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 September 30, 2009





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 o  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 o
    Accelerated filer þ
    Non-accelerated filer oSmaller reporting
company o





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





The
number of shares outstanding of the registrant’s Class A common stock, par value
$0.01 per share, was 23,985,989 as of October 15, 2009.  The number of
shares outstanding of the registrant’s Class B common stock, par value $0.0001
per share, was 16,243,979 as of October 15, 2009.













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.
                      27Item
      3.
                      Quantitative
      and Qualitative Disclosures About Market Risk.
                      51Item
      4.
                      Controls
      and Procedures.
                      51Part
      II.
                      Other
      InformationItem
      1.
                      Legal
      Proceedings
                      52Item
      1A.
                      Risk
      Factors
                      52Item
      2.
                      Unregistered
      Sales of Equity Securities and Use of Proceeds
                      52Item
      3.
                      Defaults
      Upon Senior Securities
                      52Item
      4.
                      Submission
      of Matters to a Vote of Security Holders
                      52Item
      5.
                      Other
      Information
                      52Item
      6.
                      Exhibits
                      53Signatures
                      
                      54










PART
I – FINANCIAL INFORMATION





Item
1.  Financial Statements.





DUFF
& PHELPS CORPORATION AND SUBSIDIARIES


CONDENSED
CONSOLIDATED STATEMENTS OF OPERATIONS


(In
thousands, except per share amounts)


(Unaudited)





Three
      Months Ended
                                          
                                          
                                          Nine
      Months EndedSeptember
      30,
                                          
                                          
                                          September
      30,
                                          
                                          
                                          September
      30,
                                          
                                          
                                          September
      30,2009
                                          
                                          
                                          2008
                                          
                                          
                                          2009
                                          
                                          
                                          2008Revenues
                                          
                                          $
                                          93,240
                                          
                                          
                                          $
                                          96,314
                                          
                                          
                                          $
                                          272,558
                                          
                                          
                                          $
                                          287,268Reimbursable
      expenses
                                          
                                          
                                          3,394
                                          
                                          
                                          
                                          2,781
                                          
                                          
                                          
                                          8,057
                                          
                                          
                                          
                                          7,946Total
      revenues
                                          
                                          
                                          96,634
                                          
                                          
                                          
                                          99,095
                                          
                                          
                                          
                                          280,615
                                          
                                          
                                          
                                          295,214Direct
      client service costsCompensation
      and benefits (including $4,294 and $7,551 of equity-based compensation for
      the three months ended September 30, 2009 and 2008, respectively, and
      $13,631 and $17,182 for the nine months ended September 30, 2009 and 2008,
      respectively)
                                          
                                          
                                          52,287
                                          
                                          
                                          
                                          57,280
                                          
                                          
                                          
                                          155,115
                                          
                                          
                                          
                                          166,276Other
      direct client service costs
                                          
                                          
                                          2,954
                                          
                                          
                                          
                                          2,410
                                          
                                          
                                          
                                          5,801
                                          
                                          
                                          
                                          5,828Acquisition
      retention expenses
                                          
                                          
                                          -
                                          
                                          
                                          
                                          206
                                          
                                          
                                          
                                          -
                                          
                                          
                                          
                                          782Reimbursable
      expenses
                                          
                                          
                                          3,468
                                          
                                          
                                          
                                          2,813
                                          
                                          
                                          
                                          8,120
                                          
                                          
                                          
                                          7,926Subtotal
                                          
                                          
                                          58,709
                                          
                                          
                                          
                                          62,709
                                          
                                          
                                          
                                          169,036
                                          
                                          
                                          
                                          180,812Operating
      expensesSelling,
      general and administrative expenses (including $2,018 and $2,845 of
      equity-based compensation for the three months ended September 30, 2009
      and 2008, respectively, and $5,574 and $8,164 for the nine months ended
      September 30, 2009 and 2008, respectively)
                                          
                                          
                                          24,620
                                          
                                          
                                          
                                          29,538
                                          
                                          
                                          
                                          74,048
                                          
                                          
                                          
                                          83,301Depreciation
      and amortization
                                          
                                          
                                          2,594
                                          
                                          
                                          
                                          2,446
                                          
                                          
                                          
                                          7,712
                                          
                                          
                                          
                                          6,903Subtotal
                                          
                                          
                                          27,214
                                          
                                          
                                          
                                          31,984
                                          
                                          
                                          
                                          81,760
                                          
                                          
                                          
                                          90,204Operating
      income
                                          
                                          
                                          10,711
                                          
                                          
                                          
                                          4,402
                                          
                                          
                                          
                                          29,819
                                          
                                          
                                          
                                          24,198Other
      expense/(income)Interest
      income
                                          
                                          
                                          (17
                                          )
                                          
                                          
                                          (90
                                          )
                                          
                                          
                                          (34
                                          )
                                          
                                          
                                          (654
                                          )Interest
      expense
                                          
                                          
                                          91
                                          
                                          
                                          
                                          847
                                          
                                          
                                          
                                          1,079
                                          
                                          
                                          
                                          2,569Loss
      on early extinguishment of debt
                                          
                                          
                                          -
                                          
                                          
                                          
                                          -
                                          
                                          
                                          
                                          1,737
                                          
                                          
                                          
                                          -Other
      expense
                                          
                                          
                                          50
                                          
                                          
                                          
                                          (21
                                          )
                                          
                                          
                                          137
                                          
                                          
                                          
                                          (92
                                          )Subtotal
                                          
                                          
                                          124
                                          
                                          
                                          
                                          736
                                          
                                          
                                          
                                          2,919
                                          
                                          
                                          
                                          1,823Income
      before income taxes
                                          
                                          
                                          10,587
                                          
                                          
                                          
                                          3,666
                                          
                                          
                                          
                                          26,900
                                          
                                          
                                          
                                          22,375Provision
      for income taxes
                                          
                                          
                                          2,999
                                          
                                          
                                          
                                          1,348
                                          
                                          
                                          
                                          7,532
                                          
                                          
                                          
                                          6,343Net
      income
                                          
                                          
                                          7,588
                                          
                                          
                                          
                                          2,318
                                          
                                          
                                          
                                          19,368
                                          
                                          
                                          
                                          16,032Less:  Net
      income attributable to noncontrolling interest
                                          
                                          
                                          4,136
                                          
                                          
                                          
                                          2,165
                                          
                                          
                                          
                                          12,417
                                          
                                          
                                          
                                          13,204Net
      income attributable to Duff & Phelps Corporation
                                          
                                          $
                                          3,452
                                          
                                          
                                          $
                                          153
                                          
                                          
                                          $
                                          6,951
                                          
                                          
                                          $
                                          2,828Weighted
      average shares of Class A common stock outstandingBasic
                                          
                                          
                                          21,625
                                          
                                          
                                          
                                          13,299
                                          
                                          
                                          
                                          17,517
                                          
                                          
                                          
                                          13,166Diluted
                                          
                                          
                                          22,448
                                          
                                          
                                          
                                          13,673
                                          
                                          
                                          
                                          18,197
                                          
                                          
                                          
                                          13,397Net
      income per share attributable to stockholders of Class A common stock of
      Duff & Phelps Corporation (Note 5)Basic
                                          
                                          $
                                          0.15
                                          
                                          
                                          $
                                          0.01
                                          
                                          
                                          $
                                          0.37
                                          
                                          
                                          $
                                          0.20Diluted
                                          
                                          $
                                          0.14
                                          
                                          
                                          $
                                          0.01
                                          
                                          
                                          $
                                          0.35
                                          
                                          
                                          $
                                          0.20Cash
      dividends declared per common share
                                          
                                          $
                                          0.05
                                          
                                          
                                          $
                                          -
                                          
                                          
                                          $
                                          0.10
                                          
                                          
                                          $
                                          -





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)





September
      30,
                                                  
                                                  
                                                  December
      31,2009
                                                  
                                                  
                                                  2008(Unaudited)ASSETSCurrent
      assetsCash
      and cash equivalents
                                                  
                                                  $
                                                  84,196
                                                  
                                                  
                                                  $
                                                  81,381Restricted
      cash
                                                  
                                                  
                                                  689
                                                  
                                                  
                                                  
                                                  -Accounts
      receivable, net
                                                  
                                                  
                                                  62,340
                                                  
                                                  
                                                  
                                                  55,876Unbilled
      services
                                                  
                                                  
                                                  26,949
                                                  
                                                  
                                                  
                                                  17,938Prepaid
      expenses and other current assets
                                                  
                                                  
                                                  5,996
                                                  
                                                  
                                                  
                                                  6,599Net
      deferred income taxes, current
                                                  
                                                  
                                                  3,191
                                                  
                                                  
                                                  
                                                  4,304Total
      current assets
                                                  
                                                  
                                                  183,361
                                                  
                                                  
                                                  
                                                  166,098Property
      and equipment, net
                                                  
                                                  
                                                  28,266
                                                  
                                                  
                                                  
                                                  28,350Goodwill
                                                  
                                                  
                                                  117,012
                                                  
                                                  
                                                  
                                                  116,456Intangible
      assets, net
                                                  
                                                  
                                                  28,812
                                                  
                                                  
                                                  
                                                  32,197Other
      assets
                                                  
                                                  
                                                  2,758
                                                  
                                                  
                                                  
                                                  3,541Investments
      related to deferred compensation plan (Note 10)
                                                  
                                                  
                                                  16,368
                                                  
                                                  
                                                  
                                                  7,946Net
      deferred income taxes, non-current
                                                  
                                                  
                                                  91,633
                                                  
                                                  
                                                  
                                                  61,609Total
      non-current assets
                                                  
                                                  
                                                  284,849
                                                  
                                                  
                                                  
                                                  250,099Total
      assets
                                                  
                                                  $
                                                  468,210
                                                  
                                                  
                                                  $
                                                  416,197LIABILITIES
      AND STOCKHOLDERS' EQUITYCurrent
      liabilitiesAccounts
      payable
                                                  
                                                  $
                                                  4,250
                                                  
                                                  
                                                  $
                                                  3,692Accrued
      expenses
                                                  
                                                  
                                                  7,944
                                                  
                                                  
                                                  
                                                  4,424Accrued
      compensation and benefits
                                                  
                                                  
                                                  21,315
                                                  
                                                  
                                                  
                                                  39,282Accrued
      benefits related to deferred compensation plan (Note 10)
                                                  
                                                  
                                                  17,167
                                                  
                                                  
                                                  
                                                  8,479Deferred
      revenue
                                                  
                                                  
                                                  4,499
                                                  
                                                  
                                                  
                                                  3,280Equity-based
      compensation liability
                                                  
                                                  
                                                  441
                                                  
                                                  
                                                  
                                                  1,115Current
      portion of long-term debt (Note 8)
                                                  
                                                  
                                                  -
                                                  
                                                  
                                                  
                                                  794Current
      portion due to non-controlling unitholders
                                                  
                                                  
                                                  3,148
                                                  
                                                  
                                                  
                                                  3,148Total
      current liabilities
                                                  
                                                  
                                                  58,764
                                                  
                                                  
                                                  
                                                  64,214Long-term
      debt, less current portion (Note 8)
                                                  
                                                  
                                                  -
                                                  
                                                  
                                                  
                                                  42,178Other
      long-term liabilities
                                                  
                                                  
                                                  15,916
                                                  
                                                  
                                                  
                                                  16,715Due
      to non-controlling unitholders, less current portion
                                                  
                                                  
                                                  88,879
                                                  
                                                  
                                                  
                                                  55,331Total
      non-current liabilities
                                                  
                                                  
                                                  104,795
                                                  
                                                  
                                                  
                                                  114,224Total
      liabilities
                                                  
                                                  
                                                  163,559
                                                  
                                                  
                                                  
                                                  178,438Commitments
      and contingencies (Note 11)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;
      23,984 and 14,719 shares issued and outstanding at September 30, 2009
      and December 31, 2008, respectively)
                                                  
                                                  
                                                  240
                                                  
                                                  
                                                  
                                                  147Class
      B common stock, par value $0.0001 per share (50,000 shares authorized;
      16,244 and 20,889 shares issued and outstanding at September 30, 2009
      and December 31, 2008, respectively)
                                                  
                                                  
                                                  2
                                                  
                                                  
                                                  
                                                  2Additional
      paid-in capital
                                                  
                                                  
                                                  176,904
                                                  
                                                  
                                                  
                                                  100,985Accumulated
      other comprehensive income
                                                  
                                                  
                                                  1,048
                                                  
                                                  
                                                  
                                                  122Retained
      earnings/(accumulated deficit)
                                                  
                                                  
                                                  3,446
                                                  
                                                  
                                                  
                                                  (1,127
                                                  )Total
      stockholders' equity of Duff & Phelps Corporation
                                                  
                                                  
                                                  181,640
                                                  
                                                  
                                                  
                                                  100,129Noncontrolling
      interest
                                                  
                                                  
                                                  123,011
                                                  
                                                  
                                                  
                                                  137,630Total
      stockholders' equity
                                                  
                                                  
                                                  304,651
                                                  
                                                  
                                                  
                                                  237,759Total
      liabilities and stockholders' equity
                                                  
                                                  $
                                                  468,210
                                                  
                                                  
                                                  $
                                                  416,197





See
accompanying notes to the condensed consolidated financial
statements.


2


DUFF
& PHELPS CORPORATION AND SUBSIDIARIES


CONDENSED
CONSOLIDATED STATEMENTS OF CASH FLOWS


(In
thousands)


(Unaudited)





Nine
      Months EndedSeptember
      30,
                                      
                                      
                                      September
      30,2009
                                      
                                      
                                      2008Cash
      flows from operating activities:Net
      income
                                      
                                      $
                                      19,368
                                      
                                      
                                      $
                                      16,032Adjustments
      to reconcile net income to net cash provided by operating
      activities:Depreciation
      and amortization
                                      
                                      
                                      7,712
                                      
                                      
                                      
                                      6,903Equity-based
      compensation
                                      
                                      
                                      19,205
                                      
                                      
                                      
                                      25,345Bad
      debt expense
                                      
                                      
                                      1,698
                                      
                                      
                                      
                                      1,251Net
      deferred income taxes
                                      
                                      
                                      4,637
                                      
                                      
                                      
                                      8,575Loss
      on early extinguishment of debt
                                      
                                      
                                      1,674
                                      
                                      
                                      
                                      -Other
                                      
                                      
                                      (582
                                      )
                                      
                                      
                                      1,163Changes
      in assets and liabilities providing/(using) cash:Accounts
      receivable
                                      
                                      
                                      (8,065
                                      )
                                      
                                      
                                      (12,168
                                      )Unbilled
      services
                                      
                                      
                                      (9,012
                                      )
                                      
                                      
                                      (2,216
                                      )Prepaid
      expenses and other current assets
                                      
                                      
                                      973
                                      
                                      
                                      
                                      63Other
      assets
                                      
                                      
                                      (2,396
                                      )
                                      
                                      
                                      1,542Accounts
      payable and accrued expenses
                                      
                                      
                                      4,668
                                      
                                      
                                      
                                      (2,070
                                      )Accrued
      compensation and benefits
                                      
                                      
                                      (10,019
                                      )
                                      
                                      
                                      (29,998
                                      )Deferred
      revenues
                                      
                                      
                                      1,219
                                      
                                      
                                      
                                      (3,004
                                      )Other
      liabilities
                                      
                                      
                                      (1,399
                                      )
                                      
                                      
                                      690Due
      to noncontrolling unitholders
                                      
                                      
                                      -
                                      
                                      
                                      
                                      (3,092
                                      )Net
      cash provided by operating activities
                                      
                                      
                                      29,681
                                      
                                      
                                      
                                      9,016Cash
      flows from investing activities:Purchase
      of property and equipment
                                      
                                      
                                      (4,744
                                      )
                                      
                                      
                                      (8,093
                                      )Business
      acquisitions, net of cash acquired
                                      
                                      
                                      (61
                                      )
                                      
                                      
                                      (16,427
                                      )Purchase
      of investments for deferred compensation plan
                                      
                                      
                                      (6,409
                                      )
                                      
                                      
                                      (9,991
                                      )Proceeds
      from sale of investments in deferred compensation plan
                                      
                                      
                                      -
                                      
                                      
                                      
                                      1,692Net
      cash used in investing activities
                                      
                                      
                                      (11,214
                                      )
                                      
                                      
                                      (32,819
                                      )Cash
      flows from financing activities:Net
      proceeds from sale of Class A common stock
                                      
                                      
                                      111,808
                                      
                                      
                                      
                                      -Proceeds
      from exercises of IPO Options
                                      
                                      
                                      456
                                      
                                      
                                      
                                      -Redemption
      of noncontrolling unitholders
                                      
                                      
                                      (67,112
                                      )
                                      
                                      
                                      -Repayments
      of debt
                                      
                                      
                                      (42,763
                                      )
                                      
                                      
                                      (595
                                      )Distributions
      and other payments to noncontrolling unitholders
                                      
                                      
                                      (15,510
                                      )
                                      
                                      
                                      (7,888
                                      )Increase
      in restricted cash
                                      
                                      
                                      (689
                                      )
                                      
                                      
                                      -Dividends
                                      
                                      
                                      (2,394
                                      )
                                      
                                      
                                      -Repurchases
      of Class A common stock
                                      
                                      
                                      (821
                                      )
                                      
                                      
                                      -Fees
      associated with early extinguishment of debt
                                      
                                      
                                      (63
                                      )
                                      
                                      
                                      -Net
      cash used in financing activities
                                      
                                      
                                      (17,088
                                      )
                                      
                                      
                                      (8,483
                                      )Effect
      of exchange rate on cash and cash equivalents
                                      
                                      
                                      1,436
                                      
                                      
                                      
                                      (853
                                      )Net
      increase/(decrease) in cash and cash equivalents
                                      
                                      
                                      2,815
                                      
                                      
                                      
                                      (33,139
                                      )Cash
      and cash equivalents at beginning of period
                                      
                                      
                                      81,381
                                      
                                      
                                      
                                      90,243Cash
      and cash equivalents at end of period
                                      
                                      $
                                      84,196
                                      
                                      
                                      $
                                      57,104





See
accompanying notes to the condensed consolidated financial
statements.


3





DUFF
& PHELPS CORPORATION AND SUBSIDIARIES


CONDENSED
CONSOLIDATED STATEMENT OF STOCKHOLDERS’ EQUITY


AND
COMPREHENSIVE INCOME


(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 nine months ended September 30, 2009
                                                    
                                                    
                                                    19,368
                                                    
                                                    
                                                    $
                                                    19,368
                                                    
                                                    
                                                    
                                                    -
                                                    
                                                    
                                                    
                                                    -
                                                    
                                                    
                                                    
                                                    -
                                                    
                                                    
                                                    
                                                    -
                                                    
                                                    
                                                    
                                                    -
                                                    
                                                    
                                                    
                                                    -
                                                    
                                                    
                                                    
                                                    6,951
                                                    
                                                    
                                                    
                                                    12,417Currency
      translation adjustment
                                                    
                                                    
                                                    1,435
                                                    
                                                    
                                                    
                                                    1,435
                                                    
                                                    
                                                    
                                                    -
                                                    
                                                    
                                                    
                                                    -
                                                    
                                                    
                                                    
                                                    -
                                                    
                                                    
                                                    
                                                    -
                                                    
                                                    
                                                    
                                                    -
                                                    
                                                    
                                                    
                                                    1,035
                                                    
                                                    
                                                    
                                                    -
                                                    
                                                    
                                                    
                                                    400Amortization
      of post-retirement benefits
                                                    
                                                    
                                                    28
                                                    
                                                    
                                                    
                                                    28
                                                    
                                                    
                                                    
                                                    -
                                                    
                                                    
                                                    
                                                    -
                                                    
                                                    
                                                    
                                                    -
                                                    
                                                    
                                                    
                                                    -
                                                    
                                                    
                                                    
                                                    -
                                                    
                                                    
                                                    
                                                    16
                                                    
                                                    
                                                    
                                                    -
                                                    
                                                    
                                                    
                                                    12Total
      comprehensive income
                                                    
                                                    
                                                    20,831
                                                    
                                                    
                                                    $
                                                    20,831
                                                    
                                                    
                                                    
                                                    -
                                                    
                                                    
                                                    
                                                    -
                                                    
                                                    
                                                    
                                                    -
                                                    
                                                    
                                                    
                                                    -
                                                    
                                                    
                                                    
                                                    -
                                                    
                                                    
                                                    
                                                    1,051
                                                    
                                                    
                                                    
                                                    6,951
                                                    
                                                    
                                                    
                                                    12,829Sale
      of Class A common stock
                                                    
                                                    
                                                    111,808
                                                    
                                                    
                                                    
                                                    
                                                    
                                                    
                                                    
                                                    8,050
                                                    
                                                    
                                                    
                                                    81
                                                    
                                                    
                                                    
                                                    -
                                                    
                                                    
                                                    
                                                    -
                                                    
                                                    
                                                    
                                                    111,727
                                                    
                                                    
                                                    
                                                    -
                                                    
                                                    
                                                    
                                                    -
                                                    
                                                    
                                                    
                                                    -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
                                                    
                                                    
                                                    (807
                                                    )
                                                    
                                                    
                                                    
                                                    
                                                    
                                                    
                                                    1,292
                                                    
                                                    
                                                    
                                                    13
                                                    
                                                    
                                                    
                                                    -
                                                    
                                                    
                                                    
                                                    -
                                                    
                                                    
                                                    
                                                    (371
                                                    )
                                                    
                                                    
                                                    -
                                                    
                                                    
                                                    
                                                    -
                                                    
                                                    
                                                    
                                                    (449
                                                    )Redemption
      of New Class A Units
                                                    
                                                    
                                                    (67,112
                                                    )
                                                    
                                                    
                                                    
                                                    
                                                    
                                                    
                                                    -
                                                    
                                                    
                                                    
                                                    -
                                                    
                                                    
                                                    
                                                    (4,550
                                                    )
                                                    
                                                    
                                                    -
                                                    
                                                    
                                                    
                                                    (29,060
                                                    )
                                                    
                                                    
                                                    -
                                                    
                                                    
                                                    
                                                    -
                                                    
                                                    
                                                    
                                                    (38,052
                                                    )Adjustment
      to Tax Receivable Agreement as aresult of the redemption of New
      Class A Units
                                                    
                                                    
                                                    (543
                                                    )
                                                    
                                                    
                                                    
                                                    
                                                    
                                                    
                                                    -
                                                    
                                                    
                                                    
                                                    -
                                                    
                                                    
                                                    
                                                    -
                                                    
                                                    
                                                    
                                                    -
                                                    
                                                    
                                                    
                                                    (543
                                                    )
                                                    
                                                    
                                                    -
                                                    
                                                    
                                                    
                                                    -
                                                    
                                                    
                                                    
                                                    -Exercise
      of IPO Options
                                                    
                                                    
                                                    793
                                                    
                                                    
                                                    
                                                    
                                                    
                                                    
                                                    
                                                    51
                                                    
                                                    
                                                    
                                                    -
                                                    
                                                    
                                                    
                                                    -
                                                    
                                                    
                                                    
                                                    -
                                                    
                                                    
                                                    
                                                    448
                                                    
                                                    
                                                    
                                                    -
                                                    
                                                    
                                                    
                                                    -
                                                    
                                                    
                                                    
                                                    345Forfeitures
                                                    
                                                    
                                                    1
                                                    
                                                    
                                                    
                                                    
                                                    
                                                    
                                                    
                                                    (138
                                                    )
                                                    
                                                    
                                                    (1
                                                    )
                                                    
                                                    
                                                    (95
                                                    )
                                                    
                                                    
                                                    -
                                                    
                                                    
                                                    
                                                    2
                                                    
                                                    
                                                    
                                                    -
                                                    
                                                    
                                                    
                                                    -
                                                    
                                                    
                                                    
                                                    -Equity-based
      compensation
                                                    
                                                    
                                                    19,798
                                                    
                                                    
                                                    
                                                    
                                                    
                                                    
                                                    
                                                    -
                                                    
                                                    
                                                    
                                                    -
                                                    
                                                    
                                                    
                                                    -
                                                    
                                                    
                                                    
                                                    -
                                                    
                                                    
                                                    
                                                    10,457
                                                    
                                                    
                                                    
                                                    -
                                                    
                                                    
                                                    
                                                    -
                                                    
                                                    
                                                    
                                                    9,341Income
      tax benefit on equity-based compensation
                                                    
                                                    
                                                    (103
                                                    )
                                                    
                                                    
                                                    
                                                    
                                                    
                                                    
                                                    -
                                                    
                                                    
                                                    
                                                    -
                                                    
                                                    
                                                    
                                                    -
                                                    
                                                    
                                                    
                                                    -
                                                    
                                                    
                                                    
                                                    (103
                                                    )
                                                    
                                                    
                                                    -
                                                    
                                                    
                                                    
                                                    -
                                                    
                                                    
                                                    
                                                    -Distributions
      to noncontrolling unitholders
                                                    
                                                    
                                                    (15,510
                                                    )
                                                    
                                                    
                                                    
                                                    
                                                    
                                                    
                                                    -
                                                    
                                                    
                                                    
                                                    -
                                                    
                                                    
                                                    
                                                    -
                                                    
                                                    
                                                    
                                                    -
                                                    
                                                    
                                                    
                                                    (6,187
                                                    )
                                                    
                                                    
                                                    -
                                                    
                                                    
                                                    
                                                    -
                                                    
                                                    
                                                    
                                                    (9,323
                                                    )Change
      in ownership interests between periods
                                                    
                                                    
                                                    -
                                                    
                                                    
                                                    
                                                    
                                                    
                                                    
                                                    
                                                    -
                                                    
                                                    
                                                    
                                                    -
                                                    
                                                    
                                                    
                                                    -
                                                    
                                                    
                                                    
                                                    -
                                                    
                                                    
                                                    
                                                    51,791
                                                    
                                                    
                                                    
                                                    (125
                                                    )
                                                    
                                                    
                                                    -
                                                    
                                                    
                                                    
                                                    (51,666
                                                    )Adjustment
      to due to noncontrolling unitholders
                                                    
                                                    
                                                    (3,579
                                                    )
                                                    
                                                    
                                                    
                                                    
                                                    
                                                    
                                                    -
                                                    
                                                    
                                                    
                                                    -
                                                    
                                                    
                                                    
                                                    -
                                                    
                                                    
                                                    
                                                    -
                                                    
                                                    
                                                    
                                                    (3,579
                                                    )
                                                    
                                                    
                                                    -
                                                    
                                                    
                                                    
                                                    -
                                                    
                                                    
                                                    
                                                    -Deferred
      tax asset effective tax rate conversion
                                                    
                                                    
                                                    3,513
                                                    
                                                    
                                                    
                                                    
                                                    
                                                    
                                                    
                                                    -
                                                    
                                                    
                                                    
                                                    -
                                                    
                                                    
                                                    
                                                    -
                                                    
                                                    
                                                    
                                                    -
                                                    
                                                    
                                                    
                                                    3,412
                                                    
                                                    
                                                    
                                                    -
                                                    
                                                    
                                                    
                                                    -
                                                    
                                                    
                                                    
                                                    101Dividends
      on Class A common stock
                                                    
                                                    
                                                    (2,378
                                                    )
                                                    
                                                    
                                                    
                                                    
                                                    
                                                    
                                                    -
                                                    
                                                    
                                                    
                                                    -
                                                    
                                                    
                                                    
                                                    -
                                                    
                                                    
                                                    
                                                    -
                                                    
                                                    
                                                    
                                                    -
                                                    
                                                    
                                                    
                                                    -
                                                    
                                                    
                                                    
                                                    (2,378
                                                    )
                                                    
                                                    
                                                    -Balance
      as of September 30, 2009
                                                    
                                                    $
                                                    304,651
                                                    
                                                    
                                                    
                                                    
                                                    
                                                    
                                                    
                                                    23,984
                                                    
                                                    
                                                    $
                                                    240
                                                    
                                                    
                                                    
                                                    16,244
                                                    
                                                    
                                                    $
                                                    2
                                                    
                                                    
                                                    $
                                                    176,904
                                                    
                                                    
                                                    $
                                                    1,048
                                                    
                                                    
                                                    $
                                                    3,446
                                                    
                                                    
                                                    $
                                                    123,011





See
accompanying notes to the condensed consolidated financial
statements.


4





DUFF
& PHELPS CORPORATION AND SUBSIDIARIES


CONDENSED
CONSOLIDATED STATEMENT OF STOCKHOLDERS’ EQUITY


AND
COMPREHENSIVE INCOME


(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/(Loss)
                                      
                                      
                                      Deficit)
                                      
                                      
                                      InterestBalance
      as of December 31, 2007
                                      
                                      $
                                      181,483
                                      
                                      
                                      
                                      
                                      
                                      
                                      13,125
                                      
                                      
                                      $
                                      131
                                      
                                      
                                      
                                      21,090
                                      
                                      
                                      $
                                      2
                                      
                                      
                                      $
                                      75,375
                                      
                                      
                                      $
                                      348
                                      
                                      
                                      $
                                      (6,352
                                      )
                                      
                                      $
                                      111,979Comprehensive
      income/(loss)Net
      income for the nine months ended September 30, 2008
                                      
                                      
                                      16,032
                                      
                                      
                                      $
                                      16,032
                                      
                                      
                                      
                                      -
                                      
                                      
                                      
                                      -
                                      
                                      
                                      
                                      -
                                      
                                      
                                      
                                      -
                                      
                                      
                                      
                                      -
                                      
                                      
                                      
                                      -
                                      
                                      
                                      
                                      2,828
                                      
                                      
                                      
                                      13,204Currency
      translation adjustment
                                      
                                      
                                      (853
                                      )
                                      
                                      
                                      (853
                                      )
                                      
                                      
                                      -
                                      
                                      
                                      
                                      -
                                      
                                      
                                      
                                      -
                                      
                                      
                                      
                                      -
                                      
                                      
                                      
                                      -
                                      
                                      
                                      
                                      (353
                                      )
                                      
                                      
                                      -
                                      
                                      
                                      
                                      (500
                                      )Amortization
      of post-retirement benefits
                                      
                                      
                                      36
                                      
                                      
                                      
                                      36
                                      
                                      
                                      
                                      -
                                      
                                      
                                      
                                      -
                                      
                                      
                                      
                                      -
                                      
                                      
                                      
                                      -
                                      
                                      
                                      
                                      -
                                      
                                      
                                      
                                      15
                                      
                                      
                                      
                                      -
                                      
                                      
                                      
                                      21Total
      comprehensive income/(loss)
                                      
                                      
                                      15,215
                                      
                                      
                                      $
                                      15,215
                                      
                                      
                                      
                                      -
                                      
                                      
                                      
                                      -
                                      
                                      
                                      
                                      -
                                      
                                      
                                      
                                      -
                                      
                                      
                                      
                                      -
                                      
                                      
                                      
                                      (338
                                      )
                                      
                                      
                                      2,828
                                      
                                      
                                      
                                      12,725Issuance
      of common stock
                                      
                                      
                                      5,443
                                      
                                      
                                      
                                      
                                      
                                      
                                      
                                      322
                                      
                                      
                                      
                                      3
                                      
                                      
                                      
                                      -
                                      
                                      
                                      
                                      -
                                      
                                      
                                      
                                      2,221
                                      
                                      
                                      
                                      -
                                      
                                      
                                      
                                      -
                                      
                                      
                                      
                                      3,219Issuance
      of restricted stock awards
                                      
                                      
                                      12
                                      
                                      
                                      
                                      
                                      
                                      
                                      
                                      1,156
                                      
                                      
                                      
                                      12
                                      
                                      
                                      
                                      -
                                      
                                      
                                      
                                      -
                                      
                                      
                                      
                                      -
                                      
                                      
                                      
                                      -
                                      
                                      
                                      
                                      -
                                      
                                      
                                      
                                      -Exercise
      of IPO options
                                      
                                      
                                      114
                                      
                                      
                                      
                                      
                                      
                                      
                                      
                                      7
                                      
                                      
                                      
                                      -
                                      
                                      
                                      
                                      -
                                      
                                      
                                      
                                      -
                                      
                                      
                                      
                                      114
                                      
                                      
                                      
                                      -
                                      
                                      
                                      
                                      -
                                      
                                      
                                      
                                      -Forfeitures
                                      
                                      
                                      -
                                      
                                      
                                      
                                      
                                      
                                      
                                      
                                      (13
                                      )
                                      
                                      
                                      -
                                      
                                      
                                      
                                      (46
                                      )
                                      
                                      
                                      -
                                      
                                      
                                      
                                      -
                                      
                                      
                                      
                                      -
                                      
                                      
                                      
                                      -
                                      
                                      
                                      
                                      -Equity-based
      compensation
                                      
                                      
                                      25,274
                                      
                                      
                                      
                                      
                                      
                                      
                                      
                                      -
                                      
                                      
                                      
                                      -
                                      
                                      
                                      
                                      -
                                      
                                      
                                      
                                      -
                                      
                                      
                                      
                                      10,418
                                      
                                      
                                      
                                      -
                                      
                                      
                                      
                                      -
                                      
                                      
                                      
                                      14,856Income
      tax benefit on equity-based compensation
                                      
                                      
                                      175
                                      
                                      
                                      
                                      
                                      
                                      
                                      
                                      -
                                      
                                      
                                      
                                      -
                                      
                                      
                                      
                                      -
                                      
                                      
                                      
                                      -
                                      
                                      
                                      
                                      175
                                      
                                      
                                      
                                      -
                                      
                                      
                                      
                                      -
                                      
                                      
                                      
                                      -Distributions
      to noncontrolling unitholders
                                      
                                      
                                      (7,888
                                      )
                                      
                                      
                                      
                                      
                                      
                                      
                                      -
                                      
                                      
                                      
                                      -
                                      
                                      
                                      
                                      -
                                      
                                      
                                      
                                      -
                                      
                                      
                                      
                                      (3,160
                                      )
                                      
                                      
                                      -
                                      
                                      
                                      
                                      -
                                      
                                      
                                      
                                      (4,728
                                      )Change
      in ownership interests between periods
                                      
                                      
                                      -
                                      
                                      
                                      
                                      
                                      
                                      
                                      
                                      -
                                      
                                      
                                      
                                      -
                                      
                                      
                                      
                                      -
                                      
                                      
                                      
                                      -
                                      
                                      
                                      
                                      4,821
                                      
                                      
                                      
                                      (202
                                      )
                                      
                                      
                                      -
                                      
                                      
                                      
                                      (4,619
                                      )Other
                                      
                                      
                                      (762
                                      )
                                      
                                      
                                      
                                      
                                      
                                      
                                      -
                                      
                                      
                                      
                                      -
                                      
                                      
                                      
                                      -
                                      
                                      
                                      
                                      -
                                      
                                      
                                      
                                      (577
                                      )
                                      
                                      
                                      -
                                      
                                      
                                      
                                      -
                                      
                                      
                                      
                                      (185
                                      )Balance
      as of September 30, 2008
                                      
                                      $
                                      219,066
                                      
                                      
                                      
                                      
                                      
                                      
                                      
                                      14,597
                                      
                                      
                                      $
                                      146
                                      
                                      
                                      
                                      21,044
                                      
                                      
                                      $
                                      2
                                      
                                      
                                      $
                                      89,387
                                      
                                      
                                      $
                                      (192
                                      )
                                      
                                      $
                                      (3,524
                                      )
                                      
                                      $
                                      133,247





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, corporate finance consulting and investment banking
services.  Its mission is to help its clients protect, maximize and
recover value.  The foundation of its services is its ability to
provide independent advice on issues involving highly technical and complex
assessments in the areas of valuation, taxation, dispute consulting, financial
restructuring and M&A advisory.  The Company believes the Duff
& Phelps brand is associated with a high level of professional service and
integrity, knowledge leadership and independent, trusted advice.  The
Company serves a global client base through offices in 24 cities, comprised of
offices in 18 U.S. cities, including New York, Chicago, Dallas and Los Angeles,
and six international offices located in Amsterdam, London, Munich, Paris,
Shanghai and Tokyo.





Note 2  -
            BASIS
      OF PRESENTATION





The
Company was incorporated on April 23, 2007 as a Delaware corporation and formed
as a holding company for the purpose of facilitating an initial public offering
(“IPO”) of the Company’s common equity and to become the sole managing member of
Duff & Phelps Acquisitions, LLC and subsidiaries (“D&P
Acquisitions”).





IPO
and Related Transactions





As a
result of the IPO and the Recapitalization Transactions (as defined and
described below), the Company became the sole managing member of and has a
controlling interest in D&P Acquisitions.  The Company’s only
business is to act as the sole managing member of D&P Acquisitions, and, as
such, the Company operates and controls all of the business and affairs of
D&P Acquisitions and consolidates the financial results of D&P
Acquisitions into the Company’s consolidated financial statements effective as
of the close of business October 3, 2007.





Immediately
prior to the closing of the IPO of the Company on October 3, 2007, D&P
Acquisitions effectuated certain transactions intended to simplify the capital
structure of D&P Acquisitions (the “Recapitalization
Transactions”).  Prior to the Recapitalization Transactions, D&P
Acquisitions' capital structure consisted of seven different classes of
membership interests (Classes A through G, collectively “Legacy Units”), each of
which had different capital accounts and amounts of aggregate distributions
above which its holders share in future distributions.  The net effect
of the Recapitalization Transactions was to convert the multiple-class structure
into a single new class of units called “New Class A Units.” Pursuant
to the Recapitalization Transactions and IPO, the Company issued a number of
shares of Class B common stock to existing unitholders of D&P Acquisitions
in an aggregate amount equal to the number of New Class A Units held by existing
unitholders of D&P Acquisitions.  The IPO, Recapitalization
Transactions and the Company’s capital structure are further detailed in its
Annual Report on Form 10-K for the year ended December 31, 2008.





Offering
of Class A Common Stock





On May
18, 2009, the Company consummated a follow-on offering with the sale of 8,050
newly issued shares of Class A common stock at $14.75 per share, less an
underwriting discount of $0.7375 per share, as summarized in the following table
(“May 2009 Follow-On Offering”):





Stock
      subscription of 7,000 shares at $14.75 per share
                        
                        $
                        103,250Over
      allotment of 1,050 shares at $14.75 per share
                        
                        
                        15,488Underwriting
      discount of 8,050 shares at $0.7375 per share
                        
                        
                        (5,937
                        )Offering
      related expenses
                        
                        
                        (993
                        )Net
      proceeds
                        
                        $
                        111,808




6


DUFF
& PHELPS CORPORATION AND SUBSIDIARIES


NOTES
TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS


(In
thousands, except per share amounts)


(Unaudited)





The
Company used $67,112 of net proceeds to redeem 3,500 New Class A Units of
D&P Acquisitions held by entities affiliated with Lovell Minnick Partners
and Vestar Capital Partners and 1,050 New Class A Units of D&P Acquisitions
held by employees (including executive officers), directors and entities
affiliated with directors.  Units were redeemed at a price per unit
equal to the public offering price.  In connection with the
redemption, a corresponding number of shares of Class B common stock were
cancelled.  In addition, the Company used $42,366 of the net proceeds
to repay outstanding borrowings and terminated its former credit facility with
GE Capital Corporation (see Note 8).  In connection with the
repayment, the Company incurred a nonrecurring charge of $1,737 to reflect the
accelerated amortization of the debt discount and issuance costs of which $1,674
was non-cash.





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 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 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, 2008 was derived from audited financial
statements, but does not include all disclosures required by accounting
principles generally accepted in the United States of
America.  Accordingly, certain information and footnote disclosures
normally included in financial statements prepared in accordance with generally
accepted accounting principles 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
Adopted Accounting Pronouncements





In
September 2009, the Company adopted FASB ASC 105-10, Generally Accepted Accounting
Principles – Overall.  FASB ASC 105-10 establishes the
FASB Accounting Standards CodificationTM
(“Codification”) to become the source of authoritative U.S. generally accepted
accounting principles (“U.S. GAAP”) recognized by the FASB to be applied by
nongovernmental entities.  Rules and interpretive releases of the
Securities and Exchange Commission (“SEC”) under authority of federal securities
laws are also sources of authoritative U.S. GAAP for SEC registrants. FASB
ASC 105-10 and the Codification are effective for financial statements
issued for interim and annual periods ending after September 15,
2009.  The adoption of this standard will not have a material impact
on the Company’s consolidated financial position or results of
operations.





In June
2009, the Company adopted Financial Accounting Standards Board (“FASB”)
Accounting Standards Codification (“ASC”) 855-10,Subsequent
Events – Overall.  FASB ASC 855-10establishes principles and requirements for subsequent events and sets
forth (a) the period after the balance sheet date during which management of a
reporting entity should evaluate events or transactions that may occur for
potential recognition or disclosure in the financial statements, (b) the
circumstances under which an entity should recognize events or transactions
occurring after the balance sheet date in its financial statements and (c) the
disclosures that an entity should make about events or transactions that
occurred after the balance sheet date.  The adoption of FASB ASC 855-10did not have a material impact on the Company’s consolidated financial
position or results of operations.




FASB
ASC Business Combinations – Identifiable
Assets and Liabilities, and Any Noncontrolling Interest


7





DUFF
& PHELPS CORPORATION AND SUBSIDIARIES


NOTES
TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS


(In
thousands, except per share amounts)


(Unaudited)




Effective
January 1, 2009, the Company adopted FASB
ASC805-20, Business Combinations – Identifiable
Assets and Liabilities, and Any Noncontrolling Interest.  FASB
ASC805-20requires the
acquiring entity in a business combination to recognize the full fair value of
assets acquired and liabilities assumed in the transaction, establishes the
acquisition-date fair value as the measurement objective for all assets acquired
and liabilities assumed, requires expensing of most transaction costs, and
requires the acquirer to disclose to investors and other users all of the
information needed to evaluate and understand the nature and financial effect of
the business combination.  The effect this pronouncement will have on
the Company is dependent upon each specific acquisition which may or may not
occur in the current or future periods.





Effective
January 1, 2009, the Company adopted the remaining provisions of FASB ASC 820-10-65,Fair
Value Measurements and Disclosures – Overall –Transition and Open Effective Date
Information, related to fair-value measurements of certain nonfinancial
assets and liabilities.  The adoption of the remaining provisions of
FASB
ASC 820-10-65did not have a material impact on the Company’s
consolidated financial position or results of operations.





Recently
Issued Accounting Pronouncements





In
August 2009, the FASB issued Accounting Standards Update (“ASU”)
No. 2009-05, Measuring
Liabilities at Fair Value
(“ASU 2009-05”).  ASU 2009-05 amends FASB ASC 820,
Fair Value Measurements and
Disclosures, by providing additional guidance clarifying the measurement
of liabilities at fair value.  ASU 2009-05 applies to the fair
value measurement of liabilities within the scope of ASC 820 and addresses
several key issues with respect to estimating fair value of liabilities. Among
other things, ASU 2009-05 clarifies how the price of a traded debt security
(an asset value) should be considered in estimating the fair value of the
issuer’s liability. ASU 2009-05 is effective for the first reporting period
beginning after its issuance.  The Company does not expect the
adoption of ASU 2009-05 to have a material impact on its consolidated
financial statements.





In
October 2009, the FASB issued ASU No. 2009-13, Multiple-Deliverable Revenue
Arrangements.  ASU 2009-13 supersedes certain guidance in
FASB 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
arrangement entered into, or materially modified, after the effective date or
through retrospective application to all revenue arrangement for all periods
presented.  The Company is evaluating the impact that the adoption of
ASU 2009-13 will have on its consolidated financial
statements.





Critical
Accounting Policies





There
have been no other 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,
2008.  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, 2008.  The financial data for the interim periods
may not necessarily be indicative of results to be expected for the
year.


8





DUFF
& PHELPS CORPORATION AND SUBSIDIARIES


NOTES
TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS


(In
thousands, except per share amounts)


(Unaudited)





Note 3  -
            NONCONTROLLING
      INTEREST





The
Company has sole voting power in and controls the management of D&P
Acquisitions, and it owns a majority economic interest in D&P Acquisitions
(59.6% at September 30, 2009).  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.  Net income attributable to
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 New
Class A Units owned by such unitholders.  The ownership of the New
Class A Units is summarized as follows:





Duff
      &
                          
                          
                          Non-Phelps
                          
                          
                          ControllingCorporation
                          
                          
                          Unitholders
                          
                          
                          TotalDecember
      31, 2008
                          
                          
                          14,719
                          
                          
                          
                          20,889
                          
                          
                          
                          35,608Sale
      of Class A common stock
                          
                          
                          8,050
                          
                          
                          
                          -
                          
                          
                          
                          8,050Issuance
      of Class A common stock
                          
                          
                          10
                          
                          
                          
                          -
                          
                          
                          
                          10Redemption
      of New Class A Units
                          
                          
                          -
                          
                          
                          
                          (4,550
                          )
                          
                          
                          (4,550
                          )Net
      issuance of restricted stock awards
                          
                          
                          1,292
                          
                          
                          
                          -
                          
                          
                          
                          1,292Exercises
      of IPO Options
                          
                          
                          51
                          
                          
                          
                          -
                          
                          
                          
                          51Forfeitures
                          
                          
                          (138
                          )
                          
                          
                          (95
                          )
                          
                          
                          (233
                          )September
      30, 2009
                          
                          
                          23,984
                          
                          
                          
                          16,244
                          
                          
                          
                          40,228Percent
      of total New Class A UnitsDecember
      31, 2008
                          
                          
                          41.3
                          %
                          
                          
                          58.7
                          %
                          
                          
                          100
                          %September
      30, 2009
                          
                          
                          59.6
                          %
                          
                          
                          40.4
                          %
                          
                          
                          100
                          %





As a
result of the May 2009 Follow-On Offering, the Company’s economic interest in
D&P Acquisitions changed from a minority to a majority
position.  This change did not result in a change of control as the
Company has always maintained sole voting power in and control of the management
of D&P Acquisitions.


9





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
                                    
                                    
                                    Nine
      Months EndedSeptember
      30,
                                    
                                    
                                    September
      30,2009
                                    
                                    
                                    2008
                                    
                                    
                                    2009
                                    
                                    
                                    2008Income
      before income taxes
                                    
                                    $
                                    10,587
                                    
                                    
                                    $
                                    3,666
                                    
                                    
                                    $
                                    26,900
                                    
                                    
                                    $
                                    22,375Less:
      provision for income taxes for entities other than Duff & Phelps
      Corporation(a)(b)
                                    
                                    
                                    (292
                                    )
                                    
                                    
                                    (101
                                    )
                                    
                                    
                                    (964
                                    )
                                    
                                    
                                    (162
                                    )Income
      before income taxes, as adjusted
                                    
                                    
                                    10,295
                                    
                                    
                                    
                                    3,565
                                    
                                    
                                    
                                    25,936
                                    
                                    
                                    
                                    22,213Ownership
      percentage of noncontrolling interest(d)
                                    
                                    
                                    40.2
                                    %
                                    
                                    
                                    60.7
                                    %
                                    
                                    
                                    47.9
                                    %
                                    
                                    
                                    59.4
                                    %Net
      income attributable to noncontrolling interest
                                    
                                    
                                    4,136
                                    
                                    
                                    
                                    2,165
                                    
                                    
                                    
                                    12,417
                                    
                                    
                                    
                                    13,204Income
      before income taxes, as adjusted, attributable to Duff &
      Phelps Corporation
                                    
                                    
                                    6,159
                                    
                                    
                                    
                                    1,400
                                    
                                    
                                    
                                    13,519
                                    
                                    
                                    
                                    9,009Less:
      provision for income taxes of Duff & Phelps Corporation(a)(c)
                                    
                                    
                                    (2,707
                                    )
                                    
                                    
                                    (1,247
                                    )
                                    
                                    
                                    (6,568
                                    )
                                    
                                    
                                    (6,181
                                    )Net
      income attributable to Duff & Phelps Corporation
                                    
                                    $
                                    3,452
                                    
                                    
                                    $
                                    153
                                    
                                    
                                    $
                                    6,951
                                    
                                    
                                    $
                                    2,828







(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 $2,999 and $1,348 for the three months ended September 30, 2009
      and 2008, respectively, and $7,532 and $6,343 for the nine months ended
      September 30, 2009 and 2008,
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.




10





DUFF
& PHELPS CORPORATION AND SUBSIDIARIES


NOTES
TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS


(In
thousands, except per share amounts)


(Unaudited)





Distributions
and Other Payments to Noncontrolling Unitholders





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





Nine
      Months EndedSeptember
      30,
                            
                            
                            September
      30,2009
                            
                            
                            2008Distributions
      for taxes
                            
                            $
                            14,197
                            
                            
                            $
                            7,888Other
      distributions
                            
                            
                            1,313
                            
                            
                            
                            -Payments
      pursuant to the Tax Receivable Agreement
                            
                            
                            -
                            
                            
                            
                            -$
                            15,510
                            
                            
                            $
                            7,888





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%.  During the nine months ended
September 30, 2009 and 2008, D&P Acquisitions made aggregate distributions
to its members totaling $14,197 and $7,888, respectively, not including the
Company, with respect to estimated taxable income for year-to-date 2009 and
2008, respectively.  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.





Other
distributions





During
the nine months ended September 30, 2009, the Company distributed $1,313 to
holders of New Class A Units of D&P Acquisitions (other than Duff &
Phelps Corporation).  The distributions were made concurrently with
the dividend of $0.05 per share of Class A common stock outstanding to
shareholders of record on June 12, 2009 and August 18,
2009.  Concurrent with the payment of the dividends, holders of New
Class A Units received a $0.05 distribution per vested unit which 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 distribution of $0.05 per unvested unit
was deposited into a segregated account and will be released once a year with
respect to units that vested during that year.  The segregated amount for
unvested units totaled $312 and is included as a component of “Restricted cash”
on the Consolidated Balance Sheet at September 30, 2009.  The
distribution on unvested units that forfeit will be 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.


11





DUFF
& PHELPS CORPORATION AND SUBSIDIARIES


NOTES
TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS


(In
thousands, except per share amounts)


(Unaudited)





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.  There were no payments under the TRA in the nine months ended
September 30, 2009 as these payments are typically made in the fourth quarter of
each year.  In December 2009, the Company expects to make payments
under the TRA of $3,148 relating to the year ended December 31,
2008.  In December 2008, the Company made payments of $791 with
respect to the period from October 4 through December 31,
2007.  D&P Acquisitions expects to make future payments under the
TRA to the extent cash is available for such purposes.





At
September 30, 2009, the Company recorded a liability of $92,027, representing
the payments due to D&P Acquisitions’ unitholders under the
TRA.  This amount includes additional obligations generated from the
redemption of 4,550 New Class A Units of D&P Acquisitions (see Note 2) in
conjunction with the May 2009 Follow-On Offering.  This transaction
resulted in an increase in the TRA liability of $33,548 and an associated
increase in net deferred tax assets.





Within
the next 12 month period, the Company expects to pay $3,148 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 tax receivable agreement, 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, filed as Exhibit 10.3 to the Quarterly Report on Form 10-Q as filed with
the SEC on November 14, 2007.





Obligations
pursuant to the Tax Receivable Agreement 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,
filed as Exhibit 10.1 to the Quarterly Report on Form 10-Q as filed with the SEC
on November 14, 2007.





During
the nine months ended September 30, 2009, the Company recorded an immaterial
adjustment to increase the payments due to D&P Acquisitions’ unitholders
under the tax receivable agreement by $3,579 with an offsetting credit to
additional paid-in-capital.  The adjustment resulted from a correction
to the calculation of the tax receivable agreement liability in conjunction with
the IPO transactions.  Although the revision related to the date of
the closing of the IPO transactions, it did not have a material impact on the
Company’s financial position through and as of September 30,
2009.


12





DUFF
& PHELPS CORPORATION AND SUBSIDIARIES


NOTES
TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS


(In
thousands, except per share amounts)


(Unaudited)





Note
      4   -
            ACQUISITIONS





The
following table summarizes the Company’s recent acquisitions:





EffectiveDate
                
                Acquisition
                
                Description4/11/08
                
                Dubinsky
      & Company, P.C.
                
                Washington,
      D.C. metro based specialty consulting primarilyfocused
      on litigation support and forensic services.7/15/08
                
                World
      Tax Service US, LLC
                
                Tax
      advisory firm focused on the delivery of sophisticatedinternational
      and domestic tax services.7/31/08
                
                Kane
      Reece Associates, Inc.
                
                Valuation,
      management and technical consulting firm with afocus
      on the communications, entertainment and media
  industries.8/8/08
                
                Financial
      and IP Analysis, Inc.
                
                Financial
      consulting firm that specializes in intellectual(d/b/a
      The Lumin Expert Group)
                
                property
      dispute support and expert
testimony.





The
purchase price of each of these acquisitions is immaterial to the Company’s
consolidated financial statements, both individually and in the
aggregate.  Each of these acquisitions operates as part of the
Financial Advisory segment.





Pursuant
to the terms of the acquisition of Chanin Capital Partners, LLC (“Chanin”) by
D&P Acquisitions on October 31, 2006, the Chanin sellers are eligible for
one remaining earn-out payment estimated to be a minimum of approximately $4,000
up to a maximum of approximately $5,000 for the annual period ending October 31,
2009.  This earn-out payment is subject to the achievement of certain
contingent performance results of Chanin.


13





DUFF
& PHELPS CORPORATION AND SUBSIDIARIES


NOTES
TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS


(In
thousands, except per share amounts)


(Unaudited)





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 June
2008, the FASB issued FASB ASC 260-10-45, Earnings Per Share – Overall – Other
Presentation Matters which is effective for fiscal years beginning
January 1, 2009.  FASB ASC 260-10-45 provides that 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.  FASB ASC 260-10-45 requires
retrospective application to all prior period net income per share
calculations.





Our
restricted stock awards are considered participating securities as they receive
nonforfeitable dividends at the same rate as our common stock.  In
accordance with FASB ASC 260-10-45, 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 required under FASB
ASC 260-10-45 reduces earnings available for common
stockholders.





The
effect of applying FASB ASC 260-10-45 changed basic net income per share
from $0.16 to $0.15 for the three months ended September 30, 2009, from $0.40 to
$0.37 for the nine months ended September 30, 2009, and from $0.21 to $0.20 for
the nine months ended September 30, 2008.  There was no change in
basic earnings per share for the three months ended September 30,
2008.  The effect of applying FASB ASC 260-10-45 changed fully
diluted net income per share from $0.15 to $0.14 for the three months ended
September 30, 2009, from $0.38 to $0.35 for the nine months ended September 30,
2009, and from $0.21 to $0.20 for the nine months ended September 30,
2008.  There was no change in diluted earnings per share for the three
months ended September 30, 2008.


14





DUFF
& PHELPS CORPORATION AND SUBSIDIARIES


NOTES
TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS


(In
thousands, except per share amounts)


(Unaudited)





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





Three
      Months Ended
                                  
                                  
                                  Nine
      Months EndedSeptember
      30,
                                  
                                  
                                  September
      30,
                                  
                                  
                                  September
      30,
                                  
                                  
                                  September
      30,2009
                                  
                                  
                                  2008
                                  
                                  
                                  2009
                                  
                                  
                                  2008Basic
      and diluted net income per share attributable to holders of Class A
      common stock:Numerator:Net
      income attributable to Duff & Phelps Corporation
                                  
                                  $
                                  3,452
                                  
                                  
                                  $
                                  153
                                  
                                  
                                  $
                                  6,951
                                  
                                  
                                  $
                                  2,828Earnings
      allocated to participating securities
                                  
                                  
                                  (220
                                  )
                                  
                                  
                                  (12
                                  )
                                  
                                  
                                  (493
                                  )
                                  
                                  
                                  (179
                                  )Earnings
      available for common stockholders
                                  
                                  $
                                  3,232
                                  
                                  
                                  $
                                  141
                                  
                                  
                                  $
                                  6,458
                                  
                                  
                                  $
                                  2,649Denominator
      for basic net income per share attributable to holders of Class A
      common stock:Weighted
      average shares of Class A common stock
                                  
                                  
                                  21,625
                                  
                                  
                                  
                                  13,299
                                  
                                  
                                  
                                  17,517
                                  
                                  
                                  
                                  13,166Denominator
      for diluted net income per share attributable to holders of Class A
      common stock:Weighted
      average shares of Class A common stock
                                  
                                  
                                  21,625
                                  
                                  
                                  
                                  13,299
                                  
                                  
                                  
                                  17,517
                                  
                                  
                                  
                                  13,166Add
      dilutive effect of the following:Ongoing
      RSAs
                                  
                                  
                                  823
                                  
                                  
                                  
                                  374
                                  
                                  
                                  
                                  680
                                  
                                  
                                  
                                  231Assumed conversion of
      New Class A Units for Class A common stock(a)
                                  
                                  
                                  -
                                  
                                  
                                  
                                  -
                                  
                                  
                                  
                                  -
                                  
                                  
                                  
                                  -Dilutive
      weighted average shares of Class A common stock
                                  
                                  
                                  22,448
                                  
                                  
                                  
                                  13,673
                                  
                                  
                                  
                                  18,197
                                  
                                  
                                  
                                  13,397Net
      income per share attributable to holders of Class A common stockof
      Duff & Phelps CorporationBasic
                                  
                                  $
                                  0.15
                                  
                                  
                                  $
                                  0.01
                                  
                                  
                                  $
                                  0.37
                                  
                                  
                                  $
                                  0.20Diluted
                                  
                                  $
                                  0.14
                                  
                                  
                                  $
                                  0.01
                                  
                                  
                                  $
                                  0.35
                                  
                                  
                                  $
                                  0.20_______________________________(a)The
      following shares were anti-dilutive and excluded from this
      calculation:Weighted
      average New Class A Units outstanding
                                  
                                  
                                  16,246
                                  
                                  
                                  
                                  20,684
                                  
                                  
                                  
                                  18,584
                                  
                                  
                                  
                                  20,693Weighted
      average IPO Options outstanding
                                  
                                  
                                  1,889
                                  
                                  
                                  
                                  2,032
                                  
                                  
                                  
                                  1,935
                                  
                                  
                                  
                                  2,048





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) IPO Options
and/or Ongoing RSAs listed above exceeding those outstanding under the treasury
stock method.  The 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.


15


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,
2008.  Except for adjustments to estimated forfeiture rates based on
the most recent available information, 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, 2008.





Equity-based
compensation with respect to (a) grants of 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 EndedSeptember
      30, 2009
                          
                          
                          September
      30, 2008Client
                          
                          
                          
                          
                          
                          
                          
                          
                          ClientService
                          
                          
                          SG&A
                          
                          
                          Total
                          
                          
                          Service
                          
                          
                          SG&A
                          
                          
                          TotalLegacy
      Units
                          
                          $
                          1,610
                          
                          
                          $
                          758
                          
                          
                          $
                          2,368
                          
                          
                          $
                          5,237
                          
                          
                          $
                          1,548
                          
                          
                          $
                          6,785IPO
      Options
                          
                          
                          514
                          
                          
                          
                          347
                          
                          
                          
                          861
                          
                          
                          
                          1,348
                          
                          
                          
                          572
                          
                          
                          
                          1,920Ongoing
      RSAs
                          
                          
                          2,170
                          
                          
                          
                          913
                          
                          
                          
                          3,083
                          
                          
                          
                          966
                          
                          
                          
                          725
                          
                          
                          
                          1,691Total
                          
                          $
                          4,294
                          
                          
                          $
                          2,018
                          
                          
                          $
                          6,312
                          
                          
                          $
                          7,551
                          
                          
                          $
                          2,845
                          
                          
                          $
                          10,396





Nine
      Months Ended
                            
                            
                            Nine
      Months EndedSeptember
      30, 2009
                            
                            
                            September
      30, 2008Client
                            
                            
                            
                            
                            
                            
                            
                            
                            ClientService
                            
                            
                            SG&A
                            
                            
                            Total
                            
                            
                            Service
                            
                            
                            SG&A
                            
                            
                            TotalLegacy
      Units
                            
                            $
                            6,138
                            
                            
                            $
                            2,046
                            
                            
                            $
                            8,184
                            
                            
                            $
                            11,350
                            
                            
                            $
                            4,273
                            
                            
                            $
                            15,623IPO
      Options
                            
                            
                            1,866
                            
                            
                            
                            913
                            
                            
                            
                            2,779
                            
                            
                            
                            3,741
                            
                            
                            
                            1,657
                            
                            
                            
                            5,398Ongoing
      RSAs
                            
                            
                            5,627
                            
                            
                            
                            2,615
                            
                            
                            
                            8,242
                            
                            
                            
                            2,091
                            
                            
                            
                            2,234
                            
                            
                            
                            4,325Total
                            
                            $
                            13,631
                            
                            
                            $
                            5,574
                            
                            
                            $
                            19,205
                            
                            
                            $
                            17,182
                            
                            
                            $
                            8,164
                            
                            
                            $
                            25,346





Restricted
stock awards and restricted stock units were granted as a form of incentive
compensation and are accounted for similarly.  Corresponding expense is
recognized based on the fair market value on the date of grant.  Restricted
stock units are granted to certain of our international employees, are generally
contingent on continued employment and are typically converted to Class A common
stock when restrictions on transfer lapse after three years.





During
the nine months ended September 30, 2009, the Company issued 1,426 Ongoing RSAs
related to annual bonus incentive compensation, performance incentive
initiatives, promotions and recruiting efforts.  Expense is recognized
based on the fair market value on the date of grant over the service
period.  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
1,426 Ongoing RSAs granted, 221 awards were granted to executives on February
26, 2009 and 18 to the Board of Directors on April 30, 2009.  The
restrictions on transfer and forfeiture provisions are eliminated annually over
three years based on ratable vesting for grants made to executives and four
years for non-employee members of our Board of Directors.


16


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 IPO Options and Ongoing
RSAs:





Restricted
                  
                  
                  RestrictedIPO
                  
                  
                  Stock
                  
                  
                  StockOptions
                  
                  
                  Awards
                  
                  
                  UnitsBalance
      as of December 31, 2008
                  
                  
                  1,997
                  
                  
                  
                  1,248
                  
                  
                  
                  92Grants
      of Ongoing RSAs
                  
                  
                  -
                  
                  
                  
                  1,345
                  
                  
                  
                  81Converted
      to Class A common stock upon lapse of restrictions
                  
                  
                  -
                  
                  
                  
                  (74
                  )
                  
                  
                  -Ongoing
      RSAs withheld for payroll taxes
                  
                  
                  -
                  
                  
                  
                  (53
                  )
                  
                  
                  -Exercises
      of IPO Options
                  
                  
                  (51
                  )
                  
                  
                  -
                  
                  
                  
                  -Forfeitures
                  
                  
                  (106
                  )
                  
                  
                  (138
                  )
                  
                  
                  -Balance
      as of September 30, 2009
                  
                  
                  1,840
                  
                  
                  
                  2,328
                  
                  
                  
                  173Vested
                  
                  
                  900
                  
                  
                  
                  -
                  
                  
                  
                  -Unvested
                  
                  
                  940
                  
                  
                  
                  2,328
                  
                  
                  
                  173Weighted
      average fair value on grant date
                  
                  $
                  7.33
                  
                  
                  $
                  14.12
                  
                  
                  $
                  13.88Weighted
      average exercise price
                  
                  $
                  16.00Weighted
      average remaining contractual term
                  
                  
                  8.00Total
      intrinsic value of exercised options
                  
                  $
                  202Total
      fair value of options vested
                  
                  $
                  6,597Aggregate
      intrinsic value
                  
                  $
                  5,814Options
      expected to vest
                  
                  
                  807Aggregate
      intrinsic value of options expected to vest
                  
                  $
                  2,550





The
following table summarizes activity for New Class A Units attributable to
equity-based compensation:





NewClass
      A UnitsAttributable
      toEquity-BasedCompensationBalance
      as of December 31, 2008
                    
                    
                    6,615Redemptions
                    
                    
                    (708
                    )Forfeitures
                    
                    
                    (95
                    )Balance
      as of September 30, 2009
                    
                    
                    5,812Vested
                    
                    
                    4,121Unvested
                    
                    
                    1,691





The total
unamortized compensation cost related to all non-vested awards was approximately
$24,452 at September 30, 2009.  The weighted-average period over which
this is expected to be recognized is approximately 1.6 years.  A tax
benefit of $1,581 and $1,121 was recognized for IPO Options and Ongoing RSAs for
the nine months ended September 30, 2009 and 2008,
respectively.


17


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 at September 30, 2009:





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)(2)
                          
                          $
                          -
                          
                          
                          $
                          16,368
                          
                          
                          $
                          -
                          
                          
                          $
                          16,368Total
      assets
                          
                          $
                          -
                          
                          
                          $
                          16,368
                          
                          
                          $
                          -
                          
                          
                          $
                          16,368Benefits
      payable in conjunction with deferred compensation plan(1)
                          
                          $
                          -
                          
                          
                          $
                          17,167
                          
                          
                          $
                          -
                          
                          
                          $
                          17,167Interest
      rate swap(3)
                          
                          
                          -
                          
                          
                          
                          443
                          
                          
                          
                          -
                          
                          
                          
                          443Total
      liabilities
                          
                          $
                          -
                          
                          
                          $
                          17,610
                          
                          
                          $
                          -
                          
                          
                          $
                          17,610





____________________________


(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 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.  The deferred compensation plan is further
      discussed in Note 10.




(2)
              Investments
      held in conjunction with the deferred compensation plan exclude
      approximately $727 which is included in cash and cash equivalents at
      September 30, 2009.




(3)
              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.


18




DUFF
& PHELPS CORPORATION AND SUBSIDIARIES


NOTES
TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS


(In
thousands, except per share amounts)


(Unaudited)





Note
      8   -
            LONG-TERM
      DEBT





The
Company’s long-term obligations are summarized in the following
table:





September 30,
                            
                            
                            December 31,2009
                            
                            
                            2008Outstanding
      balance of credit facility
                            
                            $
                            -
                            
                            
                            $
                            42,763Less:  current
      amounts due in following year
                            
                            
                            -
                            
                            
                            
                            (794
                            )Long-term
      portion
                            
                            
                            -
                            
                            
                            
                            41,969Debt
      discount and interest rate swap
                            
                            
                            -
                            
                            
                            
                            209Long-term
      debt, less current portion
                            
                            $
                            -
                            
                            
                            $
                            42,178





On May 22
, 2009, the Company terminated its Amended and Restated Credit Agreement
(“Former Credit Facility”), dated as of July 30, 2008, by and among Duff &
Phelps, LLC, the primary operating subsidiary of the Company, D&P
Acquisitions, the persons designated as lenders thereto, and General Electric
Capital Corporation (“GE Capital”), in its capacity as Administrative
Agent.  The Former Credit Facility consisted of a (i) $65,000
seven-year term loan, (ii) $15,000 delayed draw term loan, (iii) $20,000
six-year revolver loan, and (iv) $75,000 incremental term loan facility, which
was uncommitted by the lenders and required additional approval at the time of
request.





As
described in Note 1, the Company used a portion of the net proceeds from its May
2009 Follow-On Offering to repay all amounts outstanding under the Former Credit
Facility.  In connection with the repayment, the Company incurred a
nonrecurring charge of $1,737 to reflect the accelerated amortization of the
debt discount and issuance costs of which $1,674 was non-cash.





On July
15, 2009, Duff & Phelps, LLC entered into a Credit Agreement ("Current
Credit Agreement") with Bank of America, N.A., as administrative agent and the
lenders from time to time party thereto, providing for a $30,000 senior secured
revolving credit facility (“Current 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.





Loans
under the Current 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
September 30, 2009, the Company qualified for the 1.75% applicable margin and
0.25% unused commitment fee.





The
Current 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,
(b) 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 Current 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 September 30, 2009.  The Current Credit
Agreement permits dividend payments or other distributions in the Company’s
common stock or other equity interests subject to certain
limitations.


19


DUFF
& PHELPS CORPORATION AND SUBSIDIARIES


NOTES
TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS


(In
thousands, except per share amounts)


(Unaudited)





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





Letters
of Credit





At
September 30, 2009, the Company had $4,111 of outstanding letters of credit,
primarily in connection with real estate leases.  $377 of cash was
deposited into a restricted account to serve as deposits to secure certain of
these letters of credit.





Interest
Rate Swap





The
Company has a $11,600 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 Former Credit Facility, 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
Condensed Consolidated Statement of Operations.  At September 30,
2009, the liability resulting from the interest rate swap was included in “Other
long-term liabilities.”  Prior to the termination of the Former Credit
Facility with GE Capital, this amount was included as a component of “Long-term
debt, less current portion.”





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
                        
                        
                        Nine Months EndedSeptember 30,
                        
                        
                        September 30,
                        
                        
                        September 30,
                        
                        
                        September 30,2009
                        
                        
                        2008
                        
                        
                        2009
                        
                        
                        2008Gain/(loss)
      resulting from changein
      fair value of interest rate swap
                        
                        $
                        162
                        
                        
                        $
                        125
                        
                        
                        $
                        487
                        
                        
                        $
                        71Estimated
      fair value - asset/(liability)
                        
                        $
                        (443
                        )
                        
                        $
                        (492
                        )
                        
                        $
                        (443
                        )
                        
                        $
                        (492
                        )


20


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
                    
                    
                    Nine Months EndedSeptember 30,
                    
                    
                    September 30,
                    
                    
                    September 30,
                    
                    
                    September 30,2009
                    
                    
                    2008
                    
                    
                    2009
                    
                    
                    2008Provision
      for income taxes
                    
                    $
                    2,999
                    
                    
                    $
                    1,348
                    
                    
                    $
                    7,532
                    
                    
                    $
                    6,343Effective
      income tax rate
                    
                    
                    28.3
                    %
                    
                    
                    36.8
                    %
                    
                    
                    28.0
                    %
                    
                    
                    28.3
                    %





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 740-10-50 Income
Taxes – Overall – Disclosure.  A reconciliation of the
beginning and ending amount of unrecognized tax benefit is summarized as
follows:





Balance
      as of December 31, 2008
                        
                        $
                        502Additional
      based on tax positions related to the current year
                        
                        
                        84Balance
      as of September 30, 2009
                        
                        $
                        586





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.


21


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,
2008.





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 approximated fair market value at
September 30, 2009.





The
following table summarizes the fair market value of the rabbi trust and the
corresponding liability owed to participants:





September
      30,
                  
                  
                  December
      31,2009
                  
                  
                  2008Fair
      market value of investments in rabbi trust
                  
                  $
                  16,368
                  
                  
                  $
                  7,946Payable
      to participants of the plan
                  
                  
                  17,167
                  
                  
                  
                  8,479


______________________


(1)
              The
      fair market value of investments in rabbi trust held in conjunction with
      the deferred compensation plan exclude approximately $727 which is
      included in cash and cash equivalents at September 30,
    2009.





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 “Accrued benefits related to deferred
compensation plan” on the Consolidated Balance Sheet.  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 -
            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.


22


DUFF
& PHELPS CORPORATION AND SUBSIDIARIES


NOTES
TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS


(In
thousands, except per share amounts)


(Unaudited)





Note
      12 -
            SEGMENT
      INFORMATION





Prior to
January 1, 2009, the Company provided services through two
segments:  Financial Advisory and Investment
Banking.  Effective January 1, 2009, the Company changed the structure
of its internal organization in a manner that caused the composition of its
reportable segments to change.  As a result, the Corporate Finance
Consulting business, previously part of Financial Advisory, became a third
segment.  Segment results for the three and nine months ended
September 30, 2008 have been recast to reflect current year
presentation.





The
Financial Advisory segment provides valuation advisory services, tax services,
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 transaction opinions, merger and acquisition
advisory services, and restructuring advisory services.





Three Months Ended
                    
                    
                    Nine Months EndedSeptember 30,
                    
                    
                    September 30,
                    
                    
                    September 30,
                    
                    
                    September 30,2009
                    
                    
                    2008
                    
                    
                    2009
                    
                    
                    2008Financial
      AdvisoryRevenues
      (excluding reimbursables)
                    
                    $
                    57,634
                    
                    
                    $
                    65,022
                    
                    
                    $
                    176,431
                    
                    
                    $
                    191,919Segment
      operating income
                    
                    
                    8,855
                    
                    
                    
                    8,717
                    
                    
                    
                    29,543
                    
                    
                    
                    29,627Segment
      operating income margin
                    
                    
                    15.4
                    %
                    
                    
                    13.4
                    %
                    
                    
                    16.7
                    %
                    
                    
                    15.4
                    %Corporate
      Finance ConsultingRevenues
      (excluding reimbursables)
                    
                    $
                    17,445
                    
                    
                    $
                    15,211
                    
                    
                    $
                    47,039
                    
                    
                    $
                    43,036Segment
      operating income
                    
                    
                    5,389
                    
                    
                    
                    3,080
                    
                    
                    
                    11,819
                    
                    
                    
                    9,741Segment
      operating income margin
                    
                    
                    30.9
                    %
                    
                    
                    20.2
                    %
                    
                    
                    25.1
                    %
                    
                    
                    22.6
                    %Investment
      BankingRevenues
      (excluding reimbursables)
                    
                    $
                    18,161
                    
                    
                    $
                    16,081
                    
                    
                    $
                    49,088
                    
                    
                    $
                    52,313Segment
      operating income
                    
                    
                    2,364
                    
                    
                    
                    3,994
                    
                    
                    
                    7,195
                    
                    
                    
                    13,516Segment
      operating income margin
                    
                    
                    13.0
                    %
                    
                    
                    24.8
                    %
                    
                    
                    14.7
                    %
                    
                    
                    25.8
                    %TotalRevenues
      (excluding reimbursables)
                    
                    $
                    93,240
                    
                    
                    $
                    96,314
                    
                    
                    $
                    272,558
                    
                    
                    $
                    287,268Segment
      operating income
                    
                    $
                    16,608
                    
                    
                    $
                    15,791
                    
                    
                    $
                    48,557
                    
                    
                    $
                    52,884Net
      client reimbursable expenses
                    
                    
                    (74
                    )
                    
                    
                    (32
                    )
                    
                    
                    (63
                    )
                    
                    
                    20Equity-based
      compensationfrom
      Legacy Units and IPO Options
                    
                    
                    (3,229
                    )
                    
                    
                    (8,705
                    )
                    
                    
                    (10,963
                    )
                    
                    
                    (21,021
                    )Depreciation
      and amortization
                    
                    
                    (2,594
                    )
                    
                    
                    (2,446
                    )
                    
                    
                    (7,712
                    )
                    
                    
                    (6,903
                    )Acquisition
      retention expenses
                    
                    
                    -
                    
                    
                    
                    (206
                    )
                    
                    
                    -
                    
                    
                    
                    (782
                    )Operating
      income
                    
                    $
                    10,711
                    
                    
                    $
                    4,402
                    
                    
                    $
                    29,819
                    
                    
                    $
                    24,198


23


DUFF
& PHELPS CORPORATION AND SUBSIDIARIES


NOTES
TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS


(In
thousands, except per share amounts)


(Unaudited)





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.  In the three months ended September 30, 2009 and 2008,
the Financial Advisory segment (primarily Valuation Advisory services)
recognized revenues of $2,972 and $2,657 from the cross utilization of its
client service professionals on engagements from the Corporate Finance
Consulting segment (primarily Portfolio Valuation services),
respectively.  In the nine months ended September 30, 2009 and 2008,
the Financial Advisory segment (primarily Valuation Advisory services)
recognized revenues of $9,539 and $11,418 from the cross utilization of its
client service professionals on engagements from the Corporate Finance
Consulting segment (primarily Portfolio Valuation services),
respectively.





Revenues
excluding reimbursable expenses attributable to geographic area are summarized
as follows:





Three Months Ended
                      
                      
                      Nine Months EndedSeptember 30,
                      
                      
                      September 30,
                      
                      
                      September 30,
                      
                      
                      September 30,2009
                      
                      
                      2008
                      
                      
                      2009
                      
                      
                      2008United
      States
                      
                      $
                      83,745
                      
                      
                      $
                      86,783
                      
                      
                      $
                      246,649
                      
                      
                      $
                      258,464Europe
                      
                      
                      7,668
                      
                      
                      
                      7,663
                      
                      
                      
                      21,499
                      
                      
                      
                      24,838Asia
                      
                      
                      1,827
                      
                      
                      
                      1,868
                      
                      
                      
                      4,410
                      
                      
                      
                      3,966Revenues
      (excluding reimbursables)
                      
                      $
                      93,240
                      
                      
                      $
                      96,314
                      
                      
                      $
                      272,558
                      
                      
                      $
                      287,268





There
were no intersegment revenues during the periods presented.  The
Company does not maintain separate balance sheet information by
segment.


24


DUFF
& PHELPS CORPORATION AND SUBSIDIARIES


NOTES
TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS


(In
thousands, except per share amounts)


(Unaudited)





Note
      13 -
            RELATED
      PARTY TRANSACTIONS





Lovell
Minnick Partners





In
conjunction with the May 2009 Follow-On Offering, the Company redeemed 1,900 New
Class A Units of D&P Acquisitions held by entities affiliated with Lovell
Minnick Partners at a price per unit equal to the public offering price or an
aggregate amount of $28,025.





In
addition, D&P Acquisitions made distributions totaling $3,946 and $1,974 to
entities affiliated with Lovell Minnick Partners in the nine months ended
September 30, 2009 and 2008, respectively.  Of the total, $3,584 and
$1,974 were distributions for taxes during the nine months ended September 30,
2009 and 2008 with respect to estimated taxable income for 2008 and 2007,
respectively.  The remaining $362 for the nine months ended September
30, 2009 was a distribution of $0.05 per unit.  Both of these
distributions are further described in Note 3.





Two
managing directors of Lovell Minnick Partners serve as independent directors on
the Company’s Board of Directors.





Vestar
Capital Partners





In
conjunction with the May 2009 Follow-On Offering, the Company redeemed 1,600 New
Class A Units of D&P Acquisitions held by entities affiliated with Vestar
Capital Partners at a price per unit equal to the public offering price or an
aggregate amount of $23,600.  Included in this amount were payments to
Noah Gottdiener, Chairman and Chief Executive Officer, Gerard Creagh, President,
and Harvey Krueger, an independent director, who are also members in a limited
liability company managed by Vestar Capital Partners.  As a result,
Messrs. Gottdiener, Creagh and Krueger each received approximately $53, $53 and
$42, respectively, as a result of such redemptions.





In
addition, D&P Acquisitions made distributions totaling $4,931 and $2,371 to
entities affiliated with Vestar Capital Partners in the nine months ended
September 30, 2009 and 2008, respectively.  Of the total, $4,429 and
$2,371 were distributions for taxes during the nine months ended September 30,
2009 and 2008 with respect to estimated taxable income for 2008 and 2007,
respectively.  The remaining $502 for the nine months ended September
30, 2009 was a distribution of $0.05 per unit.  Both of these
distributions are further described in Note 3.





A
managing director of Vestar Capital Partners serves as an independent director
on the Company’s Board of Directors.


25


DUFF
& PHELPS CORPORATION AND SUBSIDIARIES


NOTES
TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS


(In
thousands, except per share amounts)


(Unaudited)





Note
      14 -
            SUBSEQUENT
      EVENTS





On
October 5, 2009, D&P Acquisitions entered into an amendment (the
“Amendment”) to the Exchange Agreement, dated as of October 3, 2007, by and
among D&P Acquisitions and the unitholders of D&P Acquisitions named
therein.  Prior to the Amendment, the unitholders of D&P
Acquisitions could exchange New Class A Units of D&P Acquisitions on a
one-for-one basis for shares of Class A common stock of the Company once per
quarter upon 45 days notice, with each exchange to occur on the fifth business
day prior to the last business day of such quarter.  Pursuant to the
Amendment, such exchanges will now occur on March 5th, May 15th, August 15th and
November 15th of each year.  In addition, the 45-day notice period for
the November 15, 2009 exchange was shortened to 30 days.  The
Amendment also contained certain textual amendments that were solely for the
purpose of clarification. The Amendment is filed as Exhibit 10.1 to the Current
Report on Form 8-K as filed with the SEC on October 6, 2009.





Pursuant
to Section 2.1 of the Registration Rights Agreement, dated as of October 3,
2007, by and among the Company and the stockholders of the Company party
thereto, the Company filed a Shelf Registration Statement on Form S-3 (“Form
S-3”) registering for resale the shares of Class A common stock of the Company
issuable to unitholders of D&P Acquisitions upon exchange of their New Class
A Units of D&P Acquisitions for shares of Class A common stock of the
Company.  The Form S-3 was declared effective by the SEC on October
26, 2009.





On
November 3, 2009, the Company announced that its board of directors had declared
a quarterly dividend of $0.05 per share on its outstanding Class A common
stock.  The dividend is payable on December 4, 2009, to shareholders
of record on November 24, 2009.  Concurrently with the payment of the
dividend, the Company will be distributing $0.05 per unit to holders of New
Class A Units.





In
accordance with FASB ASC 855-10,Subsequent
Events – Overall, management of the Company evaluated subsequent events
through November 3, 2009, the date the financial statements were
issued.


26


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, 2008, as filed with
the Securities and Exchange Commission (“SEC”) on February 26, 2009 (“2008 Form
10-K”); any subsequent filings of our Quarterly Reports on Form 10-Q; and other
filings with the SEC, including the Current Report on Form 8-K filed on October
16, 2009 which adjusts certain parts of our 2008 Form 10-K to reflect changes
arising from (i) the adoption of new accounting standards, (ii) changes in
the Company’s segment reporting that were effective January 1, 2009, and
(iii) material subsequent events.  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 SEC.  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,




·
            useful
      lives of intangible assets,




·
            the
      carrying value of goodwill and intangible
  assets,




·
            allowances
      for doubtful accounts,




·
            gains
      and losses on engagements,




·
            amounts
      due to noncontrolling unitholders,




·
            reserves
      for estimated tax liabilities,




·
            contingent
      liabilities, and




·
            certain
      estimates and assumptions used in the calculation of (i) the fair value of
      equity compensation issued to employees and (ii) segment operating
      income.





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, 2008, as filed with
the SEC on February 26, 2009.  During the nine months ended September
30, 2009, there were no significant changes in our critical accounting policies
and estimates, except for a change in our segment reporting.  Prior to
January 1, 2009, the Company provided services through two
segments:  Financial Advisory and Investment
Banking.  Effective January 1, 2009, the Company changed the structure
of its internal organization in a manner that caused the composition of its
reportable segments to change.  As a result, the Corporate Finance
Consulting business, previously part of Financial Advisory, became a third
segment.  Segment results for prior periods have been recast to
reflect current year presentation.


27


Results
of Operations





Duff
& Phelps Corporation (the “Company”) is a leading provider of independent
financial advisory, corporate finance consulting and investment banking
services.  Our mission is to help its clients protect, maximize and
recover value.  The foundation of our services is our ability to
provide independent advice on issues involving highly technical and complex
assessments in the areas of valuation, taxation, dispute consulting, financial
restructuring and M&A advisory.  We believe the Duff & Phelps
brand is associated with a high level of professional service and integrity,
knowledge leadership and independent, trusted advice.  The Company
serves a global client base through offices in 24 cities, comprised of offices
in 18 U.S. cities, including New York, Chicago, Dallas and Los Angeles, and six
international offices located in Amsterdam, London, Munich, Paris, Shanghai and
Tokyo.





Prior to
January 1, 2009, we provided services through two segments:  Financial
Advisory and Investment Banking.  Effective January 1, 2009, we
changed the structure of our internal organization in a manner that caused the
composition of our reportable segments to change.  In order to align
our segment reporting with the focus of our business in 2009 and beyond, the
Corporate Finance Consulting business, previously part of Financial Advisory,
became a third segment.











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, 2008.





Amounts
are reported in thousands, except for per share amounts, headcount or where the
context requires otherwise.





The
following defined terms are used in this section:  Financial
Accounting Standards Board (“FASB”); Accounting Standards Codification (“ASC”);
and Statement of Financial Accounting Standards (“SFAS”).


28


Three
months ended September 30, 2009 versus three months ended September 30,
2008





The
results of operations are summarized as follows:





Results
of Operations


(Dollars
in thousands)





Three Months EndedSeptember
      30,
                    
                    
                    September
      30,
                    
                    
                    Unit
                    
                    
                    Percent2009
                    
                    
                    2008
                    
                    
                    Change
                    
                    
                    ChangeRevenues
                    
                    $
                    93,240
                    
                    
                    $
                    96,314
                    
                    
                    $
                    (3,074
                    )
                    
                    
                    (3.2
                    )%Reimbursable
      expenses
                    
                    
                    3,394
                    
                    
                    
                    2,781
                    
                    
                    
                    613
                    
                    
                    
                    22.0
                    %Total
      revenues
                    
                    
                    96,634
                    
                    
                    
                    99,095
                    
                    
                    
                    (2,461
                    )
                    
                    
                    (2.5
                    )%Direct
      client service costsCompensation
      and benefits(1)
                    
                    
                    52,287
                    
                    
                    
                    57,280
                    
                    
                    
                    (4,993
                    )
                    
                    
                    (8.7
                    )%Other
      direct client service costs
                    
                    
                    2,954
                    
                    
                    
                    2,410
                    
                    
                    
                    544
                    
                    
                    
                    22.6
                    %Acquisition
      retention expenses
                    
                    
                    -
                    
                    
                    
                    206
                    
                    
                    
                    (206
                    )
                    
                    
                    (100.0
                    )%Reimbursable
      expenses
                    
                    
                    3,468
                    
                    
                    
                    2,813
                    
                    
                    
                    655
                    
                    
                    
                    23.3
                    %58,709
                    
                    
                    
                    62,709
                    
                    
                    
                    (4,000
                    )
                    
                    
                    (6.4
                    )%Operating
      expensesSelling,
      general and administrative(2)
                    
                    
                    24,620
                    
                    
                    
                    29,538
                    
                    
                    
                    (4,918
                    )
                    
                    
                    (16.6
                    )%Depreciation
      and amortization
                    
                    
                    2,594
                    
                    
                    
                    2,446
                    
                    
                    
                    148
                    
                    
                    
                    6.1
                    %27,214
                    
                    
                    
                    31,984
                    
                    
                    
                    (4,770
                    )
                    
                    
                    (14.9
                    )%Operating
      income
                    
                    
                    10,711
                    
                    
                    
                    4,402
                    
                    
                    
                    6,309
                    
                    
                    
                    143.3
                    %Other
      expense/(income)Interest
      income
                    
                    
                    (17
                    )
                    
                    
                    (90
                    )
                    
                    
                    73
                    
                    
                    
                    (81.1
                    )%Interest
      expense
                    
                    
                    91
                    
                    
                    
                    847
                    
                    
                    
                    (756
                    )
                    
                    
                    (89.3
                    )%Loss
      on early extinguishment of debt
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    -Other
      expense
                    
                    
                    50
                    
                    
                    
                    (21
                    )
                    
                    
                    71
                    
                    
                    
                    (338.1
                    )%124
                    
                    
                    
                    736
                    
                    
                    
                    (612
                    )
                    
                    
                    (83.2
                    )%Income
      before income taxes
                    
                    
                    10,587
                    
                    
                    
                    3,666
                    
                    
                    
                    6,921
                    
                    
                    
                    188.8
                    %Provision
      for income taxes
                    
                    
                    2,999
                    
                    
                    
                    1,348
                    
                    
                    
                    1,651
                    
                    
                    
                    122.5
                    %Net
      income
                    
                    
                    7,588
                    
                    
                    
                    2,318
                    
                    
                    
                    5,270
                    
                    
                    
                    227.4
                    %Less:  Net
      income attributable to the noncontrolling interest
                    
                    
                    4,136
                    
                    
                    
                    2,165
                    
                    
                    
                    1,971
                    
                    
                    
                    91.0
                    %Net
      income attributable to Duff & Phelps Corporation
                    
                    $
                    3,452
                    
                    
                    $
                    153
                    
                    
                    $
                    3,299
                    
                    
                    
                    2156.2
                    %Other
      financial and operating dataAdjusted
      EBITDA(3)
                    
                    $
                    16,534
                    
                    
                    $
                    15,759
                    
                    
                    $
                    775
                    
                    
                    
                    4.9
                    %Adjusted
      EBITDA(3)as a percentage of revenues
                    
                    
                    17.7
                    %
                    
                    
                    16.4
                    %
                    
                    
                    1.4
                    %
                    
                    
                    8.4
                    %End
      of period managing directors
                    
                    
                    162
                    
                    
                    
                    168
                    
                    
                    
                    (6
                    )
                    
                    
                    (3.6
                    )%End
      of period client service professionals
                    
                    
                    902
                    
                    
                    
                    993
                    
                    
                    
                    (91
                    )
                    
                    
                    (9.2
                    )%





(1)
              Compensation
      and benefits include $4,294 and $7,551 of equity-based compensation
      expense for the three months ended September 30, 2009 and 2008,
      respectively.




(2)
              Selling,
      general and administrative expenses include $2,018 and $2,845 of
      equity-based compensation expense for the three months ended September 30,
      2009 and 2008, respectively.




(3)
              Adjusted
      EBITDA is a non-GAAP financial measure and is calculated as
      follows:


29





(3)
            Continued
      . . .




Reconciliation
of Adjusted EBITDA


(Dollars
in thousands)





Three Months EndedSeptember 30,
                    
                    
                    September 30,2009
                    
                    
                    2008Revenues
      (excluding client reimbursables)
                    
                    $
                    93,240
                    
                    
                    $
                    96,314Net
      income attributable to Duff & Phelps Corporation
                    
                    $
                    3,452
                    
                    
                    $
                    153Net
      income attributable to the noncontrolling interest
                    
                    
                    4,136
                    
                    
                    
                    2,165Provision
      for income taxes
                    
                    
                    2,999
                    
                    
                    
                    1,348Other
      expense/(income), net
                    
                    
                    124
                    
                    
                    
                    736Depreciation
      and amortization
                    
                    
                    2,594
                    
                    
                    
                    2,446Equity-based
      compensation associated with Legacy Units and IPO Options
                    
                    
                    3,229
                    
                    
                    
                    8,705Acquisition
      retention expenses
                    
                    
                    -
                    
                    
                    
                    206Adjusted
      EBITDA
                    
                    $
                    16,534
                    
                    
                    $
                    15,759Adjusted
      EBITDA as a percentage of revenues
                    
                    
                    17.7
                    %
                    
                    
                    16.4
                    %





Adjusted
EBITDA is a non-GAAP financial measure.  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 attributable to Duff & Phelps Corporation for (a)
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), (b) equity-based
compensation associated with the Legacy Units, a significant portion of which is
due to certain one-time grants associated with predecessor acquisitions and IPO
Options, (c) acquisition retention expenses which are related to deferred
payments associated with prior acquisitions, and (d) net income attributable to
the noncontrolling interest.





Given the
level of acquisition activity during the period prior to the Company’s initial
public offering (“Predecessor”), and related capital investments and one time
equity grants associated with acquisitions during the Predecessor period (which
we do not expect to incur at the same levels in periods subsequent to the
Company’s initial public offering) 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
current 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, consists of net income attributable to Duff
& Phelps Corporation before (a) net income attributable to the
noncontrolling interest, (b) provision for income taxes, (c) other
expense/(income), net, (d) depreciation and amortization, (e) acquisition
retention expenses, and (f) equity-based compensation associated with Legacy
Units and IPO Options included in (i) compensation and benefits and (ii)
selling, general and administrative expenses.





This
non-GAAP financial measure is not prepared in accordance with, and should not be
considered an alternative 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 differently and, therefore,
Adjusted EBITDA as presented for us may not be comparable to Adjusted EBITDA
reported by other companies.


30


Overview





The
current economic landscape continues to present us with opportunities and
challenges.  While our service offerings generally correlated to the
volume of M&A transactions continue to experience reduced demand, growth in
other business units partially offset this reduction with opportunities arising
from counter-cyclical and non-cyclical services.  Services we believe
to be generally counter-cyclical include our Global Restructuring Advisory,
Dispute & Legal Management Consulting, and goodwill impairment testing in
conjunction with FASB ASC 350-20, Intangibles – Goodwill and Other(formerly SFAS 142).  Services we believe to be generally
non-cyclical include Portfolio Valuation, Financial Engineering and Tax
Services.





Revenues





Revenues
excluding reimbursable expenses decreased $3,074 or 3.2% to $93,240, compared to
$96,314 for the three months ended September 30, 2008.  As summarized
in the following table, the decrease in revenues primarily resulted from a 11.4%
decrease in revenues attributable to our Financial Advisory
segment.  These decreases were partially offset by a 14.7% increase in
revenues provided by our Corporate Finance Consulting segment and a 12.9%
increase from our Investment Banking segment.





Three Months EndedSeptember
      30,
                  
                  
                  September
      30,
                  
                  
                  Dollar
                  
                  
                  Percent2009
                  
                  
                  2008
                  
                  
                  Change
                  
                  
                  ChangeFinancial
      AdvisoryValuation
      Advisory
                  
                  $
                  29,692
                  
                  
                  $
                  43,777
                  
                  
                  $
                  (14,085
                  )
                  
                  
                  -32.2
                  %Tax
      Services
                  
                  
                  15,045
                  
                  
                  
                  12,700
                  
                  
                  
                  2,345
                  
                  
                  
                  18.5
                  %Dispute
      & Legal Management Consulting
                  
                  
                  12,897
                  
                  
                  
                  8,545
                  
                  
                  
                  4,352
                  
                  
                  
                  50.9
                  %57,634
                  
                  
                  
                  65,022
                  
                  
                  
                  (7,388
                  )
                  
                  
                  -11.4
                  %Corporate
      Finance ConsultingPortfolio
      Valuation
                  
                  
                  5,858
                  
                  
                  
                  5,010
                  
                  
                  
                  848
                  
                  
                  
                  16.9
                  %Financial
      Engineering
                  
                  
                  5,201
                  
                  
                  
                  3,068
                  
                  
                  
                  2,133
                  
                  
                  
                  69.5
                  %Strategic
      Value Advisory
                  
                  
                  4,034
                  
                  
                  
                  3,315
                  
                  
                  
                  719
                  
                  
                  
                  21.7
                  %Due
      Diligence
                  
                  
                  2,352
                  
                  
                  
                  3,818
                  
                  
                  
                  (1,466
                  )
                  
                  
                  -38.4
                  %17,445
                  
                  
                  
                  15,211
                  
                  
                  
                  2,234
                  
                  
                  
                  14.7
                  %Investment
      BankingGlobal
      Restructuring Advisory
                  
                  
                  11,038
                  
                  
                  
                  4,825
                  
                  
                  
                  6,213
                  
                  
                  
                  128.8
                  %Transaction
      Opinions
                  
                  
                  2,714
                  
                  
                  
                  6,367
                  
                  
                  
                  (3,653
                  )
                  
                  
                  -57.4
                  %M&A
      Advisory
                  
                  
                  4,409
                  
                  
                  
                  4,889
                  
                  
                  
                  (480
                  )
                  
                  
                  -9.8
                  %18,161
                  
                  
                  
                  16,081
                  
                  
                  
                  2,080
                  
                  
                  
                  12.9
                  %Total
      revenues (excluding reimbursables)
                  
                  $
                  93,240
                  
                  
                  $
                  96,314
                  
                  
                  $
                  (3,074
                  )
                  
                  
                  -3.2
                  %





Services
within each of our segments were impacted by the general economic environment
which led to a substantially lower volume of M&A and real estate
transactions and a corresponding decline in revenues from services associated
with Valuation Advisory, Transaction Opinions, Due Diligence and M&A
Advisory.  These decreases were partially offset primarily by
increases in revenues from services associated with Global Restructuring
Advisory, Dispute & Legal Management Consulting, Financial Engineering and
to a lesser extent other Corporate Finance Consulting services.





Our
client service headcount decreased to 902 client service professionals at
September 30, 2009 from 975 client service professionals at December 31,
2008.  This decrease resulted from targeted reductions and attrition,
partially offset by limited hiring of professionals in areas which we have
targeted for investment.


31





Direct
Client Service Costs





Direct
client service costs decreased $4,000 or 6.4% to $58,709 for the three months
ended September 30, 2009, compared to $62,709 for the three months ended
September 30, 2008.  Direct client services costs include compensation
and benefits and other direct client service costs. Other direct client service
costs include fees payable to contractors and other expenses related to
engagements. The following table adjusts direct client service costs for
equity-based compensation associated with Legacy Units and IPO Options,
acquisition retention expenses and reimbursable expenses.





Direct
Client Service Costs


(Dollars
in thousands)





Three Months EndedSeptember
      30,
                                
                                
                                September
      30,2009
                                
                                
                                2008Revenues
      (excluding reimbursables)
                                
                                $
                                93,240
                                
                                
                                $
                                96,314Total
      direct client service costs
                                
                                $
                                58,709
                                
                                
                                $
                                62,709Less:  equity-based
      compensation associatedwith
      Legacy Units and IPO Options
                                
                                
                                (2,124
                                )
                                
                                
                                (6,585
                                )Less:  acquisition
      retention expenses
                                
                                
                                -
                                
                                
                                
                                (206
                                )Less:  reimbursable
      expenses
                                
                                
                                (3,468
                                )
                                
                                
                                (2,813
                                )Direct
      client service costs, as adjusted
                                
                                $
                                53,117
                                
                                
                                $
                                53,105Direct
      client service costs, as adjusted,as
      a percentage of revenues
                                
                                
                                57.0
                                %
                                
                                
                                55.1
                                %





The
slight increase in direct client service costs, as adjusted, primarily resulted
from an increase in expense from accrued compensation and grants of Ongoing
RSAs, offset by lower compensation from the reduction of headcount between
periods.





Equity-based
compensation 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, partially offset by an increase in expense
from grants of Ongoing RSAs.  Expenses related to retention payments
associated with the acquisition of the CVC business in 2005 decreased as a
result of the completion of the payments in 2008.  CVC represents the
Corporate Value Consulting business (“CVC”) which we acquired in 2005 from the
Standard & Poor’s division of The McGraw-Hill Companies, Inc.





Operating
Expenses





Operating
expenses decreased $4,770 or 14.9% to $27,214 for the three months ended
September 30, 2009, compared to $31,984 for the three months ended September 30,
2008.  The following table adjusts operating expenses for depreciation
and amortization and equity-based compensation associated with Legacy Units and
IPO Options.





Operating
Expenses


(Dollars
in thousands)





Three Months EndedSeptember
      30,
                          
                          
                          September
      30,2009
                          
                          
                          2008Revenues
      (excluding reimbursables)
                          
                          $
                          93,240
                          
                          
                          $
                          96,314Total
      operating expenses
                          
                          $
                          27,214
                          
                          
                          $
                          31,984Less:  equity-based
      compensation associatedwith
      Legacy Units and IPO Options
                          
                          
                          (1,105
                          )
                          
                          
                          (2,120
                          )Less:  depreciation
      and amortization
                          
                          
                          (2,594
                          )
                          
                          
                          (2,446
                          )Operating
      expenses, as adjusted
                          
                          $
                          23,515
                          
                          
                          $
                          27,418Operating
      expenses, as adjusted,as
      a percentage of revenues
                          
                          
                          25.2
                          %
                          
                          
                          28.5
                          %


32





The
decrease in operating expenses, as adjusted, resulted from lower costs related
to professional and practice development.  In particular, last year’s
quarter included the costs of a firm-wide management conference which focused on
sales, marketing and collaboration within the Company.





Equity-based
compensation 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, partially offset by an increase in expense for
grants of Ongoing RSAs.





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 GE Capital
Corporation.





Provision
for Income Taxes





The
provision for income taxes was $2,999 or 28.3% of income before income taxes for
the three months ended September 30, 2009, compared to $1,348 or 36.8% of income
before income taxes for the three months ended September 30,
2008.  The U.S. statutory income tax rate of 35% was 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.





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 majority 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 40.2% and 60.7% for the three months
ended September 30, 2009 and 2008, respectively.


33


Segment
Results – Three months ended September 30, 2009 versus three months ended
September 30, 2008





The
following table sets forth selected segment operating results:





Results
of Operations by Segment


(In
thousands, except headcount and rate-per-hour)





Three Months EndedSeptember
      30,
                  
                  
                  September
      30,
                  
                  
                  Unit
                  
                  
                  Percent2009
                  
                  
                  2008
                  
                  
                  Change
                  
                  
                  ChangeFinancial
      AdvisoryRevenues
      (excluding reimbursables)
                  
                  $
                  57,634
                  
                  
                  $
                  65,022
                  
                  
                  $
                  (7,388
                  )
                  
                  
                  -11.4
                  %Segment
      operating income
                  
                  $
                  8,855
                  
                  
                  $
                  8,717
                  
                  
                  $
                  138
                  
                  
                  
                  1.6
                  %Segment
      operating income margin
                  
                  
                  15.4
                  %
                  
                  
                  13.4
                  %
                  
                  
                  2.0
                  %
                  
                  
                  14.6
                  %Corporate
      Finance ConsultingRevenues
      (excluding reimbursables)
                  
                  $
                  17,445
                  
                  
                  $
                  15,211
                  
                  
                  $
                  2,234
                  
                  
                  
                  14.7
                  %Segment
      operating income
                  
                  $
                  5,389
                  
                  
                  $
                  3,080
                  
                  
                  $
                  2,309
                  
                  
                  
                  75.0
                  %Segment
      operating income margin
                  
                  
                  30.9
                  %
                  
                  
                  20.2
                  %
                  
                  
                  10.6
                  %
                  
                  
                  52.6
                  %Investment
      BankingRevenues
      (excluding reimbursables)
                  
                  $
                  18,161
                  
                  
                  $
                  16,081
                  
                  
                  $
                  2,080
                  
                  
                  
                  12.9
                  %Segment
      operating income
                  
                  $
                  2,364
                  
                  
                  $
                  3,994
                  
                  
                  $
                  (1,630
                  )
                  
                  
                  -40.8
                  %Segment
      operating income margin
                  
                  
                  13.0
                  %
                  
                  
                  24.8
                  %
                  
                  
                  -11.8
                  %
                  
                  
                  -47.6
                  %TotalRevenues
      (excluding reimbursables)
                  
                  $
                  93,240
                  
                  
                  $
                  96,314Segment
      operating income
                  
                  $
                  16,608
                  
                  
                  $
                  15,791Net
      client reimbursable expenses
                  
                  
                  (74
                  )
                  
                  
                  (32
                  )Equity-based
      compensation from Legacy Units and IPO Options
                  
                  
                  (3,229
                  )
                  
                  
                  (8,705
                  )Depreciation
      and amortization
                  
                  
                  (2,594
                  )
                  
                  
                  (2,446
                  )Acquisition
      retention expenses
                  
                  
                  -
                  
                  
                  
                  (206
                  )Operating
      income
                  
                  $
                  10,711
                  
                  
                  $
                  4,402Average
      Client Service ProfessionalsFinancial
      Advisory
                  
                  
                  642
                  
                  
                  
                  701
                  
                  
                  
                  (59
                  )
                  
                  
                  -8.4
                  %Corporate
      Finance Consulting
                  
                  
                  133
                  
                  
                  
                  137
                  
                  
                  
                  (4
                  )
                  
                  
                  -2.9
                  %Investment
      Banking
                  
                  
                  130
                  
                  
                  
                  125
                  
                  
                  
                  5
                  
                  
                  
                  4.0
                  %Total
                  
                  
                  905
                  
                  
                  
                  963
                  
                  
                  
                  (58
                  )
                  
                  
                  -6.0
                  %End
      of Period Client Service ProfessionalsFinancial
      Advisory
                  
                  
                  641
                  
                  
                  
                  722
                  
                  
                  
                  (81
                  )
                  
                  
                  -11.2
                  %Corporate
      Finance Consulting
                  
                  
                  131
                  
                  
                  
                  142
                  
                  
                  
                  (11
                  )
                  
                  
                  -7.7
                  %Investment
      Banking
                  
                  
                  130
                  
                  
                  
                  129
                  
                  
                  
                  1
                  
                  
                  
                  0.8
                  %Total
                  
                  
                  902
                  
                  
                  
                  993
                  
                  
                  
                  (91
                  )
                  
                  
                  -9.2
                  %Revenue
      per Client Service ProfessionalFinancial
      Advisory
                  
                  $
                  90
                  
                  
                  $
                  93
                  
                  
                  $
                  (3
                  )
                  
                  
                  -3.2
                  %Corporate
      Finance Consulting
                  
                  $
                  131
                  
                  
                  $
                  111
                  
                  
                  $
                  20
                  
                  
                  
                  18.0
                  %Investment
      Banking
                  
                  $
                  140
                  
                  
                  $
                  129
                  
                  
                  $
                  11
                  
                  
                  
                  8.5
                  %Total
                  
                  $
                  103
                  
                  
                  $
                  100
                  
                  
                  $
                  3
                  
                  
                  
                  3.0
                  %


34





Results
of Operations by Segment – Continued


(In
thousands, except headcount and rate-per-hour)





Three Months EndedSeptember
      30,
                    
                    
                    September
      30,
                    
                    
                    Unit
                    
                    
                    Percent2009
                    
                    
                    2008
                    
                    
                    Change
                    
                    
                    ChangeUtilization(1)Financial
      Advisory
                    
                    
                    62.4
                    %
                    
                    
                    62.7
                    %
                    
                    
                    -0.3
                    %
                    
                    
                    -0.5
                    %Corporate
      Finance Consulting
                    
                    
                    70.0
                    %
                    
                    
                    54.6
                    %
                    
                    
                    15.4
                    %
                    
                    
                    28.2
                    %Rate-Per-Hour(2)Financial
      Advisory
                    
                    $
                    336
                    
                    
                    $
                    334
                    
                    
                    $
                    2
                    
                    
                    
                    0.6
                    %Corporate
      Finance Consulting
                    
                    $
                    402
                    
                    
                    $
                    431
                    
                    
                    $
                    (29
                    )
                    
                    
                    -6.7
                    %Revenues
      (excluding reimbursables)Financial
      Advisory
                    
                    $
                    57,634
                    
                    
                    $
                    65,022
                    
                    
                    $
                    (7,388
                    )
                    
                    
                    -11.4
                    %Corporate
      Finance Consulting
                    
                    
                    17,445
                    
                    
                    
                    15,211
                    
                    
                    
                    2,234
                    
                    
                    
                    14.7
                    %Investment
      Banking
                    
                    
                    18,161
                    
                    
                    
                    16,081
                    
                    
                    
                    2,080
                    
                    
                    
                    12.9
                    %Total
                    
                    $
                    93,240
                    
                    
                    $
                    96,314
                    
                    
                    $
                    (3,074
                    )
                    
                    
                    -3.2
                    %Average
      Number of Managing DirectorsFinancial
      Advisory
                    
                    
                    95
                    
                    
                    
                    103
                    
                    
                    
                    (8
                    )
                    
                    
                    -7.8
                    %Corporate
      Finance Consulting
                    
                    
                    31
                    
                    
                    
                    28
                    
                    
                    
                    3
                    
                    
                    
                    10.7
                    %Investment
      Banking
                    
                    
                    40
                    
                    
                    
                    33
                    
                    
                    
                    7
                    
                    
                    
                    21.2
                    %Total
                    
                    
                    166
                    
                    
                    
                    164
                    
                    
                    
                    2
                    
                    
                    
                    1.2
                    %End
      of Period Managing DirectorsFinancial
      Advisory
                    
                    
                    93
                    
                    
                    
                    105
                    
                    
                    
                    (12
                    )
                    
                    
                    -11.4
                    %Corporate
      Finance Consulting
                    
                    
                    29
                    
                    
                    
                    29
                    
                    
                    
                    -
                    
                    
                    
                    0.0
                    %Investment
      Banking
                    
                    
                    40
                    
                    
                    
                    34
                    
                    
                    
                    6
                    
                    
                    
                    17.6
                    %Total
                    
                    
                    162
                    
                    
                    
                    168
                    
                    
                    
                    (6
                    )
                    
                    
                    -3.6
                    %Revenue
      per Managing DirectorFinancial
      Advisory
                    
                    $
                    607
                    
                    
                    $
                    631
                    
                    
                    $
                    (24
                    )
                    
                    
                    -3.8
                    %Corporate
      Finance Consulting
                    
                    $
                    563
                    
                    
                    $
                    543
                    
                    
                    $
                    20
                    
                    
                    
                    3.7
                    %Investment
      Banking
                    
                    $
                    454
                    
                    
                    $
                    487
                    
                    
                    $
                    (33
                    )
                    
                    
                    -6.8
                    %Total
                    
                    $
                    562
                    
                    
                    $
                    587
                    
                    
                    $
                    (25
                    )
                    
                    
                    -4.3
                    %





(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 & Associate, L.P. (“Rash”), a wholly-owned subsidiary of the
      Company, 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 $2,743 and $2,975 of revenues
      associated with Rash in the three months ended September 30, 2009 and
      2008, respectively.


35





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.  In the three months ended September 30, 2009 and 2008,
the Financial Advisory segment (primarily Valuation Advisory services)
recognized revenues of $2,972 and $2,657 from the cross utilization of its
client service professionals on engagements from the Corporate Finance
Consulting segment (primarily Portfolio Valuation services),
respectively.





Financial
Advisory





Revenues




Revenues
from the Financial Advisory segment decreased $7,388 or 11.4% to $57,634 for the
three months ended September 30, 2009, compared to $65,022 for the three months
ended September 30, 2008.  The decrease in revenues resulted from our
Valuation Advisory business, partially offset by continued growth in revenues
from our Dispute & Legal Management Consulting and Tax Services businesses,
as summarized in the following table:





Three Months EndedSeptember
      30,
                  
                  
                  September
      30,
                  
                  
                  Dollar
                  
                  
                  Percent2009
                  
                  
                  2008
                  
                  
                  Change
                  
                  
                  ChangeFinancial
      AdvisoryValuation
      Advisory
                  
                  $
                  29,692
                  
                  
                  $
                  43,777
                  
                  
                  $
                  (14,085
                  )
                  
                  
                  -32.2
                  %Tax
      Services
                  
                  
                  15,045
                  
                  
                  
                  12,700
                  
                  
                  
                  2,345
                  
                  
                  
                  18.5
                  %Dispute
      & Legal Management Consulting
                  
                  
                  12,897
                  
                  
                  
                  8,545
                  
                  
                  
                  4,352
                  
                  
                  
                  50.9
                  %$
                  57,634
                  
                  
                  $
                  65,022
                  
                  
                  $
                  (7,388
                  )
                  
                  
                  -11.4
                  %





The
decrease in revenues from our Valuation Advisory business primarily resulted
from reduced demand for services correlated to the volume of M&A
transactions and the general economic environment, including real estate
valuations and purchase price allocations pursuant to FASB ASC 805-20,Business
Combinations(formerlySFAS 141(R)).  These decreases were partially offset
by increases in revenue from goodwill impairment testing in conjunction with
FASB ASC 350-20, Intangibles –
Goodwill and Other(formerly SFAS 142).  The increase in
revenues from our Dispute & Legal Management Consulting business primarily
resulted from an engagement to serve as a financial advisor to the court
appointed examiner of a large financial services company under bankruptcy
protection.  We expect this engagement to wind down early next
year.  The increase in revenues from Tax Services primarily resulted
from continued growth in property tax services, the addition of professionals in
our transactional tax advisory practice during the latter half of 2008, and an
increase in revenues recognized from engagements where revenue is contingent
upon tax savings achieved for our clients.





Segment
Operating Income




Although
Financial Advisory revenues decreased between periods, segment operating income
increased $138 or 1.6% to $8,855 for the three months ended September 30, 2009,
compared to $8,717 for the three months ended September 30,
2008.  Segment operating income margin, defined as segment operating
income expressed as a percentage of segment revenues, was 15.4% for the three
months ended September 30, 2009, compared to 13.4% for the three months ended
September 30, 2008.  The improvement in segment operating margin
primarily resulted from lower accrued compensation as a result of the decrease
in revenues and average headcount between periods.


36





Corporate
Finance Consulting





Revenues




Revenues
from the Corporate Finance Consulting segment increased $2,234 or 14.7% to
$17,445 for the three months ended September 30, 2009, compared to $15,211 for
the three months ended September 30, 2008.  The increase in revenues
was driven by demand for Portfolio Valuation, Financial Engineering and
Strategic Value services, partially offset by reduced demand for Due Diligence
services, as summarized in the following table:





Three Months EndedSeptember
      30,
                  
                  
                  September
      30,
                  
                  
                  Dollar
                  
                  
                  Percent2009
                  
                  
                  2008
                  
                  
                  Change
                  
                  
                  ChangeCorporate
      Finance ConsultingPortfolio
      Valuation
                  
                  $
                  5,858
                  
                  
                  $
                  5,010
                  
                  
                  $
                  848
                  
                  
                  
                  16.9
                  %Financial
      Engineering
                  
                  
                  5,201
                  
                  
                  
                  3,068
                  
                  
                  
                  2,133
                  
                  
                  
                  69.5
                  %Strategic
      Value Advisory
                  
                  
                  4,034
                  
                  
                  
                  3,315
                  
                  
                  
                  719
                  
                  
                  
                  21.7
                  %Due
      Diligence
                  
                  
                  2,352
                  
                  
                  
                  3,818
                  
                  
                  
                  (1,466
                  )
                  
                  
                  -38.4
                  %$
                  17,445
                  
                  
                  $
                  15,211
                  
                  
                  $
                  2,234
                  
                  
                  
                  14.7
                  %





Portfolio
Valuation, Financial Engineering and Strategic Value Advisory benefited from
increased demand from existing clients as well as the addition of new
clients.  Financial Engineering also benefited from engagements
sourced from Portfolio Valuation as well as the Financial Advisory segment,
including the engagement to serve as a financial advisor to the court appointed
examiner of a large financial services company under bankruptcy
protection.  The decrease in revenues from Due Diligence resulted from
a lower volume of M&A transactions during the quarter.





Segment
Operating Income




Operating
income from the Corporate Finance Consulting segment increased $2,309 or 75.0%
to $5,389 for the three months ended September 30, 2009, compared to $3,080 for
the three months ended September 30, 2008.  Segment operating income
margin was 30.9% for the three months ended September 30, 2009, compared to
20.2% for the three months ended September 30, 2008.  Improvements in
segment operating income and margin primarily resulted from the increase in
revenues.





Investment
Banking





Revenues




Revenues
from the Investment Banking segment increased $2,080 or 12.9% to $18,161 for the
three months ended September 30, 2009, compared to $16,081 for the three months
ended September 30, 2008.  Increases in revenues from Global
Restructuring Advisory, were partially offset by decreases in revenues from
Transaction Opinions and M&A Advisory, as summarized in the following
table:





Three Months EndedSeptember
      30,
                  
                  
                  September
      30,
                  
                  
                  Dollar
                  
                  
                  Percent2009
                  
                  
                  2008
                  
                  
                  Change
                  
                  
                  ChangeInvestment
      BankingGlobal
      Restructuring Advisory
                  
                  $
                  11,038
                  
                  
                  $
                  4,825
                  
                  
                  $
                  6,213
                  
                  
                  
                  128.8
                  %Transaction
      Opinions
                  
                  
                  2,714
                  
                  
                  
                  6,367
                  
                  
                  
                  (3,653
                  )
                  
                  
                  -57.4
                  %M&A
      Advisory
                  
                  
                  4,409
                  
                  
                  
                  4,889
                  
                  
                  
                  (480
                  )
                  
                  
                  -9.8
                  %$
                  18,161
                  
                  
                  $
                  16,081
                  
                  
                  $
                  2,080
                  
                  
                  
                  12.9
                  %





Global
Restructuring Advisory benefited from an increase in demand for our domestic
restructuring services.  Revenues from Transaction Opinions and
M&A Advisory decreased as a result of the current economic landscape and a
lower volume of M&A transactions.





Segment
Operating Income




Operating
income from the Investment Banking segment decreased $1,630 or 40.8% to $2,364
for the three months ended September 30, 2009, compared to $3,994 for the three
months ended September 30, 2008.  Operating income margin was 13.0%
for the three months ended September 30, 2009, compared to 24.8% for the three
months ended September 30, 2008.  The decrease in segment operating
income and margin primarily resulted from higher compensation expense which
resulted in part from the hiring of new managing directors to enhance our
position in the marketplace.





37





Nine
months ended September 30, 2009 versus nine months ended September 30,
2008





The
results of operations are summarized as follows:





Results
of Operations


(Dollars
in thousands)





Nine Months EndedSeptember
      30,
                        
                        
                        September
      30,
                        
                        
                        Unit
                        
                        
                        Percent2009
                        
                        
                        2008
                        
                        
                        Change
                        
                        
                        ChangeRevenues
                        
                        $
                        272,558
                        
                        
                        $
                        287,268
                        
                        
                        $
                        (14,710
                        )
                        
                        
                        (5.1
                        )%Reimbursable
      expenses
                        
                        
                        8,057
                        
                        
                        
                        7,946
                        
                        
                        
                        111
                        
                        
                        
                        1.4
                        %Total
      revenues
                        
                        
                        280,615
                        
                        
                        
                        295,214
                        
                        
                        
                        (14,599
                        )
                        
                        
                        (4.9
                        )%Direct
      client service costsCompensation
      and benefits(1)
                        
                        
                        155,115
                        
                        
                        
                        166,276
                        
                        
                        
                        (11,161
                        )
                        
                        
                        (6.7
                        )%Other
      direct client service costs
                        
                        
                        5,801
                        
                        
                        
                        5,828
                        
                        
                        
                        (27
                        )
                        
                        
                        (0.5
                        )%Acquisition
      retention expenses
                        
                        
                        -
                        
                        
                        
                        782
                        
                        
                        
                        (782
                        )
                        
                        
                        (100.0
                        )%Reimbursable
      expenses
                        
                        
                        8,120
                        
                        
                        
                        7,926
                        
                        
                        
                        194
                        
                        
                        
                        2.4
                        %169,036
                        
                        
                        
                        180,812
                        
                        
                        
                        (11,776
                        )
                        
                        
                        (6.5
                        )%Operating
      expensesSelling,
      general and administrative(2)
                        
                        
                        74,048
                        
                        
                        
                        83,301
                        
                        
                        
                        (9,253
                        )
                        
                        
                        (11.1
                        )%Depreciation
      and amortization
                        
                        
                        7,712
                        
                        
                        
                        6,903
                        
                        
                        
                        809
                        
                        
                        
                        11.7
                        %81,760
                        
                        
                        
                        90,204
                        
                        
                        
                        (8,444
                        )
                        
                        
                        (9.4
                        )%Operating
      income
                        
                        
                        29,819
                        
                        
                        
                        24,198
                        
                        
                        
                        5,621
                        
                        
                        
                        23.2
                        %Other
      expense/(income)Interest
      income
                        
                        
                        (34
                        )
                        
                        
                        (654
                        )
                        
                        
                        620
                        
                        
                        
                        (94.8
                        )%Interest
      expense
                        
                        
                        1,079
                        
                        
                        
                        2,569
                        
                        
                        
                        (1,490
                        )
                        
                        
                        (58.0
                        )%Loss
      on early extinguishment of debt
                        
                        
                        1,737
                        
                        
                        
                        -
                        
                        
                        
                        1,737
                        
                        
                        
                        N/AOther
      expense
                        
                        
                        137
                        
                        
                        
                        (92
                        )
                        
                        
                        229
                        
                        
                        
                        (248.9
                        )%2,919
                        
                        
                        
                        1,823
                        
                        
                        
                        1,096
                        
                        
                        
                        60.1
                        %Income
      before income taxes
                        
                        
                        26,900
                        
                        
                        
                        22,375
                        
                        
                        
                        4,525
                        
                        
                        
                        20.2
                        %Provision
      for income taxes
                        
                        
                        7,532
                        
                        
                        
                        6,343
                        
                        
                        
                        1,189
                        
                        
                        
                        18.7
                        %Net
      income
                        
                        
                        19,368
                        
                        
                        
                        16,032
                        
                        
                        
                        3,336
                        
                        
                        
                        20.8
                        %Less:  Net
      income attributable to the noncontrolling interest
                        
                        
                        12,417
                        
                        
                        
                        13,204
                        
                        
                        
                        (787
                        )
                        
                        
                        (6.0
                        )%Net
      income attributable to Duff & Phelps Corporation
                        
                        $
                        6,951
                        
                        
                        $
                        2,828
                        
                        
                        $
                        4,123
                        
                        
                        
                        145.8
                        %Other
      financial and operating dataAdjusted
      EBITDA(3)
                        
                        $
                        48,494
                        
                        
                        $
                        52,904
                        
                        
                        $
                        (4,410
                        )
                        
                        
                        (8.3
                        )%Adjusted
      EBITDA(3)
      as a percentage of revenues
                        
                        
                        17.8
                        %
                        
                        
                        18.4
                        %
                        
                        
                        -0.6
                        %
                        
                        
                        (3.4
                        )%End
      of period managing directors
                        
                        
                        162
                        
                        
                        
                        168
                        
                        
                        
                        (6
                        )
                        
                        
                        (3.6
                        )%End
      of period client service professionals
                        
                        
                        902
                        
                        
                        
                        993
                        
                        
                        
                        (91
                        )
                        
                        
                        (9.2
                        )%








(1)
              Compensation
      and benefits include $13,631 and $17,182 of equity-based compensation
      expense for the nine months ended September 30, 2009 and 2008,
      respectively.




(2)
              Selling,
      general and administrative expenses include $5,574 and $8,164 of
      equity-based compensation expense for the nine months ended September 30,
      2009 and 2008,
respectively.


38





(3)
            Adjusted
      EBITDA is a non-GAAP financial measure and is calculated as
      follows:





Reconciliation
      of Adjusted EBITDA(Dollars
      in thousands)Nine
      Months EndedSeptember
      30,
                    
                    
                    September
      30,2009
                    
                    
                    2008Revenues
      (excluding client reimbursables)
                    
                    $
                    272,558
                    
                    
                    $
                    287,268Net
      income attributable to Duff & Phelps Corporation
                    
                    $
                    6,951
                    
                    
                    $
                    2,828Net
      income attributable to noncontrolling interest
                    
                    
                    12,417
                    
                    
                    
                    13,204Provision
      for income taxes
                    
                    
                    7,532
                    
                    
                    
                    6,343Other
      expense/(income), net
                    
                    
                    2,919
                    
                    
                    
                    1,823Depreciation
      and amortization
                    
                    
                    7,712
                    
                    
                    
                    6,903Equity-based
      compensation associated with Legacy Units and IPO Options
                    
                    
                    10,963
                    
                    
                    
                    21,021Acquisition
      retention expenses
                    
                    
                    -
                    
                    
                    
                    782Adjusted
      EBITDA
                    
                    $
                    48,494
                    
                    
                    $
                    52,904Adjusted
      EBITDA as a percentage of revenues
                    
                    
                    17.8
                    %
                    
                    
                    18.4
                    %





Adjusted
EBITDA is a non-GAAP financial measure.  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 attributable to Duff & Phelps Corporation for (a)
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), (b) equity-based
compensation associated with the Legacy Units, a significant portion of which is
due to certain one-time grants associated with predecessor acquisitions and IPO
Options, (c) acquisition retention expenses which are related to deferred
payments associated with prior acquisitions, and (d) net income attributable to
the noncontrolling interest.





Given the
level of acquisition activity during the period prior to the Company’s initial
public offering (“Predecessor”), and related capital investments and one time
equity grants associated with acquisitions during the Predecessor period (which
we do not expect to incur at the same levels in periods subsequent to the
Company’s initial public offering) 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
current 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, consists of net income attributable to Duff
& Phelps Corporation before (a) net income attributable to the
noncontrolling interest, (b) provision for income taxes, (c) other
expense/(income), net, (d) depreciation and amortization, (e) acquisition
retention expenses, and (f) equity-based compensation associated with Legacy
Units and IPO Options included in (i) compensation and benefits and (ii)
selling, general and administrative expenses.





This
non-GAAP financial measure is not prepared in accordance with, and should not be
considered an alternative 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 differently and, therefore,
Adjusted EBITDA as presented for us may not be comparable to Adjusted EBITDA
reported by other companies.





39





Overview





The
current economic landscape continues to present us with opportunities and
challenges.  While our service offerings generally correlated to the
volume of M&A transactions continue to experience reduced demand, growth in
other business units partially offset this reduction with opportunities arising
from counter-cyclical and non-cyclical services.  Services we believe
to be generally counter-cyclical include our global restructuring services,
dispute and legal management consulting, and goodwill impairment testing in
conjunction with FASB ASC 350-20, Intangibles – Goodwill and Other(formerly SFAS 142).  Services we believe to be generally
non-cyclical include portfolio valuation, financial engineering and tax
services.





Revenues





Revenues
excluding reimbursable expenses decreased $14,710 or 5.1% to $272,558, compared
to $287,268 for the nine months ended September 30, 2008.  The
decrease in revenues primarily resulted from a 8.1% decrease in revenues from
our Financial Advisory segment and 6.2% decrease in revenues attributable to our
Investment Banking segment.  These decreases were partially offset by
a 9.3% increase in revenues provided by our Corporate Finance Consulting
segment, as summarized in the following table:





Nine
      Months EndedSeptember 30,
                          
                          
                          September 30,
                          
                          
                          Dollar
                          
                          
                          Percent2009
                          
                          
                          2008
                          
                          
                          Change
                          
                          
                          ChangeFinancial
      AdvisoryValuation
      Advisory
                          
                          $
                          103,834
                          
                          
                          $
                          136,337
                          
                          
                          $
                          (32,503
                          )
                          
                          
                          -23.8
                          %Tax
      Services
                          
                          
                          37,895
                          
                          
                          
                          33,441
                          
                          
                          
                          4,454
                          
                          
                          
                          13.3
                          %Dispute
      & Legal Management Consulting
                          
                          
                          34,702
                          
                          
                          
                          22,141
                          
                          
                          
                          12,561
                          
                          
                          
                          56.7
                          %176,431
                          
                          
                          
                          191,919
                          
                          
                          
                          (15,488
                          )
                          
                          
                          -8.1
                          %Corporate
      Finance ConsultingPortfolio
      Valuation
                          
                          
                          16,491
                          
                          
                          
                          11,632
                          
                          
                          
                          4,859
                          
                          
                          
                          41.8
                          %Financial
      Engineering
                          
                          
                          14,508
                          
                          
                          
                          10,657
                          
                          
                          
                          3,851
                          
                          
                          
                          36.1
                          %Strategic
      Value Advisory
                          
                          
                          10,242
                          
                          
                          
                          8,879
                          
                          
                          
                          1,363
                          
                          
                          
                          15.4
                          %Due
      Diligence
                          
                          
                          5,798
                          
                          
                          
                          11,868
                          
                          
                          
                          (6,070
                          )
                          
                          
                          -51.1
                          %47,039
                          
                          
                          
                          43,036
                          
                          
                          
                          4,003
                          
                          
                          
                          9.3
                          %Investment
      BankingGlobal
      Restructuring Advisory
                          
                          
                          25,230
                          
                          
                          
                          11,706
                          
                          
                          
                          13,524
                          
                          
                          
                          115.5
                          %Transaction
      Opinions
                          
                          
                          14,995
                          
                          
                          
                          27,373
                          
                          
                          
                          (12,378
                          )
                          
                          
                          -45.2
                          %M&A
      Advisory
                          
                          
                          8,863
                          
                          
                          
                          13,234
                          
                          
                          
                          (4,371
                          )
                          
                          
                          -33.0
                          %49,088
                          
                          
                          
                          52,313
                          
                          
                          
                          (3,225
                          )
                          
                          
                          -6.2
                          %Total
      revenues (excluding reimbursables)
                          
                          $
                          272,558
                          
                          
                          $
                          287,268
                          
                          
                          $
                          (14,710
                          )
                          
                          
                          -5.1
                          %





Services
within each of our segments were impacted by the general economic environment
which led to a substantially lower volume of M&A and real estate
transactions and a corresponding decline in revenues from services associated
with Valuation Advisory, Transaction Opinions, Due Diligence and M&A
Advisory.  These decreases were partially offset primarily by
increases in revenues from services associated with Global Restructuring,
Dispute & Legal Management Consulting, Portfolio Valuation and Financial
Engineering services.





Our
client service headcount decreased to 902 client service professionals at
September 30, 2009 from 975 client service professionals at December 31,
2008.  This decrease resulted from targeted reductions and attrition,
partially offset by limited hiring of professionals in areas which we have
targeted for investment.





40





Direct
Client Service Costs





Direct
client service costs decreased $11,776 or 6.5% to $169,036 for the nine months
ended September 30, 2009, compared to $180,812 for the nine months ended
September 30, 2008.  Direct client services costs include compensation
and benefits and other direct client service costs. Other direct client service
costs include fees payable to contractors and other expenses related to
engagements. The following table adjusts direct client service costs for
equity-based compensation associated with Legacy Units and IPO Options,
acquisition retention expenses and reimbursable expenses.  Adjusted
direct client service costs decreased between periods as a result of a concerted
effort to control expenses.





Direct
      Client Service Costs(Dollars
      in thousands)Nine
      Months EndedSeptember
      30,
                          
                          
                          September
      30,2009
                          
                          
                          2008Revenues
      (excluding reimbursables)
                          
                          $
                          272,558
                          
                          
                          $
                          287,268Total
      direct client service costs
                          
                          $
                          169,036
                          
                          
                          $
                          180,812Less:  equity-based
      compensation associatedwith
      Legacy Units and IPO Options
                          
                          
                          (8,004
                          )
                          
                          
                          (15,091
                          )Less:  acquisition
      retention expenses
                          
                          
                          -
                          
                          
                          
                          (782
                          )Less:  reimbursable
      expenses
                          
                          
                          (8,120
                          )
                          
                          
                          (7,926
                          )Direct
      client service costs, as adjusted
                          
                          $
                          152,912
                          
                          
                          $
                          157,013Direct
      client service costs, as adjusted,as
      a percentage of revenues
                          
                          
                          56.1
                          %
                          
                          
                          54.7
                          %





The
decrease in direct client service costs, as adjusted, resulted from lower
accrued and other compensation costs, primarily as a result of the decline in
revenues between periods and a reduction of recruiting activity in the current
year.  Lower accrued compensation was partially offset by higher
salary costs and an increase in expense from grants of Ongoing
RSAs.  Salary costs were higher as a result of an increase in average
client service professionals between periods.





Equity-based
compensation 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, partially offset by changes in estimates of
forfeiture rates and an increase in expense from grants of Ongoing
RSAs.  Expenses related to retention payments associated with the
acquisition of the CVC business in 2005 decreased as a result of the completion
of the payments in 2008.  CVC represents the Corporate Value
Consulting business (“CVC”) which we acquired in 2005 from the Standard &
Poor’s division of The McGraw-Hill Companies, Inc.





Operating
Expenses





Operating
expenses decreased $8,444 or 9.4% to $81,760 for the nine months ended September
30, 2009, compared to $90,204 for the nine months ended September 30,
2008.  The following table adjusts operating expenses for depreciation
and amortization and equity-based compensation associated with Legacy Units and
IPO Options.





Operating
      Expenses(Dollars
      in thousands)Nine
      Months EndedSeptember
      30,
                              
                              
                              September
      30,2009
                              
                              
                              2008Revenues
      (excluding reimbursables)
                              
                              $
                              272,558
                              
                              
                              $
                              287,268Total
      operating expenses
                              
                              $
                              81,760
                              
                              
                              $
                              90,204Less:  equity-based
      compensation associatedwith
      Legacy Units and IPO Options
                              
                              
                              (2,959
                              )
                              
                              
                              (5,930
                              )Less:  depreciation
      and amortization
                              
                              
                              (7,712
                              )
                              
                              
                              (6,903
                              )Operating
      expenses, as adjusted
                              
                              $
                              71,089
                              
                              
                              $
                              77,371Operating
      expenses, as adjusted,as
      a percentage of revenues
                              
                              
                              26.1
                              %
                              
                              
                              26.9
                              %





41





The
decrease in operating expenses, as adjusted, resulted from lower professional
and practice development expenses, lower recruiting costs from a decline in
hiring activity and lower accrued compensation primarily as a result of the
decline in revenues between periods, partially offset by higher professional
fees and other general expenses.





Equity-based
compensation 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, partially offset by changes in estimates of
forfeiture rates and an increase in expense for grants of Ongoing
RSAs.





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 GE Capital
Corporation.  The termination of our former credit facility resulted
in a $1,737 early extinguishment charge of which $1,674 was
non-cash.





Provision
for Income Taxes





The
provision for income taxes was $7,532 or 28.0% of income before income taxes for
the nine months ended September 30, 2009, compared to $6,343 or 28.3% of income
before income taxes for the nine months ended September 30, 2008.  The
U.S. statutory income tax rate of 35% was 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.





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 majority 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 47.9% and 59.4% for the nine months
ended September 30, 2009 and 2008, respectively.





42





Segment
Results – Nine months ended September 30, 2009 versus nine months ended
September 30, 2008





The
following table sets forth selected segment operating results:




Results
of Operations by Segment


(In
thousands, except headcount and rate-per-hour)





Nine Months EndedSeptember
      30,
                                        
                                        
                                        September
      30,
                                        
                                        
                                        Unit
                                        
                                        
                                        Percent2009
                                        
                                        
                                        2008
                                        
                                        
                                        Change
                                        
                                        
                                        ChangeFinancial
      AdvisoryRevenues
      (excluding reimbursables)
                                        
                                        $
                                        176,431
                                        
                                        
                                        $
                                        191,919
                                        
                                        
                                        $
                                        (15,488
                                        )
                                        
                                        
                                        -8.1
                                        %Segment
      operating income
                                        
                                        $
                                        29,543
                                        
                                        
                                        $
                                        29,627
                                        
                                        
                                        $
                                        (84
                                        )
                                        
                                        
                                        -0.3
                                        %Segment
      operating income margin
                                        
                                        
                                        16.7
                                        %
                                        
                                        
                                        15.4
                                        %
                                        
                                        
                                        1.3
                                        %
                                        
                                        
                                        8.5
                                        %Corporate
      Finance ConsultingRevenues
      (excluding reimbursables)
                                        
                                        $
                                        47,039
                                        
                                        
                                        $
                                        43,036
                                        
                                        
                                        $
                                        4,003
                                        
                                        
                                        
                                        9.3
                                        %Segment
      operating income
                                        
                                        $
                                        11,819
                                        
                                        
                                        $
                                        9,741
                                        
                                        
                                        $
                                        2,078
                                        
                                        
                                        
                                        21.3
                                        %Segment
      operating income margin
                                        
                                        
                                        25.1
                                        %
                                        
                                        
                                        22.6
                                        %
                                        
                                        
                                        2.5
                                        %
                                        
                                        
                                        11.0
                                        %Investment
      BankingRevenues
      (excluding reimbursables)
                                        
                                        $
                                        49,088
                                        
                                        
                                        $
                                        52,313
                                        
                                        
                                        $
                                        (3,225
                                        )
                                        
                                        
                                        -6.2
                                        %Segment
      operating income
                                        
                                        $
                                        7,195
                                        
                                        
                                        $
                                        13,516
                                        
                                        
                                        $
                                        (6,321
                                        )
                                        
                                        
                                        -46.8
                                        %Segment
      operating income margin
                                        
                                        
                                        14.7
                                        %
                                        
                                        
                                        25.8
                                        %
                                        
                                        
                                        -11.2
                                        %
                                        
                                        
                                        -43.3
                                        %TotalRevenues
      (excluding reimbursables)
                                        
                                        $
                                        272,558
                                        
                                        
                                        $
                                        287,268Segment
      operating income
                                        
                                        $
                                        48,557
                                        
                                        
                                        $
                                        52,884Net
      client reimbursable expenses
                                        
                                        
                                        (63
                                        )
                                        
                                        
                                        20Equity-based
      compensation fromLegacy
      Units and IPO Options
                                        
                                        
                                        (10,963
                                        )
                                        
                                        
                                        (21,021
                                        )Depreciation
      and amortization
                                        
                                        
                                        (7,712
                                        )
                                        
                                        
                                        (6,903
                                        )Acquisition
      retention expenses
                                        
                                        
                                        -
                                        
                                        
                                        
                                        (782
                                        )Operating
      income
                                        
                                        $
                                        29,819
                                        
                                        
                                        $
                                        24,198Average
      Client Service ProfessionalsFinancial
      Advisory
                                        
                                        
                                        668
                                        
                                        
                                        
                                        680
                                        
                                        
                                        
                                        (12
                                        )
                                        
                                        
                                        -1.8
                                        %Corporate
      Finance Consulting
                                        
                                        
                                        133
                                        
                                        
                                        
                                        125
                                        
                                        
                                        
                                        8
                                        
                                        
                                        
                                        6.4
                                        %Investment
      Banking
                                        
                                        
                                        134
                                        
                                        
                                        
                                        115
                                        
                                        
                                        
                                        19
                                        
                                        
                                        
                                        16.5
                                        %Total
                                        
                                        
                                        935
                                        
                                        
                                        
                                        920
                                        
                                        
                                        
                                        15
                                        
                                        
                                        
                                        1.6
                                        %End
      of Period Client Service ProfessionalsFinancial
      Advisory
                                        
                                        
                                        641
                                        
                                        
                                        
                                        722
                                        
                                        
                                        
                                        (81
                                        )
                                        
                                        
                                        -11.2
                                        %Corporate
      Finance Consulting
                                        
                                        
                                        131
                                        
                                        
                                        
                                        142
                                        
                                        
                                        
                                        (11
                                        )
                                        
                                        
                                        -7.7
                                        %Investment
      Banking
                                        
                                        
                                        130
                                        
                                        
                                        
                                        129
                                        
                                        
                                        
                                        1
                                        
                                        
                                        
                                        0.8
                                        %Total
                                        
                                        
                                        902
                                        
                                        
                                        
                                        993
                                        
                                        
                                        
                                        (91
                                        )
                                        
                                        
                                        -9.2
                                        %Revenue
      per Client Service ProfessionalFinancial
      Advisory
                                        
                                        $
                                        264
                                        
                                        
                                        $
                                        282
                                        
                                        
                                        $
                                        (18
                                        )
                                        
                                        
                                        -6.4
                                        %Corporate
      Finance Consulting
                                        
                                        $
                                        354
                                        
                                        
                                        $
                                        344
                                        
                                        
                                        $
                                        10
                                        
                                        
                                        
                                        2.9
                                        %Investment
      Banking
                                        
                                        $
                                        366
                                        
                                        
                                        $
                                        455
                                        
                                        
                                        $
                                        (89
                                        )
                                        
                                        
                                        -19.6
                                        %Total
                                        
                                        $
                                        292
                                        
                                        
                                        $
                                        312
                                        
                                        
                                        $
                                        (20
                                        )
                                        
                                        
                                        -6.4
                                        %





43





Results
of Operations by Segment – Continued


(In
thousands, except headcount and rate-per-hour)





Nine Months EndedSeptember 30,
                    
                    
                    September 30,
                    
                    
                    Unit
                    
                    
                    Percent2009
                    
                    
                    2008
                    
                    
                    Change
                    
                    
                    ChangeUtilization(1)Financial
      Advisory
                    
                    
                    64.0
                    %
                    
                    
                    63.2
                    %
                    
                    
                    0.8
                    %
                    
                    
                    1.3
                    %Corporate
      Finance Consulting
                    
                    
                    62.0
                    %
                    
                    
                    59.0
                    %
                    
                    
                    3.0
                    %
                    
                    
                    5.1
                    %Rate-Per-Hour(2)Financial
      Advisory
                    
                    $
                    322
                    
                    
                    $
                    341
                    
                    
                    $
                    (19
                    )
                    
                    
                    -5.6
                    %Corporate
      Finance Consulting
                    
                    $
                    407
                    
                    
                    $
                    395
                    
                    
                    $
                    12
                    
                    
                    
                    3.0
                    %Revenues
      (excluding reimbursables)Financial
      Advisory
                    
                    $
                    176,431
                    
                    
                    $
                    191,919
                    
                    
                    $
                    (15,488
                    )
                    
                    
                    -8.1
                    %Corporate
      Finance Consulting
                    
                    
                    47,039
                    
                    
                    
                    43,036
                    
                    
                    
                    4,003
                    
                    
                    
                    9.3
                    %Investment
      Banking
                    
                    
                    49,088
                    
                    
                    
                    52,313
                    
                    
                    
                    (3,225
                    )
                    
                    
                    -6.2
                    %Total
                    
                    $
                    272,558
                    
                    
                    $
                    287,268
                    
                    
                    $
                    (14,710
                    )
      $
                    
                    
                    -5.1
                    %Average
      Number of Managing DirectorsFinancial
      Advisory
                    
                    
                    98
                    
                    
                    
                    94
                    
                    
                    
                    4
                    
                    
                    
                    4.3
                    %Corporate
      Finance Consulting
                    
                    
                    30
                    
                    
                    
                    24
                    
                    
                    
                    6
                    
                    
                    
                    25.0
                    %Investment
      Banking
                    
                    
                    38
                    
                    
                    
                    32
                    
                    
                    
                    6
                    
                    
                    
                    18.8
                    %Total
                    
                    
                    166
                    
                    
                    
                    150
                    
                    
                    
                    16
                    
                    
                    
                    10.7
                    %End
      of Period Managing DirectorsFinancial
      Advisory
                    
                    
                    93
                    
                    
                    
                    105
                    
                    
                    
                    (12
                    )
                    
                    
                    -11.4
                    %Corporate
      Finance Consulting
                    
                    
                    29
                    
                    
                    
                    29
                    
                    
                    
                    -
                    
                    
                    
                    0.0
                    %Investment
      Banking
                    
                    
                    40
                    
                    
                    
                    34
                    
                    
                    
                    6
                    
                    
                    
                    17.6
                    %Total
                    
                    
                    162
                    
                    
                    
                    168
                    
                    
                    
                    (6
                    )
                    
                    
                    -3.6
                    %Revenue
      per Managing DirectorFinancial
      Advisory
                    
                    $
                    1,800
                    
                    
                    $
                    2,042
                    
                    
                    $
                    (242
                    )
                    
                    
                    -11.9
                    %Corporate
      Finance Consulting
                    
                    $
                    1,568
                    
                    
                    $
                    1,793
                    
                    
                    $
                    (225
                    )
                    
                    
                    -12.5
                    %Investment
      Banking
                    
                    $
                    1,292
                    
                    
                    $
                    1,635
                    
                    
                    $
                    (343
                    )
                    
                    
                    -21.0
                    %Total
                    
                    $
                    1,642
                    
                    
                    $
                    1,915
                    
                    
                    $
                    (273
                    )
                    
                    
                    -14.3
                    %





(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 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 $7,065 and $6,914 of revenues
      associated with Rash in the nine months ended September 30, 2009 and 2008,
      respectively.





44





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.  In the nine months ended September 30, 2009 and 2008,
the Financial Advisory segment (primarily Valuation Advisory services)
recognized revenues of $9,539 and $11,418 from the cross utilization of its
client service professionals on engagements from the Corporate Finance
Consulting segment (primarily Portfolio Valuation services),
respectively.





Financial
Advisory





Revenues




Revenues
from the Financial Advisory segment decreased $15,488 or 8.1% to $176,431 for
the nine months ended September 30, 2009, compared to $191,919 for the nine
months ended September 30, 2008.  The decrease in revenues resulted
from our Valuation Advisory business, partially offset by continued growth in
revenues from our Dispute & Legal Management Consulting and Tax Services
businesses, as summarized in the following table:





Nine
      Months EndedSeptember 30,
                    
                    
                    September 30,
                    
                    
                    Dollar
                    
                    
                    Percent2009
                    
                    
                    2008
                    
                    
                    Change
                    
                    
                    ChangeFinancial
      AdvisoryValuation
      Advisory
                    
                    $
                    103,834
                    
                    
                    $
                    136,337
                    
                    
                    $
                    (32,503
                    )
                    
                    
                    -23.8
                    %Tax
      Services
                    
                    
                    37,895
                    
                    
                    
                    33,441
                    
                    
                    
                    4,454
                    
                    
                    
                    13.3
                    %Dispute
      & Legal Management Consulting
                    
                    
                    34,702
                    
                    
                    
                    22,141
                    
                    
                    
                    12,561
                    
                    
                    
                    56.7
                    %$
                    176,431
                    
                    
                    $
                    191,919
                    
                    
                    $
                    (15,488
                    )
                    
                    
                    -8.1
                    %





The
decrease in revenues from our Valuation Advisory business primarily resulted
from reduced demand for services correlated to the volume of M&A
transactions, including real estate valuations and purchase price allocations
pursuant to FASB ASC 805-20,Business
Combinations(formerlySFAS 141(R)).  These decreases were partially offset
by increases in revenue from goodwill impairment testing in conjunction with
FASB ASC 350-20, Intangibles –
Goodwill and Other(formerly SFAS 142).  The increase in
revenues from our Dispute & Legal Management Consulting business primarily
resulted from (i) an engagement to serve as a financial advisor to the court
appointed examiner of a large financial services company under bankruptcy
protection and (ii) incremental revenues from our acquisitions of the Lumin
Expert Group and Dubinsky & Company, P.C.  We expect the
engagement for the court appointed examiner to wind down early next
year.  The increase in revenues from Tax Services primarily resulted
from continued growth in property tax services, the addition of professionals in
our transactional tax advisory practice during the latter half of 2008, and an
increase in revenues recognized from engagements where revenue is contingent
upon tax savings achieved for our clients.





Segment
Operating Income




Financial
Advisory segment operating income decreased $84 or 0.3% to $29,543 for the nine
months ended September 30, 2009, compared to $29,627 for the nine months ended
September 30, 2008.  Segment operating income margin, defined as
segment operating income expressed as a percentage of segment revenues, was
16.7% for the nine months ended September 30, 2009, compared to 15.4% for the
nine months ended September 30, 2008.  The improvement in segment
operating margin primarily resulted from lower accrued compensation as a result
of the decrease in revenues between periods.





45





Corporate
Finance Consulting





Revenues




Revenues
from the Corporate Finance Consulting segment increased $4,003 or 9.3% to
$47,039 for the nine months ended September 30, 2009, compared to $43,036 for
the nine months ended September 30, 2008.  Growth was primarily driven
by demand for services related to Portfolio Valuation, Financial Engineering and
Strategic Value Advisory, partially offset by a decrease in revenues from Due
Diligence, as summarized in the following table:





Nine
      Months EndedSeptember 30,
                    
                    
                    September 30,
                    
                    
                    Dollar
                    
                    
                    Percent2009
                    
                    
                    2008
                    
                    
                    Change
                    
                    
                    ChangeCorporate
      Finance ConsultingPortfolio
      Valuation
                    
                    $
                    16,491
                    
                    
                    $
                    11,632
                    
                    
                    $
                    4,859
                    
                    
                    
                    41.8
                    %Financial
      Engineering
                    
                    
                    14,508
                    
                    
                    
                    10,657
                    
                    
                    
                    3,851
                    
                    
                    
                    36.1
                    %Strategic
      Value Advisory
                    
                    
                    10,242
                    
                    
                    
                    8,879
                    
                    
                    
                    1,363
                    
                    
                    
                    15.4
                    %Due
      Diligence
                    
                    
                    5,798
                    
                    
                    
                    11,868
                    
                    
                    
                    (6,070
                    )
                    
                    
                    -51.1
                    %$
                    47,039
                    
                    
                    $
                    43,036
                    
                    
                    $
                    4,003
                    
                    
                    
                    9.3
                    %





Portfolio
Valuation, Financial Engineering and Strategic Value Advisory benefited from
increased demand from existing clients as well as the addition of new
clients.  Financial Engineering also benefited from engagements
sourced from Portfolio Valuation as well as the Financial Advisory segment,
including the engagement to serve as a financial advisor to the court appointed
examiner of a large financial services company under bankruptcy
protection.  The decrease in revenues from Due Diligence resulted from
a lower volume of M&A transactions during the first half of the
year.





Segment
Operating Income




Operating
income from the Corporate Finance Consulting segment increased $2,078 or 21.3%
to $11,819 for the nine months ended September 30, 2009, compared to $9,741 for
the nine months ended September 30, 2008.  Segment operating income
margin was 25.1% for the nine months ended September 30, 2009, compared to 22.6%
for the nine months ended September 30, 2008.  Improvements in segment
operating income and margin primarily resulted from the increase in
revenues.





Investment
Banking





Revenues




Revenues
from the Investment Banking segment decreased $3,225 or 6.2% to $49,088 for the
nine months ended September 30, 2009, compared to $52,313 for the nine months
ended September 30, 2008, as summarized in the following table:





Nine
      Months EndedSeptember 30,
                    
                    
                    September 30,
                    
                    
                    Dollar
                    
                    
                    Percent2009
                    
                    
                    2008
                    
                    
                    Change
                    
                    
                    ChangeInvestment
      BankingGlobal
      Restructuring Advisory
                    
                    $
                    25,230
                    
                    
                    $
                    11,706
                    
                    
                    $
                    13,524
                    
                    
                    
                    115.5
                    %Transaction
      Opinions
                    
                    
                    14,995
                    
                    
                    
                    27,373
                    
                    
                    
                    (12,378
                    )
                    
                    
                    -45.2
                    %M&A
      Advisory
                    
                    
                    8,863
                    
                    
                    
                    13,234
                    
                    
                    
                    (4,371
                    )
                    
                    
                    -33.0
                    %$
                    49,088
                    
                    
                    $
                    52,313
                    
                    
                    $
                    (3,225
                    )
                    
                    
                    -6.2
                    %





Revenues
from Transaction Opinions and M&A Advisory decreased as a result of the
current economic landscape and a lower volume of M&A
transactions.  Global Restructuring Advisory benefited from an
increase in demand for our domestic and international restructuring
services.





Segment
Operating Income




Operating
income from the Investment Banking segment decreased $6,321 or 46.8% to $7,195
for the nine months ended September 30, 2009, compared to $13,516 for the nine
months ended September 30, 2008.  Operating income margin was 14.7%
for the nine months ended September 30, 2009, compared to 25.8% for the nine
months ended September 30, 2008.    The decrease in segment
operating income and margin primarily resulted from higher compensation expense
which resulted in part from the hiring of new managing directors to enhance our
position in the marketplace.





46




Liquidity
and Capital Resources





Our
primary sources of liquidity are our existing non-restricted cash balances and
availability under our revolving credit facility (see below).  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 professionals, (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 and
(vii) funding of our deferred compensation program.





Cash and
cash equivalents increased by $2,815 to $84,196 at September 30, 2009, compared
to $81,381 at December 31, 2008.  The increase in cash resulted from
$29,681 provided by operating activities, partially offset by $17,088 used in
financing activities and $11,214 used in investing activities.





Operating
Activities




During
the nine months ended September 30, 2009, cash of $29,681 was provided by
operating activities, compared to $9,016 in the prior year
period.  The increase of amounts provided by operating activities
primarily resulted from lower cash bonus payments made in 2009 with respect to
the 2008 bonus year, as compared to cash bonus payments made in 2008 with
respect to the 2007 bonus year, offset by lower bonus accruals in the current
year, as compared to the prior year.  Typically, we accrue performance
bonuses during the course of the calendar year, therefore generating cash, which
is used to fund bonus payments to our personnel early in the following
year.





Investing
Activities




During
the nine months ended September 30, 2009, cash of $11,214 was used in investing
activities, compared to $32,819 used in the prior year
period.  Investing activities during the current period included (i)
purchases of property and equipment to support our business and (ii) purchases
of investments related to the Company’s deferred compensation
plan.  Management believes these investments pose limited liquidity
risk.  Investing activities in the prior year include $16,427 used for
acquisitions.





Pursuant
to the terms of the acquisition of Chanin Capital Partners, LLC (“Chanin”) by
D&P Acquisitions on October 31, 2006, the Chanin sellers are eligible for
one remaining earn-out payment estimated to be a minimum of approximately $4,000
up to a maximum of approximately $5,000 for the annual period ending October 31,
2009.  This earn-out payment is subject to the achievement of certain
contingent performance results of Chanin.





Financing
Activities




During
the nine months ended September 30, 2009, cash of $17,088 was used in financing
activities, compared to $8,483 used in the prior year
period.  Significant financing activities are summarized as
follows:





·
            Net
      proceeds from sale of Class A common stock – On May 18, 2009, we
      consummated a follow-on offering with the sale of 8,050 newly issued
      shares of Class A common stock at $14.75 per share, less an underwriting
      discount of $0.7375 per share.  Net proceeds totaled $111,808,
      as summarized in the following table (“May 2009 Follow-On
      Offering”):





Stock
      subscription of 7,000 shares at $14.75 per share
                        
                        $
                        103,250Over
      allotment of 1,050 shares at $14.75 per share
                        
                        
                        15,488Underwriting
      discount of 8,050 shares at $0.7375 per share
                        
                        
                        (5,937
                        )Offering
      related expenses
                        
                        
                        (993
                        )Net
      proceeds
                        
                        $
                        111,808





·
            Redemption
      of noncontrolling unitholders – In conjunction with the follow-on
      offering, we used $67,112 of our net proceeds to redeem 3,500 New Class A
      Units of D&P Acquisitions held by entities affiliated with Lovell
      Minnick Partners and Vestar Capital Partners and 1,050 New Class A Units
      of D&P Acquisitions held by employees, including executive officers,
      directors and entities affiliated with our directors.  Units
      were redeemed at a price per unit equal to the public offering
      price.  In connection with the redemption, a corresponding
      number of shares of Class B common stock were also
    cancelled.





·
            Repayments
      of debt – Repayments of debt totaled $42,763 and were used to repay all
      outstanding borrowings and terminate our credit agreement with General
      Electric Capital Corporation.


47





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





Nine
      Months EndedSeptember
      30,
                                
                                
                                September
      30,2009
                                
                                
                                2008Distributions
      for taxes
                                
                                $
                                14,197
                                
                                
                                $
                                7,888Other
      distributions
                                
                                
                                1,313
                                
                                
                                
                                -Payments
      pursuant to the TaxReceivable Agreement
                                
                                
                                -
                                
                                
                                
                                -$
                                15,510
                                
                                
                                $
                                7,888





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%.  During the nine months ended
September 30, 2009 and 2008, D&P Acquisitions made aggregate distributions
to its members totaling $14,197 and $7,888, respectively, not including the
Company, with respect to estimated taxable income for year-to-date 2009 and
2008, respectively.  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.





Other
distributions





During
the nine months ended September 30, 2009, the Company distributed $1,313 to
holders of New Class A Units of D&P Acquisitions (other than Duff &
Phelps Corporation).  The distributions were made concurrently with
the dividend of $0.05 per share of Class A common stock outstanding to
shareholders of record on June 12, 2009 and August 18,
2009.  Concurrent with the payment of the dividends, holders of New
Class A Units received a $0.05 distribution per vested unit which 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 distribution of $0.05 per unvested unit
was deposited into a segregated account and will be released once a year with
respect to units that vested during that year.  The segregated amount for
unvested units totaled $312 and is included as a component of “Restricted cash”
on the Consolidated Balance Sheet at September 30, 2009.  The
distribution on unvested units that forfeit will be 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.  There were no payments under the TRA in the nine months ended
September 30, 2009 as these payments are typically made in the fourth quarter of
each year.  In December 2009, the Company expects to make payments
under the TRA of $3,148.  In December 2008, the Company made payments
of $791 with respect to the period from October 4 through December 31,
2007.  D&P Acquisitions expects to make future payments under the
TRA to the extent cash is available for such purposes.


48


At
September 30, 2009, the Company recorded a liability of $92,027, representing
the payments due to D&P Acquisitions’ unitholders under the
TRA.  This amount includes additional obligations generated from the
redemption of 4,550 New Class A Units of D&P Acquisitions (see Note 2) in
conjunction with the May 2009 Follow-On Offering.  This transaction
resulted in an increase in the TRA liability of $33,548 and an associated
increase in net deferred tax assets.





Within
the next 12 month period, the Company expects to pay $3,148 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 with 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 tax receivable agreement, 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, filed as Exhibit 10.3 to the Quarterly Report on Form 10-Q as filed with
the SEC on November 14, 2007.





Obligations
pursuant to the Tax Receivable Agreement 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,
filed as Exhibit 10.1 to the Quarterly Report on Form 10-Q as filed with the SEC
on November 14, 2007.





During
the nine months ended September 30, 2009, the Company recorded an immaterial
adjustment to increase the payments due to D&P Acquisitions’ unitholders
under the tax receivable agreement by $3,579 with an offsetting credit to
additional paid-in-capital.  The adjustment resulted from a correction
to the calculation of the tax receivable agreement liability in conjunction with
the IPO transactions.  Although the revision related to the date of
the closing of the IPO transactions, it did not have a material impact on the
Company’s financial position through and as of September 30, 2009.





·
            Increase
      in restricted cash – The increase in restricted cash resulted from $377 of
      deposits to secure certain letters of credit and $312 of deposits for the
      distribution of $0.05 per unvested unit to noncontrolling unitholders as
      described above.





·
            Dividends
      – Cash dividends of $2,394 reflects the payment of a quarterly dividend of
      $0.05 per share on our outstanding Class A common stock, including holders
      of restricted stock awards.





·
            Repurchases
      of Class A common stock – Repurchases of Class A common stock represents
      shares of Class A common stock withheld to cover payroll tax withholdings
      related to the lapse of restrictions on Ongoing RSAs.  These
      shares were not part of a publicly announced repurchase
      program.





Credit
Facility




On May 22
, 2009, the Company terminated its Amended and Restated Credit Agreement
(“Former Credit Facility”), dated as of July 30, 2008, by and among Duff &
Phelps, LLC, the primary operating subsidiary of the Company, D&P
Acquisitions, the persons designated as lenders thereto, and General Electric
Capital Corporation (“GE Capital”), in its capacity as Administrative
Agent.  The Former Credit Facility consisted of a (i) $65,000
seven-year term loan, (ii) $15,000 delayed draw term loan, (iii) $20,000
six-year revolver loan, and (iv) $75,000 incremental term loan facility, which
was uncommitted by the lenders and required additional approval at the time of
request.





The
Company used a portion of the net proceeds from its May 2009 Follow-On Offering
to repay all amounts outstanding under the Former Credit Facility.  In
connection with the repayment, the Company incurred a nonrecurring charge of
$1,737 to reflect the accelerated amortization of the debt discount and issuance
costs of which $1,674 was non-cash.


49





On July
15, 2009, Duff & Phelps, LLC entered into a Credit Agreement ("Current
Credit Agreement") with Bank of America, N.A., as administrative agent and the
lenders from time to time party thereto, providing for a $30,000 senior secured
revolving credit facility (“Current 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.





Loans
under the Current 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
September 30, 2009, the Company qualified for the 1.75% applicable margin and
0.25% unused commitment fee.





The
Current 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,
(b) 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 Current 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 September 30, 2009.





The
obligation of the Company to pay amounts outstanding under the Current Credit
Facility may be accelerated upon the occurrence of an "Event of Default" as
defined in the Current Credit Agreement.  The Company's obligations
under the Current Credit Agreement are guaranteed by D&P Acquisitions, and
certain domestic subsidiaries of the Company (collectively, the
"Guarantors").  The Current 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 new
revolving credit agreement.  We believe these funds will be adequate
to fund future growth.


50





Item
      3.
            Quantitative
      and Qualitative Disclosures About Market
Risk.





Market
risks at September 30, 2009 have not changed significantly from those discussed
in Item 7A of our Annual Report on Form 10-K for the year ended December 31,
2008, as filed with the SEC on February 26, 2009.




Item4.
            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.


51





PART
II


OTHER
INFORMATION





Item1.
            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.





Item1A.
            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, 2008, as filed with the SEC on February 26, 2009.





Item2.
            Unregistered
      Sales of Equity Securities and Use of
Proceeds.





Issuer Purchases of Equity
Securities





During
the third quarter of 2009, we withheld shares of our Class A common stock from
holders of Ongoing RSAs to satisfy the holders’ tax liabilities in connection
with the lapse of restrictions on such shares, as summarized in the following
table:





TotalNumber
      of
                                
                                
                                AverageShares
                                
                                
                                Price
      PaidClass
      A Common Stock
                                
                                Purchased
                                
                                
                                Per
      Share(In
      thousands)July
      1 through July 31, 2009
                                
                                
                                3
                                
                                
                                $
                                18.52August
      1 through August 31, 2009
                                
                                
                                -
                                
                                
                                
                                -September
      1 through September 30, 2009
                                
                                
                                2
                                
                                
                                
                                17.27Total
                                
                                
                                5
                                
                                
                                $
                                18.02





The total
number of shares purchased represents shares of Class A common stock withheld to
cover payroll tax withholdings related to the lapse of restrictions on Ongoing
RSAs.  These shares were not part of a publicly announced repurchase
program and were retired upon purchase.





Item
      3.
            Defaults
      Upon Senior Securities.





None.





Item
      4.
            Submission
      of Matters to a Vote of Security
Holders.





None.





Item
      5.
            Other
      Information.





None.


52





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.


53


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:  November
      3, 2009
              /s/ Jacob L. SilvermanJACOB
      L. SILVERMANChief
      Financial Officer




54