 For
segment reporting purposes, management uses certain estimates and assumptions to
allocate revenues and expenses.  Revenues and expenses attributable to
reportable segments are generally based on which segment and product line a
client service professional is a dedicated member.  As a result,
revenues recognized that relate to the cross utilization of client service
professionals across reportable segments occur each period depending on the
expertise required for each engagement.  In the three months ended
June 30, 2010 and 2009, the Financial Advisory segment (primarily Valuation
Advisory services) recognized revenues of $1,247 and $2,245 from the cross
utilization of its client service professionals on engagements from the
Corporate Finance Consulting segment (primarily Portfolio Valuation services),
respectively.  In the six months ended June 30, 2010 and 2009, the
Financial Advisory segment (primarily Valuation Advisory services) recognized
revenues of $4,192 and $6,567 from the cross utilization of its client service
professionals on engagements from the Corporate Finance Consulting segment
(primarily Portfolio Valuation services), respectively.
  23
  DUFF
& PHELPS CORPORATION AND SUBSIDIARIES
 NOTES
TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
 (In
thousands, except per share amounts)
 (Unaudited)
 
 Note
15  - RELATED PARTY TRANSACTIONS
 
 Lovell
Minnick Partners
 
 Entities
affiliated with Lovell Minnick Partners are holders of Class B common stock and
an equivalent number of New Class A Units.  Two managing directors of
Lovell Minnick Partners serve as independent directors on the Company’s Board of
Directors.
 
 D&P
Acquisitions made distributions to entities affiliated with Lovell Minnick
Partners as summarized in the following table:
 
 Six Months EndedJune 30,
                      
                      
                      June 30,2010
                      
                      
                      2009Distributions
      for taxes
                      
                      $
                      59
                      
                      
                      $
                      3,023Other
      distributions
                      
                      
                      398
                      
                      
                      
                      181Payments
      pursuant to the TRA
                      
                      
                      -
                      
                      
                      
                      -$
                      457
                      
                      
                      $
                      3,204
 
 Distributions
for taxes, other distributions and payments pursuant to the TRA are further
described in Note 3.
 
 An
affiliate of Lovell Minnick Partners engaged the Company to provide certain
consulting services.  As a result of services provided, the Company
recorded $36 of revenues resulting from the engagement during the six months
ended June 30, 2010.
 
 Vestar
Capital Partners
 
 Entities
affiliated with Vestar Capital Partners are holders of Class B common stock and
an equivalent number of New Class A Units.  A managing director of
Vestar Capital Partners serves as independent directors on the Company’s Board
of Directors.
 
 D&P
Acquisitions made distributions to entities affiliated with Vestar Capital
Partners as summarized in the following table:
 
 Six Months EndedJune 30,
                      
                      
                      June 30,2010
                      
                      
                      2009Distributions
      for taxes
                      
                      $
                      74
                      
                      
                      $
                      3,644Other
      distributions
                      
                      
                      552
                      
                      
                      
                      251Payments
      pursuant to the TRA
                      
                      
                      -
                      
                      
                      
                      -$
                      626
                      
                      
                      $
                      3,895
 
 Distributions
for taxes, other distributions and payments pursuant to the TRA are further
described in Note 3.
  24
  DUFF
& PHELPS CORPORATION AND SUBSIDIARIES
 NOTES
TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
 (In
thousands, except per share amounts)
 (Unaudited)
 
 Note
16  - SUBSEQUENT EVENTS
 
 In
accordance with FASB ASC 855, Subsequent Events, management
of the Company evaluated subsequent events.
 
 Declaration
of Quarterly Dividend
 
 On July
29, 2010, the Company announced that its board of directors had declared a
quarterly dividend of $0.06 per share on its outstanding Class A common
stock.  The dividend is payable on August 27, 2010 to shareholders of
record on August 17, 2010.  Concurrently with the payment of the
dividend, the Company will also be distributing $0.06 per unit to holders of New
Class A Units.
  25
  Item
2.  Management’s Discussion and Analysis of Financial Condition and Results
of Operations.
 
 Disclosure
Regarding Forward-Looking Statements
 
 This
report 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 (the “Exchange Act”), which reflect the Company’s current views with
respect to, among other things, future events and financial
performance.  The Company generally identifies forward looking
statements by terminology such as “outlook,” “believes,” “expects,” “potential,”
“continues,” “may,” “will,” “could,” “should,” “seeks,” “approximately,”
“predicts,” “intends,” “plans,” “estimates,” “anticipates” or the negative
version of those words or other comparable words.  Any forward-looking
statements contained in this discussion are based upon our historical
performance and on our current plans, estimates and expectations.  The
inclusion of this forward-looking information should not be regarded as a
representation by us, or any other person that the future plans, estimates or
expectations contemplated by us will be achieved.  Such
forward-looking statements are subject to various risks and uncertainties and
assumptions relating to our operations, financial results, financial condition,
business prospects, growth strategy and liquidity.  If one or more of
these or other risks or uncertainties materialize, or if our underlying
assumptions prove to be incorrect, our actual results may vary materially from
those indicated in these statements.  These factors should not be
construed as exhaustive and should be read in conjunction with the other
cautionary statements and the risk factors section that are included in our
Annual Report on Form 10-K for the year ended December 31, 2009 and any
subsequent filings of our Quarterly Reports on Form 10-Q.  The
forward-looking statements included in this Quarterly Report on Form 10-Q are
made only as of the date of this filing with the Securities and Exchange
Commission.  The Company does not undertake any obligation to publicly
update or review any forward-looking statement, whether as a result of new
information, future developments or otherwise.
 
 Critical
Accounting Policies and Estimates
 
 Management’s
discussion and analysis of the Company’s financial condition and results of
operations is based upon the Company’s consolidated financial statements, which
have been prepared in accordance with accounting principles generally accepted
in the United States (“GAAP”).  The preparation of financial
statements in conformity with GAAP requires management to make estimates and
assumptions that affect amounts of assets and liabilities and disclosures of
contingent assets and liabilities as of the date of the financial statements and
reported amounts of revenues and expenses during the periods
presented.  Actual results could differ from these
estimates.  Estimates and assumptions are reviewed periodically and
the effects of revisions are reflected in the consolidated financial statements
in the period they are deemed to be necessary.  Significant estimates
made in the accompanying consolidated financial statements include, but are not
limited to the following:
 
 ·
                proportional
      performance under client engagements for the purpose of determining
      revenue recognition,
 ·
                accounts
      receivable and unbilled services
valuation,
 ·
                incentive
      compensation and other accrued
benefits,
 ·
                useful
      lives of intangible assets,
 ·
                the
      carrying value of goodwill and intangible
  assets,
 ·
                amounts
      due to noncontrolling unitholders,
 ·
                reserves
      for estimated tax liabilities,
 ·
                contingent
      liabilities,
 ·
                certain
      estimates and assumptions used in the allocation of revenues and expenses
      for our segment reporting, and
 ·
                certain
      estimates and assumptions used in the calculation of the fair value of
      equity compensation issued to
employees.
 
 A summary
of the Company’s critical accounting policies and estimates can be found in our
Annual Report on Form 10-K for the year ended December 31,
2009.  Except for the implementation of a stock repurchase program,
there have been no significant changes in new accounting pronouncements or in
our critical accounting policies and estimates from those that were disclosed in
our Annual Report on Form 10-K for the year ended December 31,
2009.  In conjunction with the stock repurchase program, repurchased
shares are retired and recorded as a reduction to additional paid-in
capital.
  26
  Results
of Operations
 
 We are a
leading provider of independent financial advisory and investment banking
services.  Our mission is to help our clients protect, maximize and
recover value by providing independent advice on issues involving highly
technical and complex assessments in the areas of valuation, transactions,
financial restructuring, disputes and taxation.  We believe that the
Duff & Phelps brand is associated with experienced professionals who give
trusted guidance in a responsive manner.  We serve a global client
base through offices in 24 cities, comprised of offices in 17 U.S. cities,
including New York, Chicago, Dallas and Los Angeles, and seven international
offices located in Amsterdam, London, Munich, Paris, Shanghai, Tokyo and
Toronto.
 
 We
provide services through three segments:  Financial Advisory,
Corporate Finance Consulting and Investment Banking.
 
 
 
 Equity-based
compensation discussed herein includes (a) grants of units of D&P
Acquisitions prior to the recapitalization transaction that were effectuated in
conjunction with the IPO (“Legacy Units”), (b) options to purchase shares of the
Company’s Class A common stock granted in connection with the IPO (“IPO
Options”) and (c) restricted stock awards and units issued in connection with
the Company’s ongoing long-term compensation program (“Ongoing
RSAs”).  The IPO, Recapitalization Transactions and the Company’s
capital structure are further detailed in our Annual Report on Form 10-K for the
year ended December 31, 2009.
 
 Amounts
are reported in thousands, except for per share amounts, headcount or where the
context requires otherwise.
 
 Overview
 
 We are
beginning to see modest improvements in certain areas of our business,
particularly in certain areas relating to M&A activity.  We believe
that many areas of our business, including M&A Advisory, Transaction
Opinions, Due Diligence and Valuation Advisory should generally react favorably
to the extent that there is an increase in overall transaction
volume.  Our Global Restructuring business has continued to exhibit growth
as a result of recent economic volatility, although such growth may be tempered
if we enter a more robust period of economic recovery.  Certain other
areas of our business which we believe have historically been less correlated to
M&A volumes, such as Portfolio Valuation and Financial
Engineering, have experienced lower growth in recent quarters as a
result of the current economic environment. Overall, we believe that
revenue and earnings for the first half of the year demonstrate the resiliency
of our balanced portfolio of services and diversified client base, whose demand
for complex financial advisory and valuation services continues.
  27
  Three
months ended June 30, 2010 versus three months ended June 30, 2009
 
 The
results of operations are summarized as follows:
 
 Three Months EndedJune 30,
                                                    
                                                    
                                                    June 30,
                                                    
                                                    
                                                    Unit
                                                    
                                                    
                                                    Percent2010
                                                    
                                                    
                                                    2009
                                                    
                                                    
                                                    Change
                                                    
                                                    
                                                    ChangeRevenues
                                                    
                                                    $
                                                    88,742
                                                    
                                                    
                                                    $
                                                    90,053
                                                    
                                                    
                                                    $
                                                    (1,311
                                                    )
                                                    
                                                    
                                                    (1.5
                                                    )%Reimbursable
      expenses
                                                    
                                                    
                                                    1,962
                                                    
                                                    
                                                    
                                                    2,626
                                                    
                                                    
                                                    
                                                    (664
                                                    )
                                                    
                                                    
                                                    (25.3
                                                    )%Total
      revenues
                                                    
                                                    
                                                    90,704
                                                    
                                                    
                                                    
                                                    92,679
                                                    
                                                    
                                                    
                                                    (1,975
                                                    )
                                                    
                                                    
                                                    (2.1
                                                    )%Direct
      client service costsCompensation
      and benefits(1)
                                                    
                                                    
                                                    50,415
                                                    
                                                    
                                                    
                                                    51,698
                                                    
                                                    
                                                    
                                                    (1,283
                                                    )
                                                    
                                                    
                                                    (2.5
                                                    )%Other
      direct client service costs
                                                    
                                                    
                                                    1,881
                                                    
                                                    
                                                    
                                                    1,543
                                                    
                                                    
                                                    
                                                    338
                                                    
                                                    
                                                    
                                                    21.9
                                                    %Reimbursable
      expenses
                                                    
                                                    
                                                    2,039
                                                    
                                                    
                                                    
                                                    2,637
                                                    
                                                    
                                                    
                                                    (598
                                                    )
                                                    
                                                    
                                                    (22.7
                                                    )%54,335
                                                    
                                                    
                                                    
                                                    55,878
                                                    
                                                    
                                                    
                                                    (1,543
                                                    )
                                                    
                                                    
                                                    (2.8
                                                    )%Operating
      expensesSelling,
      general and administrative(2)
                                                    
                                                    
                                                    26,304
                                                    
                                                    
                                                    
                                                    24,488
                                                    
                                                    
                                                    
                                                    1,816
                                                    
                                                    
                                                    
                                                    7.4
                                                    %Depreciation
      and amortization
                                                    
                                                    
                                                    2,350
                                                    
                                                    
                                                    
                                                    2,556
                                                    
                                                    
                                                    
                                                    (206
                                                    )
                                                    
                                                    
                                                    (8.1
                                                    )%Merger
      and acquisition costs
                                                    
                                                    
                                                    321
                                                    
                                                    
                                                    
                                                    -
                                                    
                                                    
                                                    
                                                    321
                                                    
                                                    
                                                    
                                                    -28,975
                                                    
                                                    
                                                    
                                                    27,044
                                                    
                                                    
                                                    
                                                    1,931
                                                    
                                                    
                                                    
                                                    7.1
                                                    %Operating
      income
                                                    
                                                    
                                                    7,394
                                                    
                                                    
                                                    
                                                    9,757
                                                    
                                                    
                                                    
                                                    (2,363
                                                    )
                                                    
                                                    
                                                    (24.2
                                                    )%Other
      expense/(income), netInterest
      income
                                                    
                                                    
                                                    (53
                                                    )
                                                    
                                                    
                                                    (3
                                                    )
                                                    
                                                    
                                                    (50
                                                    )
                                                    
                                                    
                                                    1666.7
                                                    %Interest
      expense
                                                    
                                                    
                                                    76
                                                    
                                                    
                                                    
                                                    333
                                                    
                                                    
                                                    
                                                    (257
                                                    )
                                                    
                                                    
                                                    (77.2
                                                    )%Loss
      on early extinguishment of debt
                                                    
                                                    
                                                    -
                                                    
                                                    
                                                    
                                                    1,737
                                                    
                                                    
                                                    
                                                    (1,737
                                                    )
                                                    
                                                    
                                                    (100.0
                                                    )%Other
      expense
                                                    
                                                    
                                                    247
                                                    
                                                    
                                                    
                                                    70
                                                    
                                                    
                                                    
                                                    177
                                                    
                                                    
                                                    
                                                    252.9
                                                    %270
                                                    
                                                    
                                                    
                                                    2,137
                                                    
                                                    
                                                    
                                                    (1,867
                                                    )
                                                    
                                                    
                                                    (87.4
                                                    )%Income
      before income taxes
                                                    
                                                    
                                                    7,124
                                                    
                                                    
                                                    
                                                    7,620
                                                    
                                                    
                                                    
                                                    (496
                                                    )
                                                    
                                                    
                                                    (6.5
                                                    )%Provision
      for income taxes
                                                    
                                                    
                                                    2,506
                                                    
                                                    
                                                    
                                                    2,421
                                                    
                                                    
                                                    
                                                    85
                                                    
                                                    
                                                    
                                                    3.5
                                                    %Net
      income
                                                    
                                                    
                                                    4,618
                                                    
                                                    
                                                    
                                                    5,199
                                                    
                                                    
                                                    
                                                    (581
                                                    )
                                                    
                                                    
                                                    (11.2
                                                    )%Less:  Net
      income attributable to noncontrolling interest
                                                    
                                                    
                                                    2,111
                                                    
                                                    
                                                    
                                                    3,465
                                                    
                                                    
                                                    
                                                    (1,354
                                                    )
                                                    
                                                    
                                                    (39.1
                                                    )%Net
      income attributable to Duff & Phelps Corporation
                                                    
                                                    $
                                                    2,507
                                                    
                                                    
                                                    $
                                                    1,734
                                                    
                                                    
                                                    $
                                                    773
                                                    
                                                    
                                                    
                                                    44.6
                                                    %Other
      financial and operating dataAdjusted
      EBITDA(3)(4)
                                                    
                                                    $
                                                    14,599
                                                    
                                                    
                                                    $
                                                    16,794
                                                    
                                                    
                                                    $
                                                    (2,195
                                                    )
                                                    
                                                    
                                                    (13.1
                                                    )%Adjusted
      EBITDA(3)(4)
      as a percentage of revenues
                                                    
                                                    
                                                    16.5
                                                    %
                                                    
                                                    
                                                    18.6
                                                    %
                                                    
                                                    
                                                    (2.1
                                                    )%
                                                    
                                                    
                                                    (11.3
                                                    )%Adusted
      Pro Forma Net Income(3)(4)
                                                    
                                                    $
                                                    7,203
                                                    
                                                    
                                                    $
                                                    8,084
                                                    
                                                    
                                                    $
                                                    (881
                                                    )
                                                    
                                                    
                                                    (10.9
                                                    )%Adusted
      Pro Forma Net Income per fully exchanged, fully diluted share
      outstanding(3)(4)
                                                    
                                                    $
                                                    0.19
                                                    
                                                    
                                                    $
                                                    0.22
                                                    
                                                    
                                                    $
                                                    (0.03
                                                    )
                                                    
                                                    
                                                    (13.6
                                                    )%End
      of period managing directors
                                                    
                                                    
                                                    163
                                                    
                                                    
                                                    
                                                    165
                                                    
                                                    
                                                    
                                                    (2
                                                    )
                                                    
                                                    
                                                    (1.2
                                                    )%End
      of period client service professionals
                                                    
                                                    
                                                    782
                                                    
                                                    
                                                    
                                                    907
                                                    
                                                    
                                                    
                                                    (125
                                                    )
                                                    
                                                    
                                                    (13.8
                                                    )%
 
 
 (1)
                      Compensation
      and benefits include $4,215 and $5,075 of equity-based compensation
      expense for the three months ended June 30, 2010 and 2009,
      respectively.
  (2)
                      Selling,
      general and administrative expenses include $2,005 and $1,665 of
      equity-based compensation expense for the three months ended June 30, 2010
      and 2009,
respectively.
  28
 
 (3)
                          Adjusted
      EBITDA, Adjusted Pro Forma Net Income, and Adjusted Pro Forma Net Income
      per share are non-GAAP financial measures.  We believe that
      Adjusted EBITDA provides a relevant and useful alternative measure of our
      ongoing profitability and performance, when viewed in conjunction with
      GAAP measures, as it adjusts net income or loss attributable to Duff &
      Phelps Corporation for (a) net income or loss attributable to
      noncontrolling interest, (b) provision for income taxes, (c) interest
      expense and depreciation and amortization (a significant portion of which
      relates to debt and capital investments that have been incurred as the
      result of acquisitions and investments in stand-alone infrastructure which
      we do not expect to incur at the same levels in the future), (d)
      equity-based compensation associated with the Legacy Units of D&P
      Acquisitions, a significant portion of which is due to certain onetime
      grants associated with acquisitions prior to our IPO, and options to
      purchase shares of the Company’s Class A common stock granted in
      connection with the IPO, (e) impairment charges, acquisition retention
      expenses and other merger and acquisition costs, which are generally
      non-recurring in nature or are related to deferred payments associated
      with prior acquisitions, and (f) costs incurred from the realignment of
      our senior management which are generally non-recurring in nature and
      primarily include cash severance and charges from the accounting impact of
      the acceleration of vesting of restricted stock
  awards.
 
 Given the
level of acquisition activity during the period prior to our IPO, and related
capital investments and one time equity grants associated with acquisitions
during the this period (which we do not expect to incur at the same levels post
IPO) and the IPO, and our belief that, as a professional services organization,
our operations are not capital intensive on an ongoing basis, we believe the
Adjusted EBITDA measure, in addition to GAAP financial measures, provides a
relevant and useful benchmark for investors, in order to assess our financial
performance and comparability to other companies in our industry.  The
Adjusted EBITDA measure is utilized by our senior management to evaluate our
overall performance and operating expense characteristics and to compare our
performance to that of certain of our competitors.  A measure similar
to Adjusted EBITDA is the principal measure that determines the compensation of
our senior management team.  In addition, a measure similar to
Adjusted EBITDA is a key measure that determines compliance with certain
financial covenants under our credit facility.  Management compensates
for the inherent limitations associated with using the Adjusted EBITDA measure
through disclosure of such limitations, presentation of our financial statements
in accordance with GAAP and reconciliation of Adjusted EBITDA to the most
directly comparable GAAP measure, net income or loss.  Furthermore,
management also reviews GAAP measures, and evaluates individual measures that
are not included in Adjusted EBITDA such as our level of capital expenditures,
equity issuance and interest expense, among other measures.
 
 Adjusted
EBITDA, as defined by the Company and reconciled below, consists of net income
or loss attributable to Duff & Phelps Corporation before (a) net income or
loss attributable to the noncontrolling interest, (b) provision for income
taxes, (c) other expense/(income), net, (d) depreciation and amortization, (e)
charges from impairment of intangible assets, (f) equity-based compensation
associated with Legacy Units and IPO Options included in both compensation and
benefits and in selling, general and administrative expenses, (g) acquisition
retention expenses, (h) cash severance and equity-compensation expense from the
acceleration of vesting of restricted stock awards due to the realignment of our
senior management, and (i) merger and acquisition costs:
 
 Reconciliation
of Adjusted EBITDA
 
 Three Months EndedJune 30,
                              
                              
                              June 30,2010
                              
                              
                              2009Revenues
      (excluding client reimbursables)
                              
                              $
                              88,742
                              
                              
                              $
                              90,053Net
      income attributable to Duff & Phelps Corporation
                              
                              $
                              2,507
                              
                              
                              $
                              1,734Net
      income attributable to noncontrolling interest
                              
                              
                              2,111
                              
                              
                              
                              3,465Provision
      for income taxes
                              
                              
                              2,506
                              
                              
                              
                              2,421Other
      expense/(income), net
                              
                              
                              270
                              
                              
                              
                              2,137Depreciation
      and amortization
                              
                              
                              2,350
                              
                              
                              
                              2,556Equity-based
      compensation associated with Legacy Units and IPO Options
                              
                              
                              1,494
                              
                              
                              
                              4,481Charge
      from realignment of senior management (not included in equity-based
      compensation from Legacy Units and IPO Options above)
                              
                              
                              3,040
                              
                              
                              
                              -Merger
      and acquisition costs
                              
                              
                              321
                              
                              
                              
                              -Adjusted
      EBITDA
                              
                              $
                              14,599
                              
                              
                              $
                              16,794Adjusted
      EBITDA as a percentage of revenues
                              
                              
                              16.5
                              %
                              
                              
                              18.6
                              %
  29
  Adjusted
Pro Forma Net Income, as defined by Duff & Phelps and reconciled below,
consists of net income or loss attributable to Duff & Phelps Corporation
before (a) net income or loss attributable to the noncontrolling interest, (b) a
non-recurring charge from the repayment and subsequent termination of our former
credit agreement, (c) equity-based compensation associated with Legacy Units and
IPO Options included in both compensation and benefits and in selling, general
and administrative expenses, (d) acquisition retention expenses, (e) cash
severance and equity-compensation expense from the acceleration of vesting of
restricted stock awards due to the realignment of our senior management, (f)
merger and acquisition costs, and less (g) pro forma corporate income tax
applied at an assumed rate as specified in the applicable footnote (such assumed
pro forma corporate income tax rate may fluctuate between periods and may
include true-ups relating to prior periods, based on management estimates and
judgments).  Adjusted Pro Forma Net Income per share, as defined by
Duff & Phelps, consists of Adjusted Pro Forma Net Income divided by the
weighted average number of the Company's Class A and Class B shares for the
applicable period, giving effect to the dilutive impact, if any, of stock
options and restricted stock awards.
 
 Reconciliation
of Adjusted Pro Forma Net Income
 
 Three Months EndedJune 30,
                                      
                                      
                                      June 30,2010
                                      
                                      
                                      2009Net
      income attributable to Duff & Phelps Corporation
                                      
                                      $
                                      2,507
                                      
                                      
                                      $
                                      1,734Net
      income attributable to noncontrolling interest(a)
                                      
                                      
                                      2,111
                                      
                                      
                                      
                                      3,465Loss
      on early extinguishment of debt(b)
                                      
                                      
                                      -
                                      
                                      
                                      
                                      1,737Equity-based
      compensation associated with Legacy Units and IPO Options(c)
                                      
                                      
                                      1,494
                                      
                                      
                                      
                                      4,481Charge
      from realignment of senior management (not included in equity-based
      compensation from Legacy Units and IPO Options above)(4)
                                      
                                      
                                      3,040
                                      
                                      
                                      
                                      -Merger
      and acquisition costs
                                      
                                      
                                      321
                                      
                                      
                                      
                                      -Adjustment
      to provision for income taxes(d)
                                      
                                      
                                      (2,270
                                      )
                                      
                                      
                                      (3,333
                                      )Adjusted
      Pro Forma Net Income, as defined
                                      
                                      $
                                      7,203
                                      
                                      
                                      $
                                      8,084Pro
      forma fully exchanged, fully diluted shares outstanding(e)
                                      
                                      
                                      38,681
                                      
                                      
                                      
                                      36,780Adjusted
      Pro Forma Net Income per fully exchanged, fully diluted share
      outstanding
                                      
                                      $
                                      0.19
                                      
                                      
                                      $
                                      0.22
 
 
 (a)
                  Represents
      elimination of the noncontrolling interest associated with the ownership
      by existing unitholders of D&P Acquisitions (excluding D&P
      Corporation), as if such unitholders had fully exchanged their partnership
      units and Class B common stock of the Company for shares of Class A common
      stock of the Company.
 (b)
                  Represents
      a non-recurring charge from the repayment and subsequent termination of
      our credit agreement.
 (c)
                  Represents
      elimination of equity-based compensation associated with Legacy Units and
      IPO Options.
 (d)
                  Represents
      an adjustment to reflect an assumed effective corporate tax rate of
      approximately 40.3% and 41.5% for the full year, as applied to the three
      months ended June 30, 2010 and 2009, respectively, which includes a
      provision for U.S. federal income taxes and assumes the highest statutory
      rates apportioned to each state, local and/or foreign
      jurisdiction.  For the three months ended June 30, 2010 and
      2009, the pro forma tax rates of 39.9% and 41.6% reflect a true-up
      adjustment relating to the three months ended March 31, 2010 and 2009,
      respectively.  Assumes full exchange of existing unitholders'
      partnership units and Class B common stock of the Company into Class A
      common stock of the Company.
 (e)
                  Based
      on the weighted-average number of aggregated Class A and Class B shares of
      common stock outstanding, excluding Ongoing RSAs, and dilutive effect of
      Ongoing RSAs for the three months ended June 30, 2010 and 2009,
      respectively.  The Company believes that IPO Options would not
      be considered dilutive when applying the treasury
  method.
 
 Both
Adjusted EBITDA and Adjusted Pro Forma Net Income are non-GAAP financial
measures which are not prepared in accordance with, and should not be considered
alternatives to, measurements required by GAAP, such as operating income, net
income or loss, net income or loss per share, cash flow from continuing
operating activities or any other measure of performance or liquidity derived in
accordance with GAAP.  The presentation of this additional information
is not meant to be considered in isolation or as a substitute for the most
directly comparable GAAP measures.  In addition, it should be noted
that companies calculate Adjusted EBITDA and Adjusted Pro Forma Net Income
differently and, therefore, Adjusted EBITDA and Adjusted Pro Forma Net Income as
presented for us may not be comparable to Adjusted EBITDA and Adjusted Pro Forma
Net Income reported by other companies.
  30
  (4)
                  On
      April 22, 2010, we announced certain management changes related to the
      departure of our former president and one of our segment
      leaders.  We incurred a onetime charge associated with these
      changes of approximately $3,550 in our second quarter of 2010 related to
      cash severance and the accounting impact of accelerated vesting of
      equity-based awards.  Of this amount, approximately $3,040
      primarily resulted from cash severance and a charge from the accelerated
      vesting of restricted stock awards which is added back to Adjusted EBITDA
      and Adjusted Pro Forma Net Income.  The remaining $510 related
      to a charge from the accelerated vesting of Legacy Units and IPO Options
      which is also added back to Adjusted EBITDA and Adjusted Pro Forma Net
      Income consistent with prior
presentation.
 Revenues
 
 Revenues
excluding reimbursable expenses decreased $1,311 or 1.5% to $88,742 for the
three months ended June 30, 2010, compared to $90,053 for the three months ended
June 30, 2009.  The decrease in revenues primarily resulted from a
decrease in revenues from our Financial Advisory and Corporate Finance
Consulting segments, partially offset by an increase in revenues from our
Investment Banking segment, as summarized in the following table:
 
 Three Months EndedJune 30,
                            
                            
                            June 30,
                            
                            
                            Dollar
                            
                            
                            Percent2010
                            
                            
                            2009
                            
                            
                            Change
                            
                            
                            ChangeFinancial
      AdvisoryValuation
      Advisory
                            
                            $
                            32,829
                            
                            
                            $
                            33,772
                            
                            
                            $
                            (943
                            )
                            
                            
                            (2.8
                            )%Tax
      Services
                            
                            
                            12,089
                            
                            
                            
                            11,972
                            
                            
                            
                            117
                            
                            
                            
                            1.0
                            %Dispute
      & Legal Management Consulting(1)
                            
                            
                            9,316
                            
                            
                            
                            12,162
                            
                            
                            
                            (2,846
                            )
                            
                            
                            (23.4
                            )%54,234
                            
                            
                            
                            57,906
                            
                            
                            
                            (3,672
                            )
                            
                            
                            (6.3
                            )%Corporate
      Finance ConsultingPortfolio
      Valuation
                            
                            
                            4,642
                            
                            
                            
                            4,338
                            
                            
                            
                            304
                            
                            
                            
                            7.0
                            %Financial
      Engineering
                            
                            
                            3,355
                            
                            
                            
                            5,159
                            
                            
                            
                            (1,804
                            )
                            
                            
                            (35.0
                            )%Strategic
      Value Advisory
                            
                            
                            2,883
                            
                            
                            
                            3,588
                            
                            
                            
                            (705
                            )
                            
                            
                            (19.6
                            )%Due
      Diligence
                            
                            
                            2,439
                            
                            
                            
                            1,893
                            
                            
                            
                            546
                            
                            
                            
                            28.8
                            %13,319
                            
                            
                            
                            14,978
                            
                            
                            
                            (1,659
                            )
                            
                            
                            (11.1
                            )%Investment
      BankingGlobal
      Restructuring Advisory
                            
                            
                            12,004
                            
                            
                            
                            8,614
                            
                            
                            
                            3,390
                            
                            
                            
                            39.4
                            %Transaction
      Opinions
                            
                            
                            6,041
                            
                            
                            
                            6,180
                            
                            
                            
                            (139
                            )
                            
                            
                            (2.2
                            )%M&A
      Advisory
                            
                            
                            3,144
                            
                            
                            
                            2,375
                            
                            
                            
                            769
                            
                            
                            
                            32.4
                            %21,189
                            
                            
                            
                            17,169
                            
                            
                            
                            4,020
                            
                            
                            
                            23.4
                            %Total
      Revenues (excluding reimbursables)
                            
                            $
                            88,742
                            
                            
                            $
                            90,053
                            
                            
                            $
                            (1,311
                            )
                            
                            
                            (1.5
                            )%
  
 (1)
                  Includes
      $547 of revenue from our acquisition of Cole Valuation Partners Limited
      effective June 15, 2010.
 
 Our
Financial Advisory segment was impacted by lower revenues from Dispute &
Legal Management Consulting and Valuation Advisory.  Dispute &
Legal Management Consulting (and to a lesser extent certain business units in
our Corporate Finance Consulting segment) was impacted by lower revenues from an
engagement to serve as a financial advisor to the court appointed examiner of a
large financial services company under bankruptcy protection.  This
engagement wound down during the first half of 2010.  Valuation
Advisory was impacted by a reduction of goodwill impairment testing due to the
improvement in the overall economic environment, as the corresponding prior year
quarter benefited from a significant volume of goodwill impairment testing
as a result of the fallout from the financial crisis.  This decrease
was partially offset by an increase in revenues from purchase price allocations
and a higher volume of real estate valuation work.
 
 Our
Corporate Finance Consulting segment was impacted by lower revenues from
Financial Engineering and Strategic Value Advisory, primarily due to lower
revenues from an engagement to serve as a financial advisor to the court
appointed examiner of a large financial services company under bankruptcy
protection (as described above).  Our Due Diligence business,
however, grew sequentially and as compared to the corresponding prior year
quarter from an increase in M&A related activity.
 
 Our
Investment Banking segment benefited from continued strength in Global
Restructuring Advisory and M&A Advisory versus the corresponding prior year
quarter.
 
 31
  Our
client service headcount decreased to 782 client service professionals at June
30, 2010, compared to 878 client service professionals at December 31,
2009.  This decrease resulted from targeted reductions and attrition,
partially offset by the addition of 20 client service professionals from our
acquisition of Cole Valuation Partners Limited (“Cole”) and targeted hiring of
professionals with specific expertise.
  We had
163 client service managing directors at June 30, 2010, compared to 163 at
December 31, 2009.  We added 17 managing directors from our
acquisition of Cole, internal promotions and limited
hiring.  These additions were principally offset by targeted
reductions.
  Direct
Client Service Costs
 
 Direct
client service costs decreased $1,543 or 2.8% to $54,335 for the three months
ended June 30, 2010, compared to $55,878 for the three months ended June 30,
2009.  Direct client service costs include compensation and benefits
for client service employees, fees payable to contractors and other expenses
related to the execution of engagements.
 
 In
addition, direct client service costs include a charge of approximately $540
from certain management changes announced on April 22, 2010 related to the
departure of our former president and one of our segment leaders.  The
Company incurred a onetime charge associated with these changes of approximately
$3,550 in its second quarter of 2010 related to cash severance and the
accounting impact of the accelerated vesting of equity-based
awards.  Of this amount, approximately $540 was included as a charge
to direct client service costs, primarily for cash severance related to the
departure of one of our segment leaders.
 
 The
following table adjusts direct client service costs for equity-based
compensation associated with Legacy Units and IPO Options, reimbursable expenses
and a charge from the departure of our former president and one of our segment
leaders:
 
 Direct
Client Service Costs
 
 Three Months EndedJune 30,
                            
                            
                            June 30,2010
                            
                            
                            2009Revenues
      (excluding reimbursables)
                            
                            $
                            88,742
                            
                            
                            $
                            90,053Total
      direct client service costs
                            
                            $
                            54,335
                            
                            
                            $
                            55,878Less:  equity-based
      compensation associated with Legacy Units and IPO Options
                            
                            
                            (636
                            )
                            
                            
                            (3,548
                            )Less:  reimbursable
      expenses
                            
                            
                            (2,039
                            )
                            
                            
                            (2,637
                            )Less:  charge
      from realignment of senior management
                            
                            
                            (540
                            )
                            
                            
                            -Direct
      client service costs, as adjusted
                            
                            $
                            51,120
                            
                            
                            $
                            49,693Direct
      client service costs, as adjusted, as a percentage of
    revenues
                            
                            
                            57.6
                            %
                            
                            
                            55.2
                            %
 
 Direct
client service costs, as adjusted, increased between periods.  Higher
equity-compensation expense from incremental grants of Ongoing RSAs, severance
expense from a reduction in headcount and higher accrued compensation were
partially offset by lower compensation and benefits from the reduction in
headcount between periods.
 
 Equity-based
compensation from Legacy Units and IPO Options decreased between periods
primarily as a result of the accelerated attribution of expense on awards with
graded-tranche vesting in prior periods.
  32
  Operating
Expenses
 
 Operating
expenses increased $1,931 or 7.1% to $28,975 for the three months ended June 30,
2010, compared to $27,044 for the three months ended June 30,
2009.  The increase in operating expenses resulted from a $1,816 or
7.4% increase in selling, general and administrative expenses and $321 of merger
and acquisition costs.  Selling, general and administrative expenses
include a charge of approximately $3,010 from the departure of our former
president, including approximately $510 related to Legacy Units and IPO
Options.  Merger and acquisition costs resulted from our acquisition
of Cole and include professional fees, incremental marketing expenses and
incremental travel and entertainment.
 
 The
following table adjusts operating expenses for equity-based compensation
associated with Legacy Units and IPO Options, depreciation and amortization, a
charge from the departure of our former president and one of our segment leaders
and merger and acquisition costs:
 
 Operating
Expenses
 
 Three Months EndedJune 30,
                          
                          
                          June 30,2010
                          
                          
                          2009Revenues
      (excluding reimbursables)
                          
                          $
                          88,742
                          
                          
                          $
                          90,053Total
      operating expenses
                          
                          $
                          28,975
                          
                          
                          $
                          27,044Less:  equity-based
      compensation associated with Legacy Units and IPO Options
                          
                          
                          (858
                          )
                          
                          
                          (933
                          )Less:  depreciation
      and amortization
                          
                          
                          (2,350
                          )
                          
                          
                          (2,556
                          )Less:  charge
      from realignment of senior management (not included in equity-based
      compensation from Legacy Units and IPO Options above)
                          
                          
                          (2,500
                          )
                          
                          
                          -Less:  merger
      and acquisition costs
                          
                          
                          (321
                          )
                          
                          
                          -Operating
      expenses, as adjusted
                          
                          $
                          22,946
                          
                          
                          $
                          23,555Operating
      expenses, as adjusted, as a percentage of revenues
                          
                          
                          25.9
                          %
                          
                          
                          26.2
                          %
 
 Operating
expenses, as adjusted, decreased between periods primarily from lower
professional fees, bad debts and other general expenses.
 
 Equity-based
compensation from Legacy Units and  IPO Options decreased between
periods primarily as a result of the accelerated attribution of expense on
awards with graded-tranche vesting in prior periods, partially offset by the
charge incurred from our realignment of senior management (as described
above).
 
 Other
Income and Expenses
 
 Other
income and expenses include interest income, interest expense and other
expense.  Interest expense decreased primarily as a result of
repayment and termination of our former credit facility with General Electric
Capital Corporation in May 2009.
 
 Provision
for Income Taxes
 
 The
provision for income taxes was $2,506 or 35.2% of income before income taxes for
the three months ended June 30, 2010, compared to $2,421 or 31.8% of income
before income taxes for the three months ended June 30, 2009.  The
U.S. statutory income tax rate of 35% plus state and local
statutory rates were decreased to the effective tax rate due to the
fact that D&P Acquisitions, LLC and many of its subsidiaries operate as
limited liability companies or other flow-through entities which are not subject
to federal income tax.  This operating structure results in a rate benefit
because a portion of the Company’s earnings are not subject to corporate level
taxes.  This favorable impact is partially offset by an increase due to
state and local taxes, the effect of permanent differences and foreign
taxes.  The increase in the provision for income taxes as a percentage
of income before income taxes resulted primarily from a decrease in the rate
benefit from operating as an LLC, due to an increase in Duff & Phelps
Corporation’s ownership of D&P Acquisitions, LLC.
  33
  Net
Income Attributable to the Noncontrolling Interest
 
 Net income attributable to the
noncontrolling interest represents the portion of net income or loss before
income taxes attributable to the ownership interest in D&P Acquisitions held
by the existing unitholders to the extent the book value of their interest in
D&P Acquisitions is greater than zero.  This interest totaled
31.4% and 40.4% at June 30, 2010 and 2009, respectively.
 
 34
  Segment
Results – Three months ended June 30, 2010 versus three months ended June
30, 2009
 
 The
following table sets forth selected segment operating results:
 
 Results
of Operations by Segment
 
 Three Months EndedJune 30,
                                                                
                                                                
                                                                June 30,
                                                                
                                                                
                                                                Unit
                                                                
                                                                
                                                                Percent2010
                                                                
                                                                
                                                                2009
                                                                
                                                                
                                                                Change
                                                                
                                                                
                                                                ChangeFinancial
      AdvisoryRevenues
      (excluding reimbursables)
                                                                
                                                                $
                                                                54,234
                                                                
                                                                
                                                                $
                                                                57,906
                                                                
                                                                
                                                                $
                                                                (3,672
                                                                )
                                                                
                                                                
                                                                (6.3
                                                                )%Segment
      operating income
                                                                
                                                                $
                                                                8,449
                                                                
                                                                
                                                                $
                                                                10,339
                                                                
                                                                
                                                                $
                                                                (1,890
                                                                )
                                                                
                                                                
                                                                (18.3
                                                                )%Segment
      operating income margin
                                                                
                                                                
                                                                15.6
                                                                %
                                                                
                                                                
                                                                17.9
                                                                %
                                                                
                                                                
                                                                (2.3
                                                                )%
                                                                
                                                                
                                                                (12.8
                                                                )%Corporate
      Finance ConsultingRevenues
      (excluding reimbursables)
                                                                
                                                                $
                                                                13,319
                                                                
                                                                
                                                                $
                                                                14,978
                                                                
                                                                
                                                                $
                                                                (1,659
                                                                )
                                                                
                                                                
                                                                (11.1
                                                                )%Segment
      operating income
                                                                
                                                                $
                                                                1,177
                                                                
                                                                
                                                                $
                                                                3,178
                                                                
                                                                
                                                                $
                                                                (2,001
                                                                )
                                                                
                                                                
                                                                (63.0
                                                                )%Segment
      operating income margin
                                                                
                                                                
                                                                8.8
                                                                %
                                                                
                                                                
                                                                21.2
                                                                %
                                                                
                                                                
                                                                (12.4
                                                                )%
                                                                
                                                                
                                                                (58.5
                                                                )%Investment
      BankingRevenues
      (excluding reimbursables)
                                                                
                                                                $
                                                                21,189
                                                                
                                                                
                                                                $
                                                                17,169
                                                                
                                                                
                                                                $
                                                                4,020
                                                                
                                                                
                                                                
                                                                23.4
                                                                %Segment
      operating income
                                                                
                                                                $
                                                                5,050
                                                                
                                                                
                                                                $
                                                                3,288
                                                                
                                                                
                                                                $
                                                                1,762
                                                                
                                                                
                                                                
                                                                53.6
                                                                %Segment
      operating income margin
                                                                
                                                                
                                                                23.8
                                                                %
                                                                
                                                                
                                                                19.2
                                                                %
                                                                
                                                                
                                                                4.6
                                                                %
                                                                
                                                                
                                                                24.0
                                                                %TotalRevenues
      (excluding reimbursables)
                                                                
                                                                $
                                                                88,742
                                                                
                                                                
                                                                $
                                                                90,053Segment
      operating income
                                                                
                                                                $
                                                                14,676
                                                                
                                                                
                                                                $
                                                                16,805Net
      client reimbursable expenses
                                                                
                                                                
                                                                (77
                                                                )
                                                                
                                                                
                                                                (11
                                                                )Equity-based
      compensation fromLegacy
      Units and IPO Options
                                                                
                                                                
                                                                (1,494
                                                                )
                                                                
                                                                
                                                                (4,481
                                                                )Depreciation
      and amortization
                                                                
                                                                
                                                                (2,350
                                                                )
                                                                
                                                                
                                                                (2,556
                                                                )Charge
      from realignment of senior management (not included in equity-based
      compensation from Legacy Units and IPO Options above)
                                                                
                                                                
                                                                (3,040
                                                                )
                                                                
                                                                
                                                                -Merger
      and acquisition costs
                                                                
                                                                
                                                                (321
                                                                )
                                                                
                                                                
                                                                -Operating
      income
                                                                
                                                                $
                                                                7,394
                                                                
                                                                
                                                                $
                                                                9,757
 
 Average
      Client Service ProfessionalsFinancial
      Advisory
                    
                    
                    566
                    
                    
                    
                    658
                    
                    
                    
                    (92
                    )
                    
                    
                    (14.0
                    )%Corporate
      Finance Consulting
                    
                    
                    113
                    
                    
                    
                    134
                    
                    
                    
                    (21
                    )
                    
                    
                    (15.7
                    )%Investment
      Banking
                    
                    
                    127
                    
                    
                    
                    135
                    
                    
                    
                    (8
                    )
                    
                    
                    (5.9
                    )%Total
                    
                    
                    806
                    
                    
                    
                    927
                    
                    
                    
                    (121
                    )
                    
                    
                    (13.1
                    )%End
      of Period Client Service ProfessionalsFinancial
      Advisory
                    
                    
                    548
                    
                    
                    
                    640
                    
                    
                    
                    (92
                    )
                    
                    
                    (14.4
                    )%Corporate
      Finance Consulting
                    
                    
                    109
                    
                    
                    
                    136
                    
                    
                    
                    (27
                    )
                    
                    
                    (19.9
                    )%Investment
      Banking
                    
                    
                    125
                    
                    
                    
                    131
                    
                    
                    
                    (6
                    )
                    
                    
                    (4.6
                    )%Total
                    
                    
                    782
                    
                    
                    
                    907
                    
                    
                    
                    (125
                    )
                    
                    
                    (13.8
                    )%Revenue
      per Client Service ProfessionalFinancial
      Advisory
                    
                    $
                    96
                    
                    
                    $
                    88
                    
                    
                    $
                    8
                    
                    
                    
                    9.1
                    %Corporate
      Finance Consulting
                    
                    $
                    118
                    
                    
                    $
                    112
                    
                    
                    $
                    6
                    
                    
                    
                    5.4
                    %Investment
      Banking
                    
                    $
                    167
                    
                    
                    $
                    127
                    
                    
                    $
                    40
                    
                    
                    
                    31.5
                    %Total
                    
                    $
                    110
                    
                    
                    $
                    97
                    
                    
                    $
                    13
                    
                    
                    
                    13.4
                    %
  35
  Results
of Operations by Segment – Continued
  Three Months EndedJune 30,
                    
                    
                    June 30,
                    
                    
                    Unit
                    
                    
                    Percent2010
                    
                    
                    2009
                    
                    
                    Change
                    
                    
                    ChangeUtilization(1)Financial
      Advisory
                    
                    
                    63.9
                    %
                    
                    
                    62.3
                    %
                    
                    
                    1.6
                    %
                    
                    
                    2.6
                    %Corporate
      Finance Consulting
                    
                    
                    56.7
                    %
                    
                    
                    60.2
                    %
                    
                    
                    (3.5
                    )%
                    
                    
                    (5.8
                    )%Rate-Per-Hour(2)Financial
      Advisory
                    
                    $
                    356
                    
                    
                    $
                    328
                    
                    
                    $
                    28
                    
                    
                    
                    8.5
                    %Corporate
      Finance Consulting
                    
                    $
                    438
                    
                    
                    $
                    393
                    
                    
                    $
                    45
                    
                    
                    
                    11.5
                    %
 
 Revenues
      (excluding reimbursables)Financial
      Advisory
                                      
                                      $
                                      54,234
                                      
                                      
                                      $
                                      57,906
                                      
                                      
                                      $
                                      (3,672
                                      )
                                      
                                      
                                      (6.3
                                      )%Corporate
      Finance Consulting
                                      
                                      
                                      13,319
                                      
                                      
                                      
                                      14,978
                                      
                                      
                                      
                                      (1,659
                                      )
                                      
                                      
                                      (11.1
                                      )%Investment
      Banking
                                      
                                      
                                      21,189
                                      
                                      
                                      
                                      17,169
                                      
                                      
                                      
                                      4,020
                                      
                                      
                                      
                                      23.4
                                      %Total
                                      
                                      $
                                      88,742
                                      
                                      
                                      $
                                      90,053
                                      
                                      
                                      $
                                      (1,311
                                      )
                                      
                                      
                                      (1.5
                                      )%Average
      Number of Managing DirectorsFinancial
      Advisory
                                      
                                      
                                      91
                                      
                                      
                                      
                                      99
                                      
                                      
                                      
                                      (8
                                      )
                                      
                                      
                                      (8.1
                                      )%Corporate
      Finance Consulting
                                      
                                      
                                      30
                                      
                                      
                                      
                                      30
                                      
                                      
                                      
                                      -
                                      
                                      
                                      
                                      0.0
                                      %Investment
      Banking
                                      
                                      
                                      41
                                      
                                      
                                      
                                      39
                                      
                                      
                                      
                                      2
                                      
                                      
                                      
                                      5.1
                                      %Total
                                      
                                      
                                      162
                                      
                                      
                                      
                                      168
                                      
                                      
                                      
                                      (6
                                      )
                                      
                                      
                                      (3.6
                                      )%End
      of Period Managing DirectorsFinancial
      Advisory
                                      
                                      
                                      94
                                      
                                      
                                      
                                      96
                                      
                                      
                                      
                                      (2
                                      )
                                      
                                      
                                      (2.1
                                      )%Corporate
      Finance Consulting
                                      
                                      
                                      29
                                      
                                      
                                      
                                      31
                                      
                                      
                                      
                                      (2
                                      )
                                      
                                      
                                      (6.5
                                      )%Investment
      Banking
                                      
                                      
                                      40
                                      
                                      
                                      
                                      38
                                      
                                      
                                      
                                      2
                                      
                                      
                                      
                                      5.3
                                      %Total
                                      
                                      
                                      163
                                      
                                      
                                      
                                      165
                                      
                                      
                                      
                                      (2
                                      )
                                      
                                      
                                      (1.2
                                      )%Revenue
      per Managing DirectorFinancial
      Advisory
                                      
                                      $
                                      596
                                      
                                      
                                      $
                                      585
                                      
                                      
                                      $
                                      11
                                      
                                      
                                      
                                      1.9
                                      %Corporate
      Finance Consulting
                                      
                                      $
                                      444
                                      
                                      
                                      $
                                      499
                                      
                                      
                                      $
                                      (55
                                      )
                                      
                                      
                                      (11.0
                                      )%Investment
      Banking
                                      
                                      $
                                      517
                                      
                                      
                                      $
                                      440
                                      
                                      
                                      $
                                      77
                                      
                                      
                                      
                                      17.5
                                      %Total
                                      
                                      $
                                      548
                                      
                                      
                                      $
                                      536
                                      
                                      
                                      $
                                      12
                                      
                                      
                                      
                                      2.2
                                      %
 
 
 (1)
                    The
      utilization rate for any given period is calculated by dividing the number
      of hours incurred by client service professionals who worked on client
      assignments (including internal projects for the Company) during the
      period by the total available working hours for all of such client service
      professionals during the same period, assuming a 40 hour work week, less
      paid holidays and vacation days.  Financial Advisory utilization
      excludes approximately 60 client service professionals associated with
      Rash & Associates, L.P. (“Rash”), a wholly-owned subsidiary, due to
      the nature of the work
performed.
 (2)
                    Average
      billing rate-per-hour is calculated by dividing applicable revenues for
      the period by the number of hours worked on client assignments (including
      internal projects for the Company) during the same
      period.  Financial Advisory revenues used to calculate
      rate-per-hour exclude approximately $1,798 and $2,430 of revenues
      associated with Rash in the three months ended June 30, 2010 and 2009,
      respectively.
 
 For
segment reporting purposes, management uses certain estimates and assumptions to
allocate revenues and expenses.  Revenues and expenses attributable to
reportable segments are generally based on which segment and product line a
client service professional is a dedicated member.  As a result,
revenues recognized that relate to the cross utilization of client service
professionals across reportable segments occur each period depending on the
expertise required for each engagement.  In particular, the Financial
Advisory segment (primarily Valuation Advisory services) recognized revenues of
$1,247 and $2,245 from the cross utilization of its client service professionals
on engagements from the Corporate Finance Consulting segment (primarily
Portfolio Valuation services) in the three months ended June 30, 2010 and 2009,
respectively.
 
 36
  Financial
Advisory
 
 Revenues
  Revenues
from the Financial Advisory segment decreased $3,672 or 6.3% to $54,234 for the
three months ended June 30, 2010, compared to $57,906 for the three months ended
June 30, 2009.  The overall decline resulted from a decrease in
revenues from Valuation Advisory and Dispute & Legal Management Consulting
business units, as summarized in the following table:
 
 Three Months EndedJune 30,
                          
                          
                          June 30,
                          
                          
                          Dollar
                          
                          
                          Percent2010
                          
                          
                          2009
                          
                          
                          Change
                          
                          
                          ChangeFinancial
      AdvisoryValuation
      Advisory
                          
                          $
                          32,829
                          
                          
                          $
                          33,772
                          
                          
                          $
                          (943
                          )
                          
                          
                          (2.8
                          )%Tax
      Services
                          
                          
                          12,089
                          
                          
                          
                          11,972
                          
                          
                          
                          117
                          
                          
                          
                          1.0
                          %Dispute
      & Legal Management Consulting(1)
                          
                          
                          9,316
                          
                          
                          
                          12,162
                          
                          
                          
                          (2,846
                          )
                          
                          
                          (23.4
                          )%$
                          54,234
                          
                          
                          $
                          57,906
                          
                          
                          $
                          (3,672
                          )
                          
                          
                          (6.3
                          )%
 
 
 (1)
                  Includes
      $547 of revenue from our acquisition of Cole Valuation Partners Limited
      effective June 15, 2010.
 
 Our
Financial Advisory segment was impacted by lower revenues from Dispute &
Legal Management Consulting and Valuation Advisory.  Dispute &
Legal Management Consulting (and to a lesser extent certain business units in
our Corporate Finance Consulting segment) was impacted by the winding down in
the first half of 2010 of an engagement to serve as a financial advisor to
the court appointed examiner of a large financial services company under
bankruptcy protection.  Our results for the second quarter include
approximately $2,700 of revenue from this assignment, primarily recognized in
the Financial Advisory and Corporate Finance Consulting segments, compared to
approximately $7,700 of revenue recognized in the corresponding prior year
quarter.
 
 Valuation
Advisory was impacted by a reduction of goodwill impairment testing due to the
improvement in the overall economic environment, as the corresponding prior year
quarter benefited from a significant volume of goodwill impairment testing
as a result of the fallout from the financial crisis.  The decrease in
revenues from goodwill impairment testing was partially offset by an increase in
revenues from purchase price allocations and a higher volume of real estate
valuation work.
 
 The
increase in revenues from Tax Services primarily resulted
from property tax contingent fees and transfer pricing activity, partially
offset by the departure of staff during the first half of
2010 associated with World Tax Service US, LLC (which we acquired
in July 2008) and a related practice.
 
 Segment
Operating Income
  Financial
Advisory segment operating income decreased $1,890 or 18.3% to $8,449 for the
three months ended June 30, 2010, compared to $10,339 for the three months ended
June 30, 2009.  Segment operating income margin, defined as segment
operating income expressed as a percentage of segment revenues, was 15.6% for
the three months ended June 30, 2010, compared to 17.9% for the three months
ended June 30, 2009.  Segment operating income and margin decreased as
a result of lower revenues which led to a corresponding increase in direct
client service costs as a percentage of revenues and from higher
equity-compensation expense from incremental grants of Ongoing
RSAs.
  37
  Corporate
Finance Consulting
 
 Revenues
  Revenues
from the Corporate Finance Consulting segment decreased $1,659 or 11.1% to
$13,319 for the three months ended June 30, 2010, compared to $14,978 for the
three months ended June 30, 2009.  Lower revenues from Financial
Engineering and Strategic Value Advisory were partially offset by higher
revenues from Due Diligence and Portfolio Valuation, as summarized in the
following table:
 
 Three Months EndedJune 30,
                        
                        
                        June 30,
                        
                        
                        Dollar
                        
                        
                        Percent2010
                        
                        
                        2009
                        
                        
                        Change
                        
                        
                        ChangeCorporate
      Finance ConsultingPortfolio
      Valuation
                        
                        $
                        4,642
                        
                        
                        $
                        4,338
                        
                        
                        $
                        304
                        
                        
                        
                        7.0
                        %Financial
      Engineering
                        
                        
                        3,355
                        
                        
                        
                        5,159
                        
                        
                        
                        (1,804
                        )
                        
                        
                        (35.0
                        )%Strategic
      Value Advisory
                        
                        
                        2,883
                        
                        
                        
                        3,588
                        
                        
                        
                        (705
                        )
                        
                        
                        (19.6
                        )%Due
      Diligence
                        
                        
                        2,439
                        
                        
                        
                        1,893
                        
                        
                        
                        546
                        
                        
                        
                        28.8
                        %$
                        13,319
                        
                        
                        $
                        14,978
                        
                        
                        $
                        (1,659
                        )
                        
                        
                        (11.1
                        )%
 
 Our
Corporate Finance Consulting segment was impacted by lower revenues from
Financial Engineering and Strategic Value Advisory, primarily due to lower
revenues from an engagement to serve as a financial advisor to the court
appointed examiner of a large financial services company under bankruptcy
protection (as described in Financial Advisory above).  Our Due
Diligence business, however, grew sequentially and as compared to the
corresponding prior year quarter from an increase in M&A
related activity.
 
 Segment
Operating Income
  Operating
income from the Corporate Finance Consulting segment decreased $2,001 or 63.0%
to $1,177 for the three months ended June 30, 2010, compared to $3,178 for the
three months ended June 30, 2009.  Segment operating income margin was
8.8% for the three months ended June 30, 2010, compared to 21.2% for the three
months ended June 30, 2009.  The decrease in segment operating income
and margin primarily resulted from lower revenues and an increase in direct
client service costs as a percentage of revenues, principally from higher
equity-compensation expense from incremental grants of Ongoing
RSAs.
 
 Investment
Banking
 
 Revenues
  Revenues
from the Investment Banking segment increased $4,020 or 23.4% to $21,189 for the
three months ended June 30, 2010, compared to $17,169 for the three months ended
June 30, 2009, as summarized in the following table:
 
 Three Months EndedJune 30,
                        
                        
                        June 30,
                        
                        
                        Dollar
                        
                        
                        Percent2010
                        
                        
                        2009
                        
                        
                        Change
                        
                        
                        ChangeInvestment
      BankingGlobal
      Restructuring Advisory
                        
                        $
                        12,004
                        
                        
                        $
                        8,614
                        
                        
                        $
                        3,390
                        
                        
                        
                        39.4
                        %Transaction
      Opinions
                        
                        
                        6,041
                        
                        
                        
                        6,180
                        
                        
                        
                        (139
                        )
                        
                        
                        (2.2
                        )%M&A
      Advisory
                        
                        
                        3,144
                        
                        
                        
                        2,375
                        
                        
                        
                        769
                        
                        
                        
                        32.4
                        %$
                        21,189
                        
                        
                        $
                        17,169
                        
                        
                        $
                        4,020
                        
                        
                        
                        23.4
                        %
 
 Global
Restructuring Advisory benefited from success fees related to our domestic and
international restructuring services.  Revenues from M&A Advisory
increased as a result of a higher level of transactional activity.
 
 Segment
Operating Income
  Operating
income from the Investment Banking segment increased $1,762 or 53.6% to $5,050
for the three months ended June 30, 2010, compared to $3,288 for the three
months ended June 30, 2009.  Operating income margin was 23.8% for the
three months ended June 30, 2010, compared to 19.2% for the three months ended
June 30, 2009.  The increase in segment operating income and margin
resulted from higher revenues driven in part by additional success
fees.
  38
  Six
months ended June 30, 2010 versus six months ended June 30, 2009
 
 The
results of operations are summarized as follows:
 
 Six Months EndedJune 30,
                            
                            
                            June 30,
                            
                            
                            Unit
                            
                            
                            Percent2010
                            
                            
                            2009
                            
                            
                            Change
                            
                            
                            ChangeRevenues
                            
                            $
                            177,906
                            
                            
                            $
                            179,318
                            
                            
                            $
                            (1,412
                            )
                            
                            
                            (0.8
                            )%Reimbursable
      expenses
                            
                            
                            4,760
                            
                            
                            
                            4,663
                            
                            
                            
                            97
                            
                            
                            
                            2.1
                            %Total
      revenues
                            
                            
                            182,666
                            
                            
                            
                            183,981
                            
                            
                            
                            (1,315
                            )
                            
                            
                            (0.7
                            )%Direct
      client service costsCompensation
      and benefits(1)
                            
                            
                            99,013
                            
                            
                            
                            102,828
                            
                            
                            
                            (3,815
                            )
                            
                            
                            (3.7
                            )%Other
      direct client service costs
                            
                            
                            3,869
                            
                            
                            
                            2,847
                            
                            
                            
                            1,022
                            
                            
                            
                            35.9
                            %Reimbursable
      expenses
                            
                            
                            4,893
                            
                            
                            
                            4,652
                            
                            
                            
                            241
                            
                            
                            
                            5.2
                            %107,775
                            
                            
                            
                            110,327
                            
                            
                            
                            (2,552
                            )
                            
                            
                            (2.3
                            )%Operating
      expensesSelling,
      general and administrative(2)
                            
                            
                            50,388
                            
                            
                            
                            49,428
                            
                            
                            
                            960
                            
                            
                            
                            1.9
                            %Depreciation
      and amortization
                            
                            
                            4,843
                            
                            
                            
                            5,118
                            
                            
                            
                            (275
                            )
                            
                            
                            (5.4
                            )%Charge
      from impairment of certain intangible assets
                            
                            
                            674
                            
                            
                            
                            -
                            
                            
                            
                            674
                            
                            
                            
                            -Merger
      and acquisition costs
                            
                            
                            321
                            
                            
                            
                            -
                            
                            
                            
                            321
                            
                            
                            
                            -56,226
                            
                            
                            
                            54,546
                            
                            
                            
                            1,680
                            
                            
                            
                            3.1
                            %Operating
      income
                            
                            
                            18,665
                            
                            
                            
                            19,108
                            
                            
                            
                            (443
                            )
                            
                            
                            (2.3
                            )%Other
      expense/(income), netInterest
      income
                            
                            
                            (77
                            )
                            
                            
                            (17
                            )
                            
                            
                            (60
                            )
                            
                            
                            352.9
                            %Interest
      expense
                            
                            
                            168
                            
                            
                            
                            988
                            
                            
                            
                            (820
                            )
                            
                            
                            (83.0
                            )%Loss
      on early extinguishment of debt
                            
                            
                            -
                            
                            
                            
                            1,737
                            
                            
                            
                            (1,737
                            )
                            
                            
                            (100.0
                            )%Other
      expense
                            
                            
                            232
                            
                            
                            
                            87
                            
                            
                            
                            145
                            
                            
                            
                            166.7
                            %323
                            
                            
                            
                            2,795
                            
                            
                            
                            (2,472
                            )
                            
                            
                            (88.4
                            )%Income
      before income taxes
                            
                            
                            18,342
                            
                            
                            
                            16,313
                            
                            
                            
                            2,029
                            
                            
                            
                            12.4
                            %Provision
      for income taxes
                            
                            
                            6,156
                            
                            
                            
                            4,533
                            
                            
                            
                            1,623
                            
                            
                            
                            35.8
                            %Net
      income
                            
                            
                            12,186
                            
                            
                            
                            11,780
                            
                            
                            
                            406
                            
                            
                            
                            3.4
                            %Less:  Net
      income attributable to noncontrolling interest
                            
                            
                            5,406
                            
                            
                            
                            8,281
                            
                            
                            
                            (2,875
                            )
                            
                            
                            (34.7
                            )%Net
      income attributable to Duff & Phelps Corporation
                            
                            $
                            6,780
                            
                            
                            $
                            3,499
                            
                            
                            $
                            3,281
                            
                            
                            
                            93.8
                            %Other
      financial and operating dataAdjusted
      EBITDA(3)
                            
                            $
                            30,120
                            
                            
                            $
                            31,959
                            
                            
                            $
                            (1,839
                            )
                            
                            
                            (5.8
                            )%Adjusted
      EBITDA(3)
      as a percentage of revenues
                            
                            
                            16.9
                            %
                            
                            
                            17.8
                            %
                            
                            
                            (0.9
                            )%
                            
                            
                            (5.1
                            )%Adusted
      Pro Forma Net Income(3)
                            
                            $
                            14,485
                            
                            
                            $
                            15,083
                            
                            
                            $
                            (593
                            )
                            
                            
                            (3.9
                            )%Adusted
      Pro Forma Net Income per fully exchanged, fully diluted share
      outstanding(3)
                            
                            $
                            0.37
                            
                            
                            $
                            0.42
                            
                            
                            $
                            (0.05
                            )
                            
                            
                            (11.9
                            )%End
      of period managing directors
                            
                            
                            163
                            
                            
                            
                            165
                            
                            
                            
                            (2
                            )
                            
                            
                            (1.2
                            )%End
      of period client service professionals
                            
                            
                            782
                            
                            
                            
                            907
                            
                            
                            
                            (125
                            )
                            
                            
                            (13.8
                            )%
 
 
 (1)
                  Compensation
      and benefits include $7,932 and $9,338 of equity-based compensation
      expense for the six months ended June 30, 2010 and 2009,
      respectively.
  (2)
                  Selling,
      general and administrative expenses include $3,458 and $3,556 of
      equity-based compensation expense for the six months ended June 30, 2010
      and 2009, respectively.
  39
 
 (3)
                  Adjusted
      EBITDA, Adjusted Pro Forma Net Income, and Adjusted Pro Forma Net Income
      per share are non-GAAP financial measures.  We believe that
      Adjusted EBITDA provides a relevant and useful alternative measure of our
      ongoing profitability and performance, when viewed in conjunction with
      GAAP measures, as it adjusts net income or loss attributable to Duff &
      Phelps Corporation for (a) net income or loss attributable to
      noncontrolling interest, (b) provision for income taxes, (c) interest
      expense and depreciation and amortization (a significant portion of which
      relates to debt and capital investments that have been incurred as the
      result of acquisitions and investments in stand-alone infrastructure which
      we do not expect to incur at the same levels in the future), (d)
      equity-based compensation associated with the Legacy Units of D&P
      Acquisitions, a significant portion of which is due to certain onetime
      grants associated with acquisitions prior to our IPO, and options to
      purchase shares of the Company’s Class A common stock granted in
      connection with the IPO, (e) impairment charges, acquisition retention
      expenses and other merger and acquisition costs, which are generally
      non-recurring in nature or are related to deferred payments associated
      with prior acquisitions, and (f) costs incurred from the realignment of
      our senior management which are generally non-recurring in nature and
      primarily include cash severance and charges from the accounting impact of
      the acceleration of vesting of restricted stock
  awards.
 
 Given the
level of acquisition activity during the period prior to our IPO, and related
capital investments and one time equity grants associated with acquisitions
during the this period (which we do not expect to incur at the same levels post
IPO) and the IPO, and our belief that, as a professional services organization,
our operations are not capital intensive on an ongoing basis, we believe the
Adjusted EBITDA measure, in addition to GAAP financial measures, provides a
relevant and useful benchmark for investors, in order to assess our financial
performance and comparability to other companies in our industry.  The
Adjusted EBITDA measure is utilized by our senior management to evaluate our
overall performance and operating expense characteristics and to compare our
performance to that of certain of our competitors.  A measure similar
to Adjusted EBITDA is the principal measure that determines the compensation of
our senior management team.  In addition, a measure similar to
Adjusted EBITDA is a key measure that determines compliance with certain
financial covenants under our credit facility.  Management compensates
for the inherent limitations associated with using the Adjusted EBITDA measure
through disclosure of such limitations, presentation of our financial statements
in accordance with GAAP and reconciliation of Adjusted EBITDA to the most
directly comparable GAAP measure, net income or loss.  Furthermore,
management also reviews GAAP measures, and evaluates individual measures that
are not included in Adjusted EBITDA such as our level of capital expenditures,
equity issuance and interest expense, among other measures.
 
 Adjusted
EBITDA, as defined by the Company and reconciled below, consists of net income
or loss attributable to Duff & Phelps Corporation before (a) net income or
loss attributable to the noncontrolling interest, (b) provision for income
taxes, (c) other expense/(income), net, (d) depreciation and amortization, (e)
charges from impairment of intangible assets, (f) equity-based compensation
associated with Legacy Units and IPO Options included in both compensation and
benefits and in selling, general and administrative expenses, (g) acquisition
retention expenses, (h) cash severance and equity-compensation expense from the
acceleration of vesting of restricted stock awards due to the realignment of our
senior management, and (i) merger and acquisition costs:
 
 Reconciliation
of Adjusted EBITDA
 
 Six Months EndedJune 30,
                        
                        
                        June 30,2010
                        
                        
                        2009Revenues
      (excluding client reimbursables)
                        
                        $
                        177,906
                        
                        
                        $
                        179,318Net
      income attributable to Duff & Phelps Corporation
                        
                        $
                        6,780
                        
                        
                        $
                        3,499Net
      income attributable to noncontrolling interest
                        
                        
                        5,406
                        
                        
                        
                        8,281Provision
      for income taxes
                        
                        
                        6,156
                        
                        
                        
                        4,533Other
      expense/(income), net
                        
                        
                        323
                        
                        
                        
                        2,795Depreciation
      and amortization
                        
                        
                        4,843
                        
                        
                        
                        5,118Charge
      from impairment of certain intangible assets
                        
                        
                        674
                        
                        
                        
                        -Equity-based
      compensation associated with Legacy Units and IPO Options
                        
                        
                        2,577
                        
                        
                        
                        7,733Charge
      from realignment of senior management (not included in equity-based
      compensation from Legacy Units and IPO Options above)(4)
                        
                        
                        3,040
                        
                        
                        
                        -Merger
      and acquisition costs
                        
                        
                        321
                        
                        
                        
                        -Adjusted
      EBITDA
                        
                        $
                        30,120
                        
                        
                        $
                        31,959Adjusted
      EBITDA as a percentage of revenues
                        
                        
                        16.9
                        %
                        
                        
                        17.8
                        %
 
 40


Adjusted
Pro Forma Net Income, as defined by Duff & Phelps and reconciled below,
consists of net income or loss attributable to Duff & Phelps Corporation
before (a) net income or loss attributable to the noncontrolling interest, (b) a
non-recurring charge from the repayment and subsequent termination of our former
credit agreement, (c) equity-based compensation associated with Legacy Units and
IPO Options included in both compensation and benefits and in selling, general
and administrative expenses, (d) acquisition retention expenses, (e) cash
severance and equity-compensation expense from the acceleration of vesting of
restricted stock awards due to the realignment of our senior management, (f)
merger and acquisition costs, and less (g) pro forma corporate income tax
applied at an assumed rate as specified in the applicable footnote (such assumed
pro forma corporate income tax rate may fluctuate between periods and may
include true-ups relating to prior periods, based on management estimates and
judgments). Adjusted Pro Forma Net Income per share, as defined by Duff &
Phelps, consists of Adjusted Pro Forma Net Income divided by the weighted
average number of the Company's Class A and Class B shares for the applicable
period, giving effect to the dilutive impact, if any, of stock options and
restricted stock awards.





Reconciliation
of Adjusted Pro Forma Net Income





Six Months EndedJune 30,
                    
                    
                    June 30,2010
                    
                    
                    2009Net
      income attributable to Duff & Phelps Corporation
                    
                    $
                    6,780
                    
                    
                    $
                    3,499Net
      income attributable to noncontrolling interest(a)
                    
                    
                    5,406
                    
                    
                    
                    8,281Loss
      on early extinguishment of debt(b)
                    
                    
                    -
                    
                    
                    
                    1,737Equity-based
      compensation associated with Legacy Units and IPO Options(c)
                    
                    
                    2,577
                    
                    
                    
                    7,733Charge
      from realignment of senior management (not included in equity-based
      compensation from Legacy Units and IPO Options above)(4)
                    
                    
                    3,040
                    
                    
                    
                    -Merger
      and acquisition costs
                    
                    
                    321
                    
                    
                    
                    -Adjustment
      to provision for income taxes(d)
                    
                    
                    (3,639
                    )
                    
                    
                    (6,167
                    )Adjusted
      Pro Forma Net Income, as defined
                    
                    $
                    14,485
                    
                    
                    $
                    15,083Pro
      forma fully exchanged, fully diluted shares outstanding(e)
                    
                    
                    38,850
                    
                    
                    
                    35,818Adjusted
      Pro Forma Net Income per fully exchanged, fully diluted share
      outstanding
                    
                    $
                    0.37
                    
                    
                    $
                    0.42








(a)
              Represents
      elimination of the noncontrolling interest associated with the ownership
      by existing unitholders of D&P Acquisitions (excluding D&P
      Corporation), as if such unitholders had fully exchanged their partnership
      units and Class B common stock of the Company for shares of Class A common
      stock of the Company.


(b)
              Represents
      a non-recurring charge from the repayment and subsequent termination of
      our credit agreement.


(c)
              Represents
      elimination of equity-based compensation associated with Legacy Units and
      IPO Options.


(d)
              Represents
      an adjustment to reflect an assumed effective corporate tax rate of
      approximately 40.3% and 41.5% for the full year, as applied to the six
      months ended June 30, 2010 and 2009, respectively, which includes a
      provision for U.S. federal income taxes and assumes the highest statutory
      rates apportioned to each state, local and/or foreign jurisdiction.
      Assumes full exchange of existing unitholders' partnership units and Class
      B common stock of the Company into Class A common stock of the
      Company.


(e)
              Based
      on the weighted-average number of aggregated Class A and Class B shares of
      common stock outstanding, excluding Ongoing RSAs, and dilutive effect of
      Ongoing RSAs for the three months ended June 30, 2010 and 2009,
      respectively. The Company believes that IPO Options would not be
      considered dilutive when applying the treasury
  method.





Both
Adjusted EBITDA and Adjusted Pro Forma Net Income are non-GAAP financial
measures which are not prepared in accordance with, and should not be considered
alternatives to, measurements required by GAAP, such as operating income, net
income or loss, net income or loss per share, cash flow from continuing
operating activities or any other measure of performance or liquidity derived in
accordance with GAAP. The presentation of this additional information is not
meant to be considered in isolation or as a substitute for the most directly
comparable GAAP measures. In addition, it should be noted that companies
calculate Adjusted EBITDA and Adjusted Pro Forma Net Income differently and,
therefore, Adjusted EBITDA and Adjusted Pro Forma Net Income as presented for us
may not be comparable to Adjusted EBITDA and Adjusted Pro Forma Net Income
reported by other companies.


41


(4)
            On
      April 22, 2010, we announced certain management changes related to the
      departure of our former president and one of our segment leaders. We
      incurred a onetime charge associated with these changes of approximately
      $3,550 in our second quarter of 2010 related to cash severance and the
      accounting impact of accelerated vesting of equity-based awards. Of this
      amount, approximately $3,040 primarily resulted from cash severance and a
      charge from the accelerated vesting of restricted stock awards which is
      added back to Adjusted EBITDA and Adjusted Pro Forma Net Income. The
      remaining $510 related to a charge from the accelerated vesting of Legacy
      Units and IPO Options which is also added back to Adjusted EBITDA and
      Adjusted Pro Forma Net Income consistent with prior
      presentation.





Revenues





Revenues
excluding reimbursable expenses decreased $1,412 or 0.8% to $177,906 for the six
months ended June 30, 2010, compared to $179,318 for the six months ended June
30, 2009. The decrease in revenues primarily resulted from a decrease in
revenues from our Financial Advisory and Corporate Finance Consulting segments,
partially offset by an increase in revenues from our Investment Banking segment,
as summarized in the following table:





Six Months EndedJune 30,
                          
                          
                          June 30,
                          
                          
                          Dollar
                          
                          
                          Percent2010
                          
                          
                          2009
                          
                          
                          Change
                          
                          
                          ChangeFinancial
      AdvisoryValuation
      Advisory
                          
                          $
                          67,849
                          
                          
                          $
                          74,142
                          
                          
                          $
                          (6,293
                          )
                          
                          
                          (8.5
                          )%Tax
Services
                          
                          
                          21,536
                          
                          
                          
                          22,850
                          
                          
                          
                          (1,314
                          )
                          
                          
                          (5.8
                          )%Dispute & Legal Management
      Consulting (1)
                          
                          
                          18,731
                          
                          
                          
                          21,805
                          
                          
                          
                          (3,074
                          )
                          
                          
                          (14.1
                          )%108,116
                          
                          
                          
                          118,797
                          
                          
                          
                          (10,681
                          )
                          
                          
                          (9.0
                          )%Corporate Finance
      ConsultingPortfolio
      Valuation
                          
                          
                          10,124
                          
                          
                          
                          10,633
                          
                          
                          
                          (509
                          )
                          
                          
                          (4.8
                          )%Financial
      Engineering
                          
                          
                          7,481
                          
                          
                          
                          9,307
                          
                          
                          
                          (1,826
                          )
                          
                          
                          (19.6
                          )%Strategic Value
      Advisory
                          
                          
                          6,041
                          
                          
                          
                          6,208
                          
                          
                          
                          (167
                          )
                          
                          
                          (2.7
                          )%Due
    Diligence
                          
                          
                          4,609
                          
                          
                          
                          3,446
                          
                          
                          
                          1,163
                          
                          
                          
                          33.7
                          %28,255
                          
                          
                          
                          29,594
                          
                          
                          
                          (1,339
                          )
                          
                          
                          (4.5
                          )%Investment
      BankingGlobal Restructuring
      Advisory
                          
                          
                          21,845
                          
                          
                          
                          14,192
                          
                          
                          
                          7,653
                          
                          
                          
                          53.9
                          %Transaction
      Opinions
                          
                          
                          12,864
                          
                          
                          
                          12,281
                          
                          
                          
                          583
                          
                          
                          
                          4.7
                          %M&A
      Advisory
                          
                          
                          6,826
                          
                          
                          
                          4,454
                          
                          
                          
                          2,372
                          
                          
                          
                          53.3
                          %41,535
                          
                          
                          
                          30,927
                          
                          
                          
                          10,608
                          
                          
                          
                          34.3
                          %Total Revenues (excluding
      reimbursables)
                          
                          $
                          177,906
                          
                          
                          $
                          179,318
                          
                          
                          $
                          (1,412
                          )
                          
                          
                          (0.8
                          )%







(1)
              Includes
      $547 of revenue from our acquisition of Cole Valuation Partners Limited
      effective June 15, 2010.





Our
Financial Advisory segment was impacted by lower revenues from each business
unit. Valuation Advisory was impacted by a reduction of goodwill impairment
testing due to the improvement in the overall economic environment, as the
corresponding prior year period benefited from a significant volume of
goodwill impairment testing as a result of the fallout from the financial
crisis. This decrease was partially offset by an increase in revenues from
purchase price allocations and a higher volume of real estate valuation work.
The decrease in revenues from Tax Services primarily resulted from the
departure of staff during the first half of 2010 associated with World
Tax Service US, LLC (which we acquired in July 2008) and a related
practice, partially offset by an increase in revenues from property tax
contingent fees and transfer pricing activity. Dispute & Legal Management
Consulting (and to a lesser extent certain business units in our Corporate
Finance Consulting segment) was impacted by lower revenues from an engagement to
serve as a financial advisor to the court appointed examiner of a large
financial services company under bankruptcy protection. This engagement wound
down during the first half of 2010.





Our
Corporate Finance Consulting segment was impacted by lower revenues from
Portfolio Valuation, Financial Engineering and Strategic Value Advisory.
Financial Engineering and Strategic Value Advisory were primarily impacted by
lower revenues from an engagement to serve as a financial advisor to the court
appointed examiner of a large financial services company under bankruptcy
protection (as described above). Our Due Diligence business, however, grew 
sequentially and as compared to results from the corresponding prior
year period from an increase in M&A related activity.




42


Each of
our business units in the Investment Banking segment demonstrated continued
strength, especially Global Restructuring Advisory and M&A Advisory, versus
the corresponding prior year period.





Our
client service headcount decreased to 782 client service professionals at June
30, 2010, compared to 878 client service professionals at December 31, 2009.
This decrease resulted from targeted reductions and attrition, partially offset
by the addition of 20 client service professionals from our acquisition of
Cole  and targeted hiring of professionals with specific
expertise.





We had
163 client service managing directors at June 30, 2010, compared to 163 at
December 31, 2009. We added 17 managing directors from our acquisition of
Cole, internal promotions and limited hiring. These additions were
principally offset by targeted reductions.





Direct
Client Service Costs





Direct
client service costs decreased $2,552 or 2.3% to $107,775 for the six months
ended June 30, 2010, compared to $110,327 for the six months ended June 30,
2009. Direct client service costs include compensation and benefits for client
service employees, fees payable to contractors and other expenses related to the
execution of engagements.





In
addition, direct client service costs include a charge of approximately $540
from certain management changes announced on April 22, 2010, including the
departure of our former president and one of our segment leaders. The Company
incurred a onetime charge associated with these changes of approximately $3,550
in its second quarter of 2010 related to cash severance and the accounting
impact of the accelerated vesting of equity-based awards. Of this amount,
approximately $540 was included as a charge to direct client service costs,
primarily for cash severance related to the departure of one of our segment
leaders.





The
following table adjusts direct client service costs for equity-based
compensation associated with Legacy Units and IPO Options, reimbursable expenses
and the charge from the departure of our former president and one of our segment
leaders:





Direct
Client Service Costs





Six Months EndedJune 30,
                      
                      
                      June 30,2010
                      
                      
                      2009Revenues
      (excluding reimbursables)
                      
                      $
                      177,906
                      
                      
                      $
                      179,318Total
      direct client service costs
                      
                      $
                      107,775
                      
                      
                      $
                      110,327Less: 
      equity-based compensation associated with Legacy Units and IPO
      Options
                      
                      
                      (1,234
                      )
                      
                      
                      (5,880
                      )Less: 
      reimbursable expenses
                      
                      
                      (4,893
                      )
                      
                      
                      (4,652
                      )Less: 
      charge from realignment of senior management
                      
                      
                      (540
                      )Direct
      client service costs, as adjusted
                      
                      $
                      101,108
                      
                      
                      $
                      99,795Direct
      client service costs, as adjusted, as a percentage of
    revenues
                      
                      
                      56.8
                      %
                      
                      
                      55.7
                      %





Direct
client service costs, as adjusted, increased between periods. Higher
equity-compensation expense from incremental grants of Ongoing RSAs, severance
expense from a reduction in headcount and higher accrued compensation were
partially offset by lower compensation and benefits from the reduction in
headcount between periods.





Equity-based
compensation from Legacy Units and IPO Options decreased between periods
primarily as a result of the accelerated attribution of expense on awards with
graded-tranche vesting in prior periods for Legacy Units and IPO
Options.


43


Operating
Expenses





Operating
expenses increased $1,680 or 3.1% to $56,226 for the six months ended June 30,
2010, compared to $54,546 for the six months ended June 30, 2009. Selling,
general and administrative expenses include a charge of approximately $3,010
from the departure of our former president, including approximately $510 related
to Legacy Units and IPO Options. In addition, operating expenses include a $674
onetime charge from the impairment of certain intangible assets that originated
from our acquisition of WTS in July 2008. The impairment resulted from the
departure of the two managing directors who ran this group and associated staff
in March 2010. WTS operated as part of our Financial Advisory segment. Also,
merger and acquisition costs resulted from our acquisition of Cole and include
professional fees, incremental marketing expenses and incremental travel and
entertainment.





The
following table adjusts operating expenses for equity-based compensation
associated with Legacy Units and IPO Options, depreciation and amortization, a
charge to impair certain intangible assets, the charge from the departure of our
former president and one of our segment leaders and merger and acquisition
costs:





Operating
Expenses





Six Months EndedJune
      30,
                      
                      
                      June
      30,2010
                      
                      
                      2009Revenues
      (excluding reimbursables)
                      
                      $
                      177,906
                      
                      
                      $
                      179,318Total
      operating expenses
                      
                      $
                      56,226
                      
                      
                      $
                      54,546Less: 
      equity-based compensation associated with Legacy Units and IPO
      Options
                      
                      
                      (1,343
                      )
                      
                      
                      (1,853
                      )Less: 
      depreciation and amortization
                      
                      
                      (4,843
                      )
                      
                      
                      (5,118
                      )Less: 
      charge to impair certain intangible assets
                      
                      
                      (674
                      )
                      
                      
                      -Less: 
      charge from realignment of senior management (not included in equity-based
      compensation from Legacy Units and IPO Options above)
                      
                      
                      (2,500
                      )
                      
                      
                      -Less: 
      merger and acquisition costs
                      
                      
                      (321
                      )
                      
                      
                      -Operating
      expenses, as adjusted
                      
                      $
                      46,545
                      
                      
                      $
                      47,575Operating
      expenses, as adjusted, as a percentage of revenues
                      
                      
                      26.2
                      %
                      
                      
                      26.5
                      %





Operating
expenses, as adjusted, decreased between periods primarily from lower
professional fees and other general expenses.





Equity-based
compensation from Legacy Units and IPO Options decreased between periods
primarily as a result of the accelerated attribution of expense on awards with
graded-tranche vesting in prior periods, partially offset by the charge incurred
from our realignment of senior management (as described above).





Other
Income and Expenses





Other
income and expenses include interest income, interest expense and other expense.
Interest expense decreased primarily as a result of repayment and termination of
our former credit facility with General Electric Capital Corporation in May
2009.





Provision
for Income Taxes





The
provision for income taxes was $6,156 or 33.6% of income before income taxes for
the six months ended June 30, 2010, compared to $4,533 or 27.8% of income before
income taxes for the six months ended June 30, 2009. The U.S. statutory income
tax rate of 35% plus state and local statutory rates were decreased to
the effective tax rate due to the fact that D&P Acquisitions, LLC and many
of its subsidiaries operate as limited liability companies or other flow-through
entities which are not subject to federal income tax. This operating structure
results in a rate benefit because a portion of the Company’s earnings are not
subject to corporate level taxes. This favorable impact is partially offset by
an increase due to state and local taxes, the effect of permanent differences
and foreign taxes. The increase in the provision for income taxes as a
percentage of income before income taxes resulted primarily from a decrease in
the rate benefit from operating as an LLC, due to an increase in Duff &
Phelps Corporation’s ownership of D&P Acquisitions, LLC.


44


Net
Income Attributable to the Noncontrolling Interest





Net
income attributable to the noncontrolling interest represents the portion of net
income or loss before income taxes attributable to the ownership interest in
D&P Acquisitions held by the existing unitholders to the extent the book
value of their interest in D&P Acquisitions is greater than zero. This
interest totaled 31.4% and 40.4% at June 30, 2010 and 2009,
respectively.


45


Segment
Results – Six months ended June 30, 2010 versus six months ended June 30,
2009





The
following table sets forth selected segment operating results:


46


Results of Operations by
Segment





SixMonthsEndedJune30,
                                    
                                    
                                    June30,
                                    
                                    
                                    Unit
                                    
                                    
                                    Percent2010
                                    
                                    
                                    2009
                                    
                                    
                                    Change
                                    
                                    
                                    ChangeFinancial
      AdvisoryRevenues (excluding
      reimbursables)
                                    
                                    $
                                    108,116
                                    
                                    
                                    $
                                    118,797
                                    
                                    
                                    $
                                    (10,681
                                    )
                                    
                                    
                                    (9.0
                                    )%Segment operating
      income
                                    
                                    $
                                    15,987
                                    
                                    
                                    $
                                    20,688
                                    
                                    
                                    $
                                    (4,701
                                    )
                                    
                                    
                                    (22.7
                                    )%Segment operating income
      margin
                                    
                                    
                                    14.8
                                    %
                                    
                                    
                                    17.4
                                    %
                                    
                                    
                                    (2.6
                                    )%
                                    
                                    
                                    (14.9
                                    )%Corporate Finance
      ConsultingRevenues (excluding
      reimbursables)
                                    
                                    $
                                    28,255
                                    
                                    
                                    $
                                    29,594
                                    
                                    
                                    $
                                    (1,339
                                    )
                                    
                                    
                                    (4.5
                                    )%Segment operating
      income
                                    
                                    $
                                    4,159
                                    
                                    
                                    $
                                    6,430
                                    
                                    
                                    $
                                    (2,271
                                    )
                                    
                                    
                                    (35.3
                                    )%Segment operating income
      margin
                                    
                                    
                                    14.7
                                    %
                                    
                                    
                                    21.7
                                    %
                                    
                                    
                                    (7.0
                                    )%
                                    
                                    
                                    (32.3
                                    )%Investment
      BankingRevenues (excluding
      reimbursables)
                                    
                                    $
                                    41,535
                                    
                                    
                                    $
                                    30,927
                                    
                                    
                                    $
                                    10,608
                                    
                                    
                                    
                                    34.3
                                    %Segment operating
      income
                                    
                                    $
                                    10,107
                                    
                                    
                                    $
                                    4,831
                                    
                                    
                                    $
                                    5,276
                                    
                                    
                                    
                                    109.2
                                    %Segment operating income
      margin
                                    
                                    
                                    24.3
                                    %
                                    
                                    
                                    15.6
                                    %
                                    
                                    
                                    8.7
                                    %
                                    
                                    
                                    55.8
                                    %TotalRevenues (excluding
      reimbursables)
                                    
                                    $
                                    177,906
                                    
                                    
                                    $
                                    179,318Segment operating
      income
                                    
                                    $
                                    30,253
                                    
                                    
                                    $
                                    31,949Net client reimbursable
      expenses
                                    
                                    
                                    (133
                                    )
                                    
                                    
                                    11Equity-based compensation from
      Legacy Units and IPO Options
                                    
                                    
                                    (2,577
                                    )
                                    
                                    
                                    (7,734
                                    )Depreciation and
      amortization
                                    
                                    
                                    (4,843
                                    )
                                    
                                    
                                    (5,118
                                    )Charge from impairment of certain
      intangible assets
                                    
                                    
                                    (674
                                    )Charge from realignment of senior
      management (not included in equity-based compensation from Legacy Units or
      IPO Options above)
                                    
                                    
                                    (3,040
                                    )
                                    
                                    
                                    -Merger and acquisition
      costs
                                    
                                    
                                    (321
                                    )
                                    
                                    
                                    -Operating
      income
                                    
                                    $
                                    18,665
                                    
                                    
                                    $
                                    19,108Average Client Service
      ProfessionalsFinancial
      Advisory
                                    
                                    
                                    587
                                    
                                    
                                    
                                    679
                                    
                                    
                                    
                                    (92
                                    )
                                    
                                    
                                    (13.5
                                    )%Corporate Finance
      Consulting
                                    
                                    
                                    119
                                    
                                    
                                    
                                    133
                                    
                                    
                                    
                                    (14
                                    )
                                    
                                    
                                    (10.5
                                    )%Investment
      Banking
                                    
                                    
                                    129
                                    
                                    
                                    
                                    135
                                    
                                    
                                    
                                    (6
                                    )
                                    
                                    
                                    (4.4
                                    )%Total
                                    
                                    
                                    835
                                    
                                    
                                    
                                    947
                                    
                                    
                                    
                                    (112
                                    )
                                    
                                    
                                    (11.8
                                    )%End of Period Client Service
      ProfessionalsFinancial
      Advisory
                                    
                                    
                                    548
                                    
                                    
                                    
                                    640
                                    
                                    
                                    
                                    (92
                                    )
                                    
                                    
                                    (14.4
                                    )%Corporate Finance
      Consulting
                                    
                                    
                                    109
                                    
                                    
                                    
                                    136
                                    
                                    
                                    
                                    (27
                                    )
                                    
                                    
                                    (19.9
                                    )%Investment
      Banking
                                    
                                    
                                    125
                                    
                                    
                                    
                                    131
                                    
                                    
                                    
                                    (6
                                    )
                                    
                                    
                                    (4.6
                                    )%Total
                                    
                                    
                                    782
                                    
                                    
                                    
                                    907
                                    
                                    
                                    
                                    (125
                                    )
                                    
                                    
                                    (13.8
                                    )%Revenue per Client Service
      ProfessionalFinancial
      Advisory
                                    
                                    $
                                    184
                                    
                                    
                                    $
                                    175
                                    
                                    
                                    $
                                    9
                                    
                                    
                                    
                                    5.1
                                    %Corporate Finance
      Consulting
                                    
                                    $
                                    237
                                    
                                    
                                    $
                                    223
                                    
                                    
                                    $
                                    14
                                    
                                    
                                    
                                    6.3
                                    %Investment
      Banking
                                    
                                    $
                                    322
                                    
                                    
                                    $
                                    229
                                    
                                    
                                    $
                                    93
                                    
                                    
                                    
                                    40.6
                                    %Total
                                    
                                    $
                                    213
                                    
                                    
                                    $
                                    189
                                    
                                    
                                    $
                                    24
                                    
                                    
                                    
                                    12.7
                                    %


47


Results of Operations by Segment –
Continued





SixMonthsEndedJune30,
                                    
                                    
                                    June30,
                                    
                                    
                                    Unit
                                    
                                    
                                    Percent2010
                                    
                                    
                                    2009
                                    
                                    
                                    Change
                                    
                                    
                                    ChangeUtilization(1)Financial
      Advisory
                                    
                                    
                                    64.6
                                    %
                                    
                                    
                                    64.8
                                    %
                                    
                                    
                                    (0.2
                                    )%
                                    
                                    
                                    (0.3
                                    )%Corporate Finance
      Consulting
                                    
                                    
                                    57.5
                                    %
                                    
                                    
                                    57.9
                                    %
                                    
                                    
                                    (0.4
                                    )%
                                    
                                    
                                    (0.7
                                    )%Rate-Per-Hour(2)Financial
      Advisory
                                    
                                    $
                                    341
                                    
                                    
                                    $
                                    316
                                    
                                    
                                    $
                                    25
                                    
                                    
                                    
                                    7.9
                                    %Corporate Finance
      Consulting
                                    
                                    $
                                    452
                                    
                                    
                                    $
                                    410
                                    
                                    
                                    $
                                    42
                                    
                                    
                                    
                                    10.2
                                    %Revenues (excluding
      reimbursables)Financial
      Advisory
                                    
                                    $
                                    108,116
                                    
                                    
                                    $
                                    118,797
                                    
                                    
                                    $
                                    (10,681
                                    )
                                    
                                    
                                    (9.0
                                    )%Corporate Finance
      Consulting
                                    
                                    
                                    28,255
                                    
                                    
                                    
                                    29,594
                                    
                                    
                                    
                                    (1,339
                                    )
                                    
                                    
                                    (4.5
                                    )%Investment
      Banking
                                    
                                    
                                    41,535
                                    
                                    
                                    
                                    30,927
                                    
                                    
                                    
                                    10,608
                                    
                                    
                                    
                                    34.3
                                    %Total
                                    
                                    $
                                    177,906
                                    
                                    
                                    $
                                    179,318
                                    
                                    
                                    $
                                    (1,412
                                    )
                                    
                                    
                                    (0.8
                                    )%Average Number of Managing
      DirectorsFinancial
      Advisory
                                    
                                    
                                    92
                                    
                                    
                                    
                                    100
                                    
                                    
                                    
                                    (8
                                    )
                                    
                                    
                                    (8.0
                                    )%Corporate Finance
      Consulting
                                    
                                    
                                    31
                                    
                                    
                                    
                                    30
                                    
                                    
                                    
                                    1
                                    
                                    
                                    
                                    3.3
                                    %Investment
      Banking
                                    
                                    
                                    41
                                    
                                    
                                    
                                    37
                                    
                                    
                                    
                                    4
                                    
                                    
                                    
                                    10.8
                                    %Total
                                    
                                    
                                    164
                                    
                                    
                                    
                                    167
                                    
                                    
                                    
                                    (3
                                    )
                                    
                                    
                                    (1.8
                                    )%End of Period Managing
      DirectorsFinancial
      Advisory
                                    
                                    
                                    94
                                    
                                    
                                    
                                    96
                                    
                                    
                                    
                                    (2
                                    )
                                    
                                    
                                    (2.1
                                    )%Corporate Finance
      Consulting
                                    
                                    
                                    29
                                    
                                    
                                    
                                    31
                                    
                                    
                                    
                                    (2
                                    )
                                    
                                    
                                    (6.5
                                    )%Investment
      Banking
                                    
                                    
                                    40
                                    
                                    
                                    
                                    38
                                    
                                    
                                    
                                    2
                                    
                                    
                                    
                                    5.3
                                    %Total
                                    
                                    
                                    163
                                    
                                    
                                    
                                    165
                                    
                                    
                                    
                                    (2
                                    )
                                    
                                    
                                    (1.2
                                    )%Revenue per Managing
      DirectorFinancial
      Advisory
                                    
                                    $
                                    1,175
                                    
                                    
                                    $
                                    1,188
                                    
                                    
                                    $
                                    (13
                                    )
                                    
                                    
                                    (1.1
                                    )%Corporate Finance
      Consulting
                                    
                                    $
                                    911
                                    
                                    
                                    $
                                    986
                                    
                                    
                                    $
                                    (75
                                    )
                                    
                                    
                                    (7.6
                                    )%Investment
      Banking
                                    
                                    $
                                    1,013
                                    
                                    
                                    $
                                    836
                                    
                                    
                                    $
                                    177
                                    
                                    
                                    
                                    21.2
                                    %Total
                                    
                                    $
                                    1,085
                                    
                                    
                                    $
                                    1,074
                                    
                                    
                                    $
                                    11
                                    
                                    
                                    
                                    1.0
                                    %








(1)
              The
      utilization rate for any given period is calculated by dividing the number
      of hours incurred by client service professionals who worked on client
      assignments (including internal projects for the Company) during the
      period by the total available working hours for all of such client service
      professionals during the same period, assuming a 40 hour work week, less
      paid holidays and vacation days. Financial Advisory utilization excludes
      approximately 60 client service professionals associated with Rash &
      Associates, L.P., a wholly-owned subsidiary, due to the nature of the work
      performed.


(2)
              Average
      billing rate-per-hour is calculated by dividing applicable revenues for
      the period by the number of hours worked on client assignments (including
      internal projects for the Company) during the same period. Financial
      Advisory revenues used to calculate rate-per-hour exclude approximately
      $3,381 and $4,322 of revenues associated with Rash in the six months ended
      June 30, 2010 and 2009,
respectively.





For
segment reporting purposes, management uses certain estimates and assumptions to
allocate revenues and expenses. Revenues and expenses attributable to reportable
segments are generally based on which segment and product line a client service
professional is a dedicated member. As a result, revenues recognized that relate
to the cross utilization of client service professionals across reportable
segments occur each period depending on the expertise required for each
engagement. In particular, the Financial Advisory segment (primarily Valuation
Advisory services) recognized revenues of $4,192 and $6,567 from the cross
utilization of its client service professionals on engagements from the
Corporate Finance Consulting segment (primarily Portfolio Valuation services) in
the six months ended June 30, 2010 and 2009, respectively.


48


Financial
Advisory





Revenues




Revenues
from the Financial Advisory segment decreased $10,681 or 9.0% to $108,116 for
the six months ended June 30, 2010, compared to $118,797 for the six months
ended June 30, 2009. The overall decline resulted from a decrease in revenues
from each business unit, as summarized in the following table:





Six Months EndedJune 30,
                    
                    
                    June 30,
                    
                    
                    Dollar
                    
                    
                    Percent2010
                    
                    
                    2009
                    
                    
                    Change
                    
                    
                    ChangeFinancial
      AdvisoryValuation
      Advisory
                    
                    $
                    67,849
                    
                    
                    $
                    74,142
                    
                    
                    $
                    (6,293
                    )
                    
                    
                    (8.5
                    )%Tax
      Services
                    
                    
                    21,536
                    
                    
                    
                    22,850
                    
                    
                    
                    (1,314
                    )
                    
                    
                    (5.8
                    )%Dispute
      & Legal Management Consulting(1)
                    
                    
                    18,731
                    
                    
                    
                    21,805
                    
                    
                    
                    (3,074
                    )
                    
                    
                    (14.1
                    )%$
                    108,116
                    
                    
                    $
                    118,797
                    
                    
                    $
                    (10,681
                    )
                    
                    
                    (9.0
                    )%





(1)
            Includes
      $547 of revenue from our acquisition of Cole Valuation Partners Limited
      effective June 15, 2010.





Our
Financial Advisory segment was impacted by lower revenues in each business
unit. Valuation Advisory was impacted by a reduction of goodwill impairment
testing due to the improvement in the overall economic environment, as the
corresponding prior year period benefited from a significant volume
of goodwill impairment testing as a result of the fallout from the
financial crisis. The decrease in revenues from goodwill impairment testing was
partially offset by an increase in revenues from purchase price allocations and
a higher volume of real estate valuation work.





The
decrease in revenues from Tax Services primarily resulted from the
departure of staff during the first half of 2010 associated with World
Tax Service US, LLC (which we acquired in July 2008) and a related
practice, partially offset by an increase in revenues from property tax
contingent fees and transfer pricing activity.




Dispute
& Legal Management Consulting (and to a lesser extent certain business units
in our Corporate Finance Consulting segment) was impacted by the winding down in
the first half of 2010 of an engagement to serve as a financial advisor to
the court appointed examiner of a large financial services company under
bankruptcy protection. Our results for the six months ended June 30, 2010
include approximately $8,200 of revenue from this assignment, primarily
recognized in the Financial Advisory and Corporate Finance Consulting segments,
compared to approximately $10,200 of revenue recognized in the corresponding
prior year period.





Segment
Operating Income




Financial
Advisory segment operating income decreased $4,701 or 22.7% to $15,987 for the
six months ended June 30, 2010, compared to $20,688 for the six months ended
June 30, 2009. Segment operating income margin, defined as segment operating
income expressed as a percentage of segment revenues, was 14.8% for the six
months ended June 30, 2010, compared to 17.4% for the six months ended June 30,
2009. Despite a decrease in expenses, segment operating income and margin
decreased as a result of lower revenues which led to a corresponding increase in
direct client service costs as a percentage of revenues.


49


Corporate
Finance Consulting





Revenues




Revenues
from the Corporate Finance Consulting segment decreased $1,339 or 4.5% to
$28,255 for the six months ended June 30, 2010, compared to $29,594 for the six
months ended June 30, 2009. Lower revenues from Portfolio Valuation, Financial
Engineering and Strategic Value Advisory were partially offset by higher
revenues from Due Diligence, as summarized in the following table:





Six Months EndedJune 30,
                  
                  
                  June 30,
                  
                  
                  Dollar
                  
                  
                  Percent2010
                  
                  
                  2009
                  
                  
                  Change
                  
                  
                  ChangeCorporate
      Finance ConsultingPortfolio
      Valuation
                  
                  $
                  10,124
                  
                  
                  $
                  10,633
                  
                  
                  $
                  (509
                  )
                  
                  
                  (4.8
                  )%Financial
      Engineering
                  
                  
                  7,481
                  
                  
                  
                  9,307
                  
                  
                  
                  (1,826
                  )
                  
                  
                  (19.6
                  )%Strategic
      Value Advisory
                  
                  
                  6,041
                  
                  
                  
                  6,208
                  
                  
                  
                  (167
                  )
                  
                  
                  (2.7
                  )%Due
      Diligence
                  
                  
                  4,609
                  
                  
                  
                  3,446
                  
                  
                  
                  1,163
                  
                  
                  
                  33.7
                  %$
                  28,255
                  
                  
                  $
                  29,594
                  
                  
                  $
                  (1,339
                  )
                  
                  
                  (4.5
                  )%





Our
Corporate Finance Consulting segment was impacted by lower revenues from
Portfolio Valuation, Financial Engineering and Strategic Value Advisory.
Financial Engineering and Strategic Value Advisory were primarily impacted by
lower revenues from an engagement to serve as a financial advisor to the court
appointed examiner of a large financial services company under bankruptcy
protection (as described in Financial Advisory above). Our Due Diligence
business, however, grew sequentially and as compared to results from
the corresponding prior year period from an increase in M&A
related activity.





Segment
Operating Income




Operating
income from the Corporate Finance Consulting segment decreased $2,271 or 35.3%
to $4,159 for the six months ended June 30, 2010, compared to $6,430 for the six
months ended June 30, 2009. Segment operating income margin was 14.7% for the
six months ended June 30, 2010, compared to 21.7% for the six months ended June
30, 2009. The decrease in segment operating income and margin primarily resulted
from lower revenues and an increase in direct client service costs as a
percentage of revenues, principally from higher equity-compensation expense from
incremental grants of Ongoing RSAs.





Investment
Banking





Revenues




Revenues
from the Investment Banking segment increased $10,608 or 34.3% to $41,535 for
the six months ended June 30, 2010, compared to $30,927 for the six months ended
June 30, 2009, as summarized in the following table:





Six Months EndedJune 30,
                  
                  
                  June 30,
                  
                  
                  Dollar
                  
                  
                  Percent2010
                  
                  
                  2009
                  
                  
                  Change
                  
                  
                  ChangeInvestment
      BankingGlobal
      Restructuring Advisory
                  
                  $
                  21,845
                  
                  
                  $
                  14,192
                  
                  
                  $
                  7,653
                  
                  
                  
                  53.9
                  %Transaction
      Opinions
                  
                  
                  12,864
                  
                  
                  
                  12,281
                  
                  
                  
                  583
                  
                  
                  
                  4.7
                  %M&A
      Advisory
                  
                  
                  6,826
                  
                  
                  
                  4,454
                  
                  
                  
                  2,372
                  
                  
                  
                  53.3
                  %$
                  41,535
                  
                  
                  $
                  30,927
                  
                  
                  $
                  10,608
                  
                  
                  
                  34.3
                  %





Global
Restructuring Advisory benefited from success fees related to our domestic and
international restructuring services. Revenues from M&A Advisory and
Transaction Opinions increased as a result of a higher level of transactional
activity.





Segment
Operating Income




Operating
income from the Investment Banking segment increased $5,276 or 109.2% to $10,107
for the six months ended June 30, 2010, compared to $4,831 for the six months
ended June 30, 2009. Operating income margin was 24.3% for the six months ended
June 30, 2010, compared to 15.6% for the six months ended June 30, 2009. The
increase in segment operating income and margin resulted from higher revenues
driven in part by additional success fees.


50


Liquidity
and Capital Resources





Our
primary sources of liquidity are our existing cash balances and availability
under our revolving credit facility. Our historical cash flows are primarily
related to the timing of (i) cash receipt of revenues, (ii) payment of base
compensation, benefits and operating expenses, (iii) the timing of payment of
bonuses to employees, (iv) distributions and other payments to noncontrolling
unitholders, (v) corporate tax payments by the Company, (vi) dividends to the
extent declared by the board of directors, (vii) funding of our deferred
compensation program, (viii) repurchases of Class A common stock, and (ix) cash
consideration for acquisitions and acquisition-related expenses.





Cash and
cash equivalents decreased by $28,080 to $79,231 at June 30, 2010, compared to
$107,311 at December 31, 2009. The decrease in cash primarily resulted from
$18,343 used in investing activities and $16,530 used in financing activities,
partially offset by $9,162 provided by operating activities.





Operating
Activities




During
the six months ended June 30, 2010, cash of $9,162 was provided by operating
activities, compared to $2,302 provided in the corresponding prior year period.
The increase of amounts used in operating activities primarily resulted from (i)
an increase in amounts provided by accounts receivable, (ii) a decrease in
amounts used by unbilled services, and (iii) lower cash bonus payment made in
2010 with respect to the 2009 bonus year, as compared to cash bonus payments
made in 2009 with respect to the 2008 bonus year, partially offset by lower
bonus accruals in the current year, as compared to the prior year. These
benefits were partially offset primarily from an increase in amounts used by
accounts payable and accrued expenses.





Investing
Activities




During
the six months ended June 30, 2010, cash of $18,343 was used in investing
activities, compared to $9,556 used in the corresponding prior year period.
Investing activities during the current period included (i) purchases of
property and equipment to support our business, (ii) cash consideration for our
acquisition of Cole Valuation Partners Limited and payments of earn-outs for
acquisitions which primarily consisted of an earn-out payment to the sellers of
Financial and IP Analysis, Inc. (d/b/a The Lumin Expert Group), and (iii)
purchases of investments related to the Company’s deferred compensation
plan.





Financing
Activities




During
the six months ended June 30, 2010, cash of $16,530 was used in financing
activities, compared to $16,074 used in the prior year period. Significant
financing activities are summarized as follows:





·
            Repurchases
      of Class A common stock – Repurchases of Class A common stock includes
      shares repurchased pursuant to a publicly announced repurchase program as
      well as shares of Class A common stock withheld to cover payroll tax
      withholdings related to the lapse of restrictions on Ongoing
      RSAs.





·
            Increase
      in restricted cash – The increase in restricted cash related to amounts
      placed in an escrow account in conjunction with our acquisition of Cole
      Valuation Partners Limited.





·
            Dividends
      – Cash dividends of $3,141 reflects the payment of quarterly cash
      dividends of $0.06 per share of our Class A common stock to holders of
      record as of March 16, 2010 and May 18,
2010.





·
            Distributions
      and other payments to noncontrolling unitholders – Distributions and other
      payments to noncontrolling unitholders are summarized as
      follows:





Six Months EndedJune 30,
                    
                    
                    June 30,2010
                    
                    
                    2009Distributions
      for taxes
                    
                    $
                    708
                    
                    
                    $
                    11,714Other
      distributions
                    
                    
                    1,427
                    
                    
                    
                    656Payments
      pursuant to the Tax Receivable Agreement
                    
                    
                    -
                    
                    
                    
                    -$
                    2,135
                    
                    
                    $
                    12,370


51


Distributions for
taxes


As a
limited liability company, D&P Acquisitions does not incur significant
federal or state and local taxes, as these taxes are primarily the obligations
of the members of D&P Acquisitions. As authorized by the Third Amended and
Restated LLC Agreement of D&P Acquisitions, D&P Acquisitions is required
to distribute cash, generally, on a pro rata basis, to its members to the extent
necessary to provide funds to pay the members' tax liabilities, if any, with
respect to the earnings of D&P Acquisitions. The tax distribution rate has
been set at 45% of each member’s allocable share of taxable income of D&P
Acquisitions. D&P Acquisitions is only required to make such distributions
if cash is available for such purposes as determined by the Company. The Company
expects cash will be available to make these distributions. Upon completion of
its tax returns with respect to the prior year, D&P Acquisitions may make
true-up distributions to its members, if cash is available for such purposes,
with respect to actual taxable income for the prior year. The decrease in tax
distributions between periods primarily resulted from the timing of quarterly
payments. The decrease in payments for the distributions for taxes between the
six months ended June 30, 2010 and 2009 primarily resulted from the timing of
payments. The distributions for each member’s estimated tax liability from
taxable income of D&P acquisitions during the fourth quarter of 2008 was
primarily made during the first quarter of 2009. The corresponding distribution
to members for taxable income of D&P acquisitions during the fourth quarter
of 2009 was primarily made during the quarter ended December 31,
2009.





Other
distributions


During
the six months ended June 30, 2010, the Company distributed $1,427 to holders of
New Class A Units, other than Duff & Phelps Corporation. Concurrent with the
payment of the dividend to shareholders of record, holders of New Class A Units
received a $0.05 and $0.06 distribution per vested unit on March 16, 2010 and
May 28, 2010, respectively. These amounts totaled $1,265 and will be treated as
a reduction in basis of each member’s ownership interests. Pursuant to the terms
of the Third Amended and Restated LLC Agreement of D&P Acquisitions, a
corresponding amount per unvested unit was deposited into a segregated account
and will be distributed once a year with respect to units that vested during
that year. During the six months ended June 30, 2010, the Company distributed
$162 to members whose units vested during 2009. Any amounts related to unvested
units that forfeit are returned to the Company.





Payments pursuant to the Tax
Receivable Agreement


As a
result of the Company’s acquisition of New Class A Units of D&P
Acquisitions, the Company expects to benefit from depreciation and other tax
deductions reflecting D&P Acquisitions' tax basis for its assets. Those
deductions will be allocated to the Company and will be taken into account in
reporting the Company’s taxable income. Further, as a result of a federal income
tax election made by D&P Acquisitions applicable to a portion of the
Company’s acquisition of New Class A Units of D&P Acquisitions, the income
tax basis of the assets of D&P Acquisitions underlying a portion of the
units the Company has and will acquire (pursuant to the exchange agreement) will
be adjusted based upon the amount that the Company has paid for that portion of
its New Class A Units of D&P Acquisitions.





The
Company has entered into a tax receivable agreement (“TRA”) with the existing
unitholders of D&P Acquisitions (for the benefit of the existing unitholders
of D&P Acquisitions) that provides for the payment by the Company to the
unitholders of D&P Acquisitions of 85% of the amount of cash savings, if
any, in U.S. federal, state and local income tax that the Company realizes (i)
from the tax basis in its proportionate share of D&P Acquisitions' goodwill
and similar intangible assets that the Company receives as a result of the
exchanges and (ii) from the federal income tax election referred to above.
D&P Acquisitions expects to make future payments under the TRA to the extent
cash is available for such purposes.





As of
June 30, 2010, the Company recorded a liability of $105,685, representing the
payments due to D&P Acquisitions’ unitholders under the TRA (see current and
non-current portion of “Due to noncontrolling unitholders” on the Company’s
Condensed Consolidated Balance Sheets).





Within
the next 12 month period, the Company expects to pay $4,303 of the total amount.
The basis for determining the current portion of the payments due to D&P
Acquisitions’ unitholders under the TRA is the expected amount of payments to be
made within the next 12 months. The long-term portion of the payments due to
D&P Acquisitions’ unitholders under the tax receivable agreement is the
remainder. Payments are anticipated to be made annually over 15 years,
commencing from the date of each event that gives rise to the TRA benefits,
beginning with the date of the closing of the IPO on October 3, 2007. The
payments are made in accordance with the terms of the TRA. The timing of the
payments is subject to certain contingencies including Duff & Phelps
Corporation having sufficient taxable income to utilize all of the tax benefits
defined in the TRA.





To
determine the current amount of the payments due to D&P Acquisitions’
unitholders under the TRA, the Company estimated the amount of taxable income
that Duff & Phelps Corporation has generated over the previous fiscal year.
Next, the Company estimated the amount of the specified TRA deductions at year
end. This was used as a basis for determining the amount of tax reduction that
generates a TRA obligation. In turn, this was used to calculate the estimated
payments due under the TRA that the Company expects to pay in the next 12
months. These calculations are performed pursuant to the terms of the
TRA.


52


Credit
Facility




On July
15, 2009, Duff & Phelps, LLC entered into a credit agreement with Bank of
America, N.A., as administrative agent and the lenders from time to time party
thereto ("Credit Agreement"), providing for a $30,000 senior secured revolving
credit facility (“Credit Facility”), including a $10,000 sub-limit for the
issuance of letters of credit. The proceeds of the facility are permitted to be
used for working capital, permitted acquisitions and general corporate purposes.
The maturity date is July 15, 2012 and amounts borrowed may be voluntarily
prepaid at any time without penalty or premium, subject to customary breakage
costs.





There
were no amounts outstanding under the Credit Facility at June 30, 2010 or
through the filing date of this Quarterly Report on Form 10-Q. As of June 30,
2010, the Company had $4,472 of outstanding letters of credit of which $4,085
were issued against the Credit Facility. There was $387 of cash deposited into a
restricted account to serve as deposits to secure the remaining letters of
credit. These letters of credit were issued in connection with real estate
leases.





Loans
under the Credit Facility will, at the Company's option, bear interest on the
principal amount outstanding at either (a) a rate equal to LIBOR, plus an
applicable margin or (b) a base rate, plus an applicable margin. The applicable
margin rate will be based on the Company's most recent consolidated leverage
ratio and ranges from 1.75% to 2.50% per annum depending on the Company's
consolidated leverage ratio. In addition, the Company is required to pay an
unused commitment fee on the actual daily amount of the unutilized portion of
the commitments of the lenders at a rate ranging from 0.25% to 0.50% per annum,
based on the Company's most recent consolidated leverage ratio. Based on the
Company’s consolidated leverage ratio at June 30, 2010, the Company qualified
for the 1.75% applicable margin and 0.25% unused commitment fee.





The
Credit Agreement contains customary representations and warranties and customary
affirmative and negative covenants, including, among others, limitations on (a)
the incurrence of liens, (b) the incurrence of indebtedness, (c) the ability to
make dividends and distributions, as well as redeem and repurchase equity
interests, and (d) acquisitions, mergers, consolidations and sales of assets. In
addition, the Credit Agreement contains financial covenants that do not permit
(a) a total leverage ratio of greater than 2.75 to 1.00 until the quarter ending
September 30, 2010, and 2.50 to 1.00 thereafter and (b) a consolidated fixed
charge coverage ratio of less than 2.00 to 1.00. The financial covenants are
tested on the last day of each fiscal quarter based on the last four fiscal
quarter periods. Management believes that the Company was in compliance with all
of its covenants as of June 30, 2010. The Credit Agreement permits dividend
payments or other distributions in the Company’s common stock or other equity
interests subject to certain limitations.





The
obligation of the Company to pay amounts outstanding under the Credit Facility
may be accelerated upon the occurrence of an "Event of Default" as defined in
the Credit Agreement. The Company's obligations under the Credit Agreement are
guaranteed by D&P Acquisitions, and certain domestic subsidiaries of the
Company (collectively, the "Guarantors"). The Credit Agreement is secured by a
lien on substantially all of the personal property of the Company and each of
the Guarantors.





Future
Needs





Our
primary financing need has been to fund our growth. Our growth strategy includes
hiring additional revenue-generating client service professionals and expanding
our service offerings through existing client service professionals, new hires
or acquisitions of new businesses. We intend to fund such growth over the next
twelve months with cash on-hand, funds generated from operations and borrowings
under our revolving credit agreement. We believe these funds will be adequate to
fund future growth.


53


Recent
Accounting Pronouncements





In
October 2009, the Financial Accounting Standards Board (“FASB”) issued
Accounting Standards Update (“ASU”) No. 2009-13, Multiple-Deliverable Revenue
Arrangements. ASU 2009-13 supersedes certain guidance in FASB Accounting
Standards Codification (“ASC”) 605-25, Revenue Recognition –
Multiple-Element Arrangements and requires an entity to allocate
arrangement consideration at the inception of an arrangement to all of its
deliverables based on their relative selling prices (the relative-selling-price
method). ASU 2009-13 eliminates the use of the residual method of allocation in
which the undelivered element is measured at its estimated selling price and the
delivered element is measured as the residual of the arrangement consideration,
and requires the relative-selling-price method in all circumstances in which an
entity recognizes revenue for an arrangement with multiple deliverable subject
to ASU 2009-13. ASU 2009-13 must be adopted no later than the beginning of the
first fiscal year beginning on or after June 15, 2010, with early adoption
permitted through either prospective application for revenue arrangements
entered into, or materially modified, after the effective date or through
retrospective application to all revenue arrangements for all periods presented.
We are currently evaluating the impact that the adoption of ASU 2009-13 will
have on our consolidated financial statements.





Item
      3.
            Quantitative
      and Qualitative Disclosures About Market
Risk.





Market
risks at June 30, 2010 have not changed significantly from those discussed in
Item 7A of our Annual Report on Form 10-K for the year ended December 31,
2009.





Item
      4.
            Controls
      and Procedures.





Disclosure
Controls and Procedures





Our
management, including our Chief Executive Officer and Chief Financial Officer,
evaluated the effectiveness of our disclosure controls and procedures pursuant
to Rule 13a-15 under the Exchange Act as of the end of the period covered by
this report. Based on that evaluation, our Chief Executive Officer and Chief
Financial Officer have concluded that, as of the end of the period covered by
this quarterly report, our disclosure controls and procedures (as defined in
Rule 13a-15(e) under the Exchange Act) are effective, in all material respects,
to ensure that information we are required to disclose in reports that we file
or submit under the Exchange Act is recorded, processed, summarized and reported
within the time periods specified in SEC rules and forms, and that such
information is accumulated and communicated to our management, including our
Chief Executive Officer and Chief Financial Officer, as appropriate, to allow
timely decisions regarding required disclosure.





The
effectiveness of our disclosure controls and procedures and our internal control
over financial reporting is subject to various inherent limitations, including
cost limitations, judgments used in decision making, assumptions about the
likelihood of future events, the soundness of our systems, the possibility of
human error, and the risk of fraud. Moreover, projections of any evaluation of
effectiveness of future periods are subject to the risk that controls may become
inadequate because of changes in conditions and the risk that the degree of
compliance with policies or procedures may deteriorate over time. Because of
these limitations, there can be no assurance that any system of disclosure
controls and procedures or internal control over financial reporting will be
successful in preventing all errors or fraud or in making all material
information known in a timely manner to the appropriate levels of
management.





Changes
in Internal Controls





No change
in our internal control over financial reporting (as defined in Rule 13a-15(f)
under the Exchange Act) occurred during our most recent fiscal quarter that has
materially affected, or is likely to materially affect, our internal control
over financial reporting.


54


PART
II


OTHER
INFORMATION





Item
      1.
            Legal
      Proceedings.





From time
to time, we are involved in legal proceedings and litigation arising in the
ordinary course of business. As of the date of this filing, we are not a party
to or threatened with any litigation or other legal proceeding that, in our
opinion, could have a material adverse effect on our business, operating results
or financial condition.





Item
      1A.
            Risk
      Factors.





There
have been no material changes in the Company’s risk factors since those
published in the Company’s Annual Report on Form 10-K for the year ended
December 31, 2009.





Item
      2.
            Unregistered
      Sales of Equity Securities and Use of
Proceeds.





Issuer Purchases of Equity
Securities




The
following table summarizes repurchases of shares of the Company’s Class A common
stock during the quarter ended June 30, 2010:





ApproximateTotal
                      
                      
                      DollarNumberof
                      
                      
                      ValueofShares
                      
                      
                      SharesthatTotal
                      
                      
                      
                      
                      
                      Purchasedas
                      
                      
                      MayYetBeNumberof
                      
                      
                      Average
                      
                      
                      PartofPublicly
                      
                      
                      PurchasedShares
                      
                      
                      PricePaid
                      
                      
                      Announced
                      
                      
                      UndertheClassACommonStock
                      
                      Purchased
                      
                      
                      PerShare
                      
                      
                      Program
                      
                      
                      ProgramApril 1 through April 30,
      2010
                      
                      
                      10
                      
                      
                      $
                      16.36
                      
                      
                      
                      -
                      
                      
                      $
                      50,000May 1 through May 31,
      2010
                      
                      
                      296
                      
                      
                      
                      14.69
                      
                      
                      
                      247
                      
                      
                      
                      46,370June 1 through June 30,
      2010
                      
                      
                      137
                      
                      
                      
                      12.18
                      
                      
                      
                      137
                      
                      
                      
                      44,699Total
                      
                      
                      443
                      
                      
                      $
                      13.95
                      
                      
                      
                      384





On April
29, 2010, the Company announced that its Board of Directors had approved a stock
repurchase program, authorizing the Company to repurchase in the aggregate up to
$50,000 of its outstanding common stock. Purchases by the Company under this
program were made from time to time at prevailing market prices in open market
purchases. The purchases were funded from existing cash balances. Repurchased
shares were retired and recorded as a reduction to additional paid-in capital.
This program does not obligate the Company to acquire any particular amount of
common stock. The timing, frequency and amount of repurchase activity will
depend on a variety of factors such as levels of cash generation from
operations, cash requirements for investment in the Company’s business, current
stock price, market conditions, compliance with financial covenants pursuant to
our Credit Agreement, and other factors. The share repurchase program may be
suspended, modified or discontinued at any time and has no set expiration
date.





In
addition, the Company withheld shares of our Class A common stock from holders
of restricted stock awards to satisfy the holders’ tax liabilities in connection
with the lapse of restrictions on such shares. These shares were not part of a
publicly announced repurchase program and were retired upon
purchase.





Subsequent
to June 30, 2010 through the day prior to this filing, the Company repurchased
an additional 30 shares of Class A common stock at an average price of $12.56
per share. All of these additional shares were purchased as part of our publicly
announced program. The approximate dollar value of shares that may yet be
purchased under this program totaled $44,322 as of the day prior to this
filing.


55


Exchange
of New Class A Units to Shares of Class A Common Stock





In
connection with the closing of the IPO, we entered into an exchange agreement,
dated as of October 3, 2007 (as amended, the “Exchange Agreement”), by and among
us, D&P Acquisitions, and certain unitholders of D&P Acquisitions,
through which we may issue shares of Class A common stock upon the exchange of
the New Class A Units. Pursuant to the Exchange Agreement, in connection with
any such exchange, a corresponding number of shares of our Class B common stock
will be cancelled. Subject to the terms and notice requirements as set forth in
an amendment to the Exchange Agreement, exchanges are scheduled to occur on
March 5th, May 15th, August 15th and November 15th of each year.





In May
2010, 21 New Class A Units were exchanged for 21 shares of Class A common stock
and 21 shares of Class B common stock were cancelled.  We filed a
registration statement in order to permit the resale of these shares from time
to time, subject to certain blackouts and other restrictions.  We
received no other consideration in connection with these exchanges.





Item
      3.
            Defaults
      Upon Senior Securities.





None.





Item
      4.
            (Removed
      and Reserved).





Item
      5.
            Other
      Information.





None.





Item
      6.
            Exhibits.





ExhibitNumber
                    
                    Description31.1
                    
                    Certification of the Chief
      Executive Officer, pursuant to Rule 13a-14(a)/15d-14(a), as adopted
      pursuant to Section 302 of the Sarbanes-Oxley Act of
      2002.31.2
                    
                    Certification of the Chief
      Financial Officer, pursuant to Rule 13a-14(a)/15d-14(a), as adopted
      pursuant to Section 302 of the Sarbanes-Oxley Act of
      2002.32.1
                    
                    Certification of the Chief
      Executive Officer, pursuant to 18 U.S.C. Section 1350, as adopted pursuant
      to Section 906 of the Sarbanes-Oxley Act of
2002.32.2
                    
                    Certification of the Chief
      Financial Officer, pursuant to 18 U.S.C. Section 1350, as adopted pursuant
      to Section 906 of the Sarbanes-Oxley Act of
  2002.


56


SIGNATURES





Pursuant
to the requirements of the Securities Exchange Act of 1934, the registrant has
duly caused this report to be signed on its behalf by the undersigned thereunto
duly authorized.





DUFF
      & PHELPS CORPORATION(Registrant)Date:  July
      29, 2010
                /s/ Jacob L. SilvermanJACOB
      L. SILVERMANChief
      Financial Officer


57