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 March 31, 2010





OR





o
            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 o





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 o





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 28,624,014 as of April 16, 2010.  The number of
shares outstanding of the registrant’s Class B common stock, par value $0.0001
per share, was 12,945,489 as of April 16, 2010.











DUFF
& PHELPS CORPORATION


AND
SUBSIDIARIES





TABLE
OF CONTENTS





Part
      I.
                    Financial
      InformationItem
      1.
                    Financial
      Statements
                    1Item
      2.
                    Management’s
      Discussion and Analysis of Financial Condition and Results of
      Operations.
                    24Item
      3.
                    Quantitative
      and Qualitative Disclosures About Market Risk.
                    38Item
      4.
                    Controls
      and Procedures.
                    38Part
      II.
                    Other
      InformationItem
      1.
                    Legal
      Proceedings
                    39Item
      1A.
                    Risk
      Factors
                    39Item
      2.
                    Unregistered
      Sales of Equity Securities and Use of Proceeds
                    39Item
      3.
                    Defaults
      Upon Senior Securities
                    39Item
      4.
                    (Removed
      and Reserved)
                    39Item
      5.
                    Other
      Information
                    39Item
      6.
                    Exhibits
                    40Signatures
                    41





PART
I – FINANCIAL INFORMATION





Item
1.  Financial Statements.





DUFF
& PHELPS CORPORATION AND SUBSIDIARIES


CONDENSED
CONSOLIDATED STATEMENTS OF INCOME


(In
thousands, except per share amounts)


(Unaudited)





Three
      Months EndedMarch
      31,
                                                      
                                                      
                                                      March
      31,2010
                                                      
                                                      
                                                      2009Revenues
                                                      
                                                      $
                                                      89,164
                                                      
                                                      
                                                      $
                                                      89,265Reimbursable
      expenses
                                                      
                                                      
                                                      2,798
                                                      
                                                      
                                                      
                                                      2,037Total
      revenues
                                                      
                                                      
                                                      91,962
                                                      
                                                      
                                                      
                                                      91,302Direct
      client service costsCompensation
      and benefits (includes $3,717 and $4,262of
      equity-based compensation for the three months endedMarch
      31, 2010 and 2009, respectively)
                                                      
                                                      
                                                      48,598
                                                      
                                                      
                                                      
                                                      51,130Other
      direct client service costs
                                                      
                                                      
                                                      2,605
                                                      
                                                      
                                                      
                                                      1,304Reimbursable
      expenses
                                                      
                                                      
                                                      2,854
                                                      
                                                      
                                                      
                                                      2,01554,057
                                                      
                                                      
                                                      
                                                      54,449Operating
      expensesSelling,
      general and administrative (includes $1,453 and $1,892of
      equity-based compensation for the three months endedMarch
      31, 2010 and 2009, respectively)
                                                      
                                                      
                                                      23,467
                                                      
                                                      
                                                      
                                                      24,940Depreciation
      and amortization
                                                      
                                                      
                                                      2,493
                                                      
                                                      
                                                      
                                                      2,562Charge
      from impairment of certain intangible assets (Note 10)
                                                      
                                                      
                                                      674
                                                      
                                                      
                                                      
                                                      -26,634
                                                      
                                                      
                                                      
                                                      27,502Operating
      income
                                                      
                                                      
                                                      11,271
                                                      
                                                      
                                                      
                                                      9,351Other
      expense, netInterest
      income
                                                      
                                                      
                                                      (24
                                                      )
                                                      
                                                      
                                                      (14
                                                      )Interest
      expense
                                                      
                                                      
                                                      92
                                                      
                                                      
                                                      
                                                      655Other
      (income)/expense
                                                      
                                                      
                                                      (15
                                                      )
                                                      
                                                      
                                                      1753
                                                      
                                                      
                                                      
                                                      658Income
      before income taxes
                                                      
                                                      
                                                      11,218
                                                      
                                                      
                                                      
                                                      8,693Provision
      for income taxes
                                                      
                                                      
                                                      3,650
                                                      
                                                      
                                                      
                                                      2,112Net
      income
                                                      
                                                      
                                                      7,568
                                                      
                                                      
                                                      
                                                      6,581Less:  Net
      income attributable to noncontrolling interest
                                                      
                                                      
                                                      3,295
                                                      
                                                      
                                                      
                                                      4,816Net
      income attributable to Duff & Phelps Corporation
                                                      
                                                      $
                                                      4,273
                                                      
                                                      
                                                      $
                                                      1,765Weighted
      average shares of Class A common stock outstandingBasic
                                                      
                                                      
                                                      24,986
                                                      
                                                      
                                                      
                                                      13,479Diluted
                                                      
                                                      
                                                      25,780
                                                      
                                                      
                                                      
                                                      13,973Net
      income per share attributable to stockholders of Class Acommon
      stock of Duff & Phelps Corporation (Note 4)Basic
                                                      
                                                      $
                                                      0.16
                                                      
                                                      
                                                      $
                                                      0.12Diluted
                                                      
                                                      $
                                                      0.16
                                                      
                                                      
                                                      $
                                                      0.11





See
accompanying notes to the condensed consolidated financial
statements.


1





DUFF
& PHELPS CORPORATION AND SUBSIDIARIES


CONDENSED
CONSOLIDATED BALANCE SHEETS


(In
thousands, except per share amounts)


(Unaudited)





March
      31,
                                                                  
                                                                  
                                                                  December
      31,2010
                                                                  
                                                                  
                                                                  2009ASSETSCurrent
      assetsCash
      and cash equivalents
                                                                  
                                                                  $
                                                                  89,979
                                                                  
                                                                  
                                                                  $
                                                                  107,311Accounts
      receivable (net of allowance for doubtful accountsof
      $1,346 at March 31, 2010 and $1,690 at December 31, 2009)
                                                                  
                                                                  
                                                                  52,285
                                                                  
                                                                  
                                                                  
                                                                  55,079Unbilled
      services
                                                                  
                                                                  
                                                                  25,226
                                                                  
                                                                  
                                                                  
                                                                  22,456Prepaid
      expenses and other current assets
                                                                  
                                                                  
                                                                  7,696
                                                                  
                                                                  
                                                                  
                                                                  6,100Net
      deferred income taxes, current
                                                                  
                                                                  
                                                                  70
                                                                  
                                                                  
                                                                  
                                                                  4,601Total
      current assets
                                                                  
                                                                  
                                                                  175,256
                                                                  
                                                                  
                                                                  
                                                                  195,547Property
      and equipment (net of accumulated depreciationof
      $21,876 at March 31, 2010 and $20,621 at December 31,
2009)
                                                                  
                                                                  
                                                                  28,897
                                                                  
                                                                  
                                                                  
                                                                  27,413Goodwill
                                                                  
                                                                  
                                                                  122,879
                                                                  
                                                                  
                                                                  
                                                                  122,876Intangible
      assets (net of accumulated amortizationof
      $17,759 at March 31, 2010 and $16,881 at December 31,
2009)
                                                                  
                                                                  
                                                                  26,355
                                                                  
                                                                  
                                                                  
                                                                  27,907Other
      assets
                                                                  
                                                                  
                                                                  3,054
                                                                  
                                                                  
                                                                  
                                                                  3,218Investments
      related to deferred compensation plan (Note 9)
                                                                  
                                                                  
                                                                  20,400
                                                                  
                                                                  
                                                                  
                                                                  17,807Net
      deferred income taxes, non-current
                                                                  
                                                                  
                                                                  112,220
                                                                  
                                                                  
                                                                  
                                                                  112,265Total
      non-current assets
                                                                  
                                                                  
                                                                  313,805
                                                                  
                                                                  
                                                                  
                                                                  311,486Total
      assets
                                                                  
                                                                  $
                                                                  489,061
                                                                  
                                                                  
                                                                  $
                                                                  507,033LIABILITIES
      AND STOCKHOLDERS' EQUITYCurrent
      liabilitiesAccounts
      payable
                                                                  
                                                                  $
                                                                  3,520
                                                                  
                                                                  
                                                                  $
                                                                  2,459Accrued
      expenses
                                                                  
                                                                  
                                                                  7,215
                                                                  
                                                                  
                                                                  
                                                                  11,609Accrued
      compensation and benefits
                                                                  
                                                                  
                                                                  9,168
                                                                  
                                                                  
                                                                  
                                                                  35,730Current
      portion of liability related to deferred compensation plan (Note
      9)
                                                                  
                                                                  
                                                                  411
                                                                  
                                                                  
                                                                  
                                                                  -Deferred
      revenues
                                                                  
                                                                  
                                                                  4,318
                                                                  
                                                                  
                                                                  
                                                                  3,633Other
      current liabilities
                                                                  
                                                                  
                                                                  223
                                                                  
                                                                  
                                                                  
                                                                  993Current
      portion due to noncontrolling unitholders
                                                                  
                                                                  
                                                                  4,303
                                                                  
                                                                  
                                                                  
                                                                  4,303Total
      current liabilities
                                                                  
                                                                  
                                                                  29,158
                                                                  
                                                                  
                                                                  
                                                                  58,727Liability
      related to deferred compensation plan, less current portion (Note
      9)
                                                                  
                                                                  
                                                                  21,358
                                                                  
                                                                  
                                                                  
                                                                  18,051Other
      long-term liabilities
                                                                  
                                                                  
                                                                  15,585
                                                                  
                                                                  
                                                                  
                                                                  15,400Due
      to noncontrolling unitholders, less current portion
                                                                  
                                                                  
                                                                  101,257
                                                                  
                                                                  
                                                                  
                                                                  101,098Total
      non-current liabilities
                                                                  
                                                                  
                                                                  138,200
                                                                  
                                                                  
                                                                  
                                                                  134,549Total
      liabilities
                                                                  
                                                                  
                                                                  167,358
                                                                  
                                                                  
                                                                  
                                                                  193,276Commitments
      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;
      28,621 and27,290
      shares issued and outstanding at March 31, 2010 and December 31, 2009,
      respectively)
                                                                  
                                                                  
                                                                  286
                                                                  
                                                                  
                                                                  
                                                                  273Class
      B common stock, par value $0.0001 per share (50,000 shares authorized;
      12,945 and12,974
      shares issued and outstanding at March 31, 2010 and December 31, 2009,
      respectively)
                                                                  
                                                                  
                                                                  1
                                                                  
                                                                  
                                                                  
                                                                  1Additional
      paid-in capital
                                                                  
                                                                  
                                                                  213,951
                                                                  
                                                                  
                                                                  
                                                                  207,210Accumulated
      other comprehensive income/(loss)
                                                                  
                                                                  
                                                                  (338
                                                                  )
                                                                  
                                                                  
                                                                  693Retained
      earnings
                                                                  
                                                                  
                                                                  9,565
                                                                  
                                                                  
                                                                  
                                                                  6,709Total
      stockholders' equity of Duff & Phelps Corporation
                                                                  
                                                                  
                                                                  223,465
                                                                  
                                                                  
                                                                  
                                                                  214,886Noncontrolling
      interest
                                                                  
                                                                  
                                                                  98,238
                                                                  
                                                                  
                                                                  
                                                                  98,871Total
      stockholders' equity
                                                                  
                                                                  
                                                                  321,703
                                                                  
                                                                  
                                                                  
                                                                  313,757Total
      liabilities and stockholders' equity
                                                                  
                                                                  $
                                                                  489,061
                                                                  
                                                                  
                                                                  $
                                                                  507,033





See
accompanying notes to the condensed consolidated financial
statements.


2


DUFF
& PHELPS CORPORATION AND SUBSIDIARIES


CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS


(In
thousands)


(Unaudited)





Three
      Months EndedMarch
      31,
                                            
                                            
                                            March
      31,2010
                                            
                                            
                                            2009Cash
      flows from operating activities:Net
      income
                                            
                                            $
                                            7,568
                                            
                                            
                                            $
                                            6,581Adjustments
      to reconcile net incometo
      net cash provided by operating activities:Depreciation
      and amortization
                                            
                                            
                                            2,493
                                            
                                            
                                            
                                            2,562Equity-based
      compensation
                                            
                                            
                                            5,170
                                            
                                            
                                            
                                            6,154Bad
      debt expense
                                            
                                            
                                            600
                                            
                                            
                                            
                                            464Net
      deferred income taxes
                                            
                                            
                                            4,734
                                            
                                            
                                            
                                            2,583Charge
      from impairment of certain intangible assets
                                            
                                            
                                            674
                                            
                                            
                                            
                                            -Other
                                            
                                            
                                            277
                                            
                                            
                                            
                                            (234
                                            )Changes
      in assets and liabilities providing/(using) cash:Accounts
      receivable
                                            
                                            
                                            2,194
                                            
                                            
                                            
                                            1,539Unbilled
      services
                                            
                                            
                                            (2,770
                                            )
                                            
                                            
                                            (12,577
                                            )Prepaid
      expenses and other current assets
                                            
                                            
                                            222
                                            
                                            
                                            
                                            132Other
      assets
                                            
                                            
                                            503
                                            
                                            
                                            
                                            2,701Accounts
      payable and accrued expenses
                                            
                                            
                                            (5,488
                                            )
                                            
                                            
                                            (651
                                            )Accrued
      compensation and benefits
                                            
                                            
                                            (22,706
                                            )
                                            
                                            
                                            (22,729
                                            )Deferred
      revenues
                                            
                                            
                                            685
                                            
                                            
                                            
                                            (66
                                            )Other
      liabilities
                                            
                                            
                                            (649
                                            )
                                            
                                            
                                            -Net
      cash used in operating activities
                                            
                                            
                                            (6,493
                                            )
                                            
                                            
                                            (13,541
                                            )Cash
      flows from investing activities:Purchase
      of property and equipment
                                            
                                            
                                            (1,518
                                            )
                                            
                                            
                                            (2,108
                                            )Business
      acquisitions, net of cash acquired
                                            
                                            
                                            (481
                                            )
                                            
                                            
                                            -Purchase
      of investments for deferred compensation plan
                                            
                                            
                                            (2,975
                                            )
                                            
                                            
                                            (5,684
                                            )Net
      cash used in investing activities
                                            
                                            
                                            (4,974
                                            )
                                            
                                            
                                            (7,792
                                            )Cash
      flows from financing activities:Proceeds
      from exercises of IPO Options
                                            
                                            
                                            28
                                            
                                            
                                            
                                            80Distributions
      and other payments to noncontrolling unitholders
                                            
                                            
                                            (1,343
                                            )
                                            
                                            
                                            (8,847
                                            )Dividends
                                            
                                            
                                            (1,403
                                            )
                                            
                                            
                                            -Repurchases
      of Class A common stock
                                            
                                            
                                            (1,618
                                            )
                                            
                                            
                                            (603
                                            )Repayments
      of debt
                                            
                                            
                                            -
                                            
                                            
                                            
                                            (198
                                            )Other
                                            
                                            
                                            (3
                                            )
                                            
                                            
                                            -Net
      cash used in financing activities
                                            
                                            
                                            (4,339
                                            )
                                            
                                            
                                            (9,568
                                            )Effect
      of exchange rate on cash and cash equivalents
                                            
                                            
                                            (1,526
                                            )
                                            
                                            
                                            (1,104
                                            )Net
      decrease in cash and cash equivalents
                                            
                                            
                                            (17,332
                                            )
                                            
                                            
                                            (32,005
                                            )Cash
      and cash equivalents at beginning of period
                                            
                                            
                                            107,311
                                            
                                            
                                            
                                            81,381Cash
      and cash equivalents at end of period
                                            
                                            $
                                            89,979
                                            
                                            
                                            $
                                            49,376





See
accompanying notes to the condensed consolidated financial
statements.


3


DUFF
& PHELPS CORPORATION AND SUBSIDIARIES


CONDENSED
CONSOLIDATED STATEMENT OF STOCKHOLDERS’ EQUITY


AND
COMPREHENSIVE INCOME/(LOSS)


(In
thousands)


(Unaudited)





Stockholders of Duff & Phelps CorporationAccumulatedTotal
                                                  
                                                  
                                                  
                                                  
                                                  
                                                  
                                                  
                                                  
                                                  
                                                  
                                                  
                                                  
                                                  
                                                  
                                                  
                                                  
                                                  
                                                  
                                                  
                                                  
                                                  OtherStockholders'
                                                  
                                                  
                                                  Comprehensive
                                                  
                                                  
                                                  Common Stock - Class A
                                                  
                                                  
                                                  Common Stock - Class B
                                                  
                                                  
                                                  Additional
                                                  
                                                  
                                                  Comprehensive
                                                  
                                                  
                                                  Retained
                                                  
                                                  
                                                  NoncontrollingEquity
                                                  
                                                  
                                                  Income
                                                  
                                                  
                                                  Shares
                                                  
                                                  
                                                  Dollars
                                                  
                                                  
                                                  Shares
                                                  
                                                  
                                                  Dollars
                                                  
                                                  
                                                  Paid-in-Capital
                                                  
                                                  
                                                  Income/(Loss)
                                                  
                                                  
                                                  Earnings
                                                  
                                                  
                                                  InterestBalance
      as of December 31, 2009
                                                  
                                                  $
                                                  313,757
                                                  
                                                  
                                                  
                                                  
                                                  
                                                  
                                                  27,290
                                                  
                                                  
                                                  $
                                                  273
                                                  
                                                  
                                                  
                                                  12,974
                                                  
                                                  
                                                  $
                                                  1
                                                  
                                                  
                                                  $
                                                  207,210
                                                  
                                                  
                                                  $
                                                  693
                                                  
                                                  
                                                  $
                                                  6,709
                                                  
                                                  
                                                  $
                                                  98,871Comprehensive
      incomeNet
      income for the three months ended March 31, 2010
                                                  
                                                  
                                                  7,568
                                                  
                                                  
                                                  $
                                                  7,568
                                                  
                                                  
                                                  
                                                  -
                                                  
                                                  
                                                  
                                                  -
                                                  
                                                  
                                                  
                                                  -
                                                  
                                                  
                                                  
                                                  -
                                                  
                                                  
                                                  
                                                  -
                                                  
                                                  
                                                  
                                                  -
                                                  
                                                  
                                                  
                                                  4,273
                                                  
                                                  
                                                  
                                                  3,295Currency
      translation adjustment
                                                  
                                                  
                                                  (1,525
                                                  )
                                                  
                                                  
                                                  (1,525
                                                  )
                                                  
                                                  
                                                  -
                                                  
                                                  
                                                  
                                                  -
                                                  
                                                  
                                                  
                                                  -
                                                  
                                                  
                                                  
                                                  -
                                                  
                                                  
                                                  
                                                  -
                                                  
                                                  
                                                  
                                                  (1,037
                                                  )
                                                  
                                                  
                                                  -
                                                  
                                                  
                                                  
                                                  (488
                                                  )Amortization
      of post-retirement benefits
                                                  
                                                  
                                                  12
                                                  
                                                  
                                                  
                                                  12
                                                  
                                                  
                                                  
                                                  -
                                                  
                                                  
                                                  
                                                  -
                                                  
                                                  
                                                  
                                                  -
                                                  
                                                  
                                                  
                                                  -
                                                  
                                                  
                                                  
                                                  -
                                                  
                                                  
                                                  
                                                  8
                                                  
                                                  
                                                  
                                                  -
                                                  
                                                  
                                                  
                                                  4Total
      comprehensive income
                                                  
                                                  
                                                  6,055
                                                  
                                                  
                                                  
                                                  6,055
                                                  
                                                  
                                                  
                                                  -
                                                  
                                                  
                                                  
                                                  -
                                                  
                                                  
                                                  
                                                  -
                                                  
                                                  
                                                  
                                                  -
                                                  
                                                  
                                                  
                                                  -
                                                  
                                                  
                                                  
                                                  (1,029
                                                  )
                                                  
                                                  
                                                  4,273
                                                  
                                                  
                                                  
                                                  2,811Sale
      of Class A common stock
                                                  
                                                  
                                                  (3
                                                  )
                                                  
                                                  
                                                  
                                                  
                                                  
                                                  
                                                  -
                                                  
                                                  
                                                  
                                                  -
                                                  
                                                  
                                                  
                                                  -
                                                  
                                                  
                                                  
                                                  -
                                                  
                                                  
                                                  
                                                  (3
                                                  )
                                                  
                                                  
                                                  -
                                                  
                                                  
                                                  
                                                  -
                                                  
                                                  
                                                  
                                                  -Issuance
      of Class A common stock for acquisitions
                                                  
                                                  
                                                  322
                                                  
                                                  
                                                  
                                                  
                                                  
                                                  
                                                  
                                                  19
                                                  
                                                  
                                                  
                                                  -
                                                  
                                                  
                                                  
                                                  -
                                                  
                                                  
                                                  
                                                  -
                                                  
                                                  
                                                  
                                                  222
                                                  
                                                  
                                                  
                                                  -
                                                  
                                                  
                                                  
                                                  -
                                                  
                                                  
                                                  
                                                  100Exchange
      of New Class A Units
                                                  
                                                  
                                                  -
                                                  
                                                  
                                                  
                                                  
                                                  
                                                  
                                                  
                                                  22
                                                  
                                                  
                                                  
                                                  -
                                                  
                                                  
                                                  
                                                  (22
                                                  )
                                                  
                                                  
                                                  -
                                                  
                                                  
                                                  
                                                  -
                                                  
                                                  
                                                  
                                                  -
                                                  
                                                  
                                                  
                                                  -
                                                  
                                                  
                                                  
                                                  -Net
      issuance of restricted stock awards
                                                  
                                                  
                                                  (1,603
                                                  )
                                                  
                                                  
                                                  
                                                  
                                                  
                                                  
                                                  1,352
                                                  
                                                  
                                                  
                                                  14
                                                  
                                                  
                                                  
                                                  -
                                                  
                                                  
                                                  
                                                  -
                                                  
                                                  
                                                  
                                                  (1,108
                                                  )
                                                  
                                                  
                                                  -
                                                  
                                                  
                                                  
                                                  -
                                                  
                                                  
                                                  
                                                  (509
                                                  )Adjustment
      to Tax Receivable Agreement as aresult of the exchange of New
      Class A Units
                                                  
                                                  
                                                  34
                                                  
                                                  
                                                  
                                                  
                                                  
                                                  
                                                  
                                                  -
                                                  
                                                  
                                                  
                                                  -
                                                  
                                                  
                                                  
                                                  -
                                                  
                                                  
                                                  
                                                  -
                                                  
                                                  
                                                  
                                                  34
                                                  
                                                  
                                                  
                                                  -
                                                  
                                                  
                                                  
                                                  -
                                                  
                                                  
                                                  
                                                  -Issuance
      for exercise of IPO Options
                                                  
                                                  
                                                  18
                                                  
                                                  
                                                  
                                                  
                                                  
                                                  
                                                  
                                                  1
                                                  
                                                  
                                                  
                                                  -
                                                  
                                                  
                                                  
                                                  -
                                                  
                                                  
                                                  
                                                  -
                                                  
                                                  
                                                  
                                                  12
                                                  
                                                  
                                                  
                                                  -
                                                  
                                                  
                                                  
                                                  -
                                                  
                                                  
                                                  
                                                  6Forfeitures
                                                  
                                                  
                                                  (1
                                                  )
                                                  
                                                  
                                                  
                                                  
                                                  
                                                  
                                                  (63
                                                  )
                                                  
                                                  
                                                  (1
                                                  )
                                                  
                                                  
                                                  (7
                                                  )
                                                  
                                                  
                                                  -
                                                  
                                                  
                                                  
                                                  -
                                                  
                                                  
                                                  
                                                  -
                                                  
                                                  
                                                  
                                                  -
                                                  
                                                  
                                                  
                                                  -Equity-based
      compensation
                                                  
                                                  
                                                  5,755
                                                  
                                                  
                                                  
                                                  
                                                  
                                                  
                                                  
                                                  -
                                                  
                                                  
                                                  
                                                  -
                                                  
                                                  
                                                  
                                                  -
                                                  
                                                  
                                                  
                                                  -
                                                  
                                                  
                                                  
                                                  3,923
                                                  
                                                  
                                                  
                                                  -
                                                  
                                                  
                                                  
                                                  -
                                                  
                                                  
                                                  
                                                  1,832Income
      tax benefit on equity-based compensation
                                                  
                                                  
                                                  72
                                                  
                                                  
                                                  
                                                  
                                                  
                                                  
                                                  
                                                  -
                                                  
                                                  
                                                  
                                                  -
                                                  
                                                  
                                                  
                                                  -
                                                  
                                                  
                                                  
                                                  -
                                                  
                                                  
                                                  
                                                  72
                                                  
                                                  
                                                  
                                                  -
                                                  
                                                  
                                                  
                                                  -
                                                  
                                                  
                                                  
                                                  -Distributions
      to noncontrolling unitholders
                                                  
                                                  
                                                  (1,343
                                                  )
                                                  
                                                  
                                                  
                                                  
                                                  
                                                  
                                                  -
                                                  
                                                  
                                                  
                                                  -
                                                  
                                                  
                                                  
                                                  -
                                                  
                                                  
                                                  
                                                  -
                                                  
                                                  
                                                  
                                                  (917
                                                  )
                                                  
                                                  
                                                  -
                                                  
                                                  
                                                  
                                                  -
                                                  
                                                  
                                                  
                                                  (426
                                                  )Change
      in ownership interests between periods
                                                  
                                                  
                                                  -
                                                  
                                                  
                                                  
                                                  
                                                  
                                                  
                                                  
                                                  -
                                                  
                                                  
                                                  
                                                  -
                                                  
                                                  
                                                  
                                                  -
                                                  
                                                  
                                                  
                                                  -
                                                  
                                                  
                                                  
                                                  4,031
                                                  
                                                  
                                                  
                                                  (2
                                                  )
                                                  
                                                  
                                                  -
                                                  
                                                  
                                                  
                                                  (4,029
                                                  )Deferred
      tax asset effective tax rate conversion
                                                  
                                                  
                                                  57
                                                  
                                                  
                                                  
                                                  
                                                  
                                                  
                                                  
                                                  -
                                                  
                                                  
                                                  
                                                  -
                                                  
                                                  
                                                  
                                                  -
                                                  
                                                  
                                                  
                                                  -
                                                  
                                                  
                                                  
                                                  475
                                                  
                                                  
                                                  
                                                  -
                                                  
                                                  
                                                  
                                                  -
                                                  
                                                  
                                                  
                                                  (418
                                                  )Dividends
      on Class A common stock
                                                  
                                                  
                                                  (1,417
                                                  )
                                                  
                                                  
                                                  
                                                  
                                                  
                                                  
                                                  -
                                                  
                                                  
                                                  
                                                  -
                                                  
                                                  
                                                  
                                                  -
                                                  
                                                  
                                                  
                                                  -
                                                  
                                                  
                                                  
                                                  -
                                                  
                                                  
                                                  
                                                  -
                                                  
                                                  
                                                  
                                                  (1,417
                                                  )
                                                  
                                                  
                                                  -Balance
      as of March 31, 2010
                                                  
                                                  $
                                                  321,703
                                                  
                                                  
                                                  
                                                  
                                                  
                                                  
                                                  
                                                  28,621
                                                  
                                                  
                                                  $
                                                  286
                                                  
                                                  
                                                  
                                                  12,945
                                                  
                                                  
                                                  $
                                                  1
                                                  
                                                  
                                                  $
                                                  213,951
                                                  
                                                  
                                                  $
                                                  (338
                                                  )
                                                  
                                                  $
                                                  9,565
                                                  
                                                  
                                                  $
                                                  98,238





See
accompanying notes to the condensed consolidated financial
statements.


4





DUFF
& PHELPS CORPORATION AND SUBSIDIARIES


CONDENSED
CONSOLIDATED STATEMENT OF STOCKHOLDERS’ EQUITY


AND
COMPREHENSIVE INCOME/(LOSS)


(In
thousands)


(Unaudited)





Stockholders
      of Duff & Phelps CorporationAccumulated
                                        
                                        
                                        RetainedTotal
                                        
                                        
                                        
                                        
                                        
                                        
                                        
                                        
                                        
                                        
                                        
                                        
                                        
                                        
                                        
                                        
                                        
                                        
                                        
                                        
                                        Other
                                        
                                        
                                        Earnings/Stockholders'
                                        
                                        
                                        Comprehensive
                                        
                                        
                                        Common
      Stock - Class A
                                        
                                        
                                        Common
      Stock - Class B
                                        
                                        
                                        Additional
                                        
                                        
                                        Comprehensive
                                        
                                        
                                        (Accumulated
                                        
                                        
                                        NoncontrollingEquity
                                        
                                        
                                        Income
                                        
                                        
                                        Shares
                                        
                                        
                                        Dollars
                                        
                                        
                                        Shares
                                        
                                        
                                        Dollars
                                        
                                        
                                        Paid-in-Capital
                                        
                                        
                                        Income/(Loss)
                                        
                                        
                                        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 three months ended March 31, 2009
                                        
                                        
                                        6,581
                                        
                                        
                                        
                                        6,581
                                        
                                        
                                        
                                        -
                                        
                                        
                                        
                                        -
                                        
                                        
                                        
                                        -
                                        
                                        
                                        
                                        -
                                        
                                        
                                        
                                        -
                                        
                                        
                                        
                                        -
                                        
                                        
                                        
                                        1,765
                                        
                                        
                                        
                                        4,816Currency
      translation adjustment
                                        
                                        
                                        (1,104
                                        )
                                        
                                        
                                        (1,104
                                        )
                                        
                                        
                                        -
                                        
                                        
                                        
                                        -
                                        
                                        
                                        
                                        -
                                        
                                        
                                        
                                        -
                                        
                                        
                                        
                                        -
                                        
                                        
                                        
                                        (478
                                        )
                                        
                                        
                                        -
                                        
                                        
                                        
                                        (626
                                        )Amortization
      of post-retirement benefits
                                        
                                        
                                        4
                                        
                                        
                                        
                                        4
                                        
                                        
                                        
                                        -
                                        
                                        
                                        
                                        -
                                        
                                        
                                        
                                        -
                                        
                                        
                                        
                                        -
                                        
                                        
                                        
                                        -
                                        
                                        
                                        
                                        2
                                        
                                        
                                        
                                        -
                                        
                                        
                                        
                                        2Total
      comprehensive income/(loss)
                                        
                                        
                                        5,481
                                        
                                        
                                        $
                                        5,481
                                        
                                        
                                        
                                        -
                                        
                                        
                                        
                                        -
                                        
                                        
                                        
                                        -
                                        
                                        
                                        
                                        -
                                        
                                        
                                        
                                        -
                                        
                                        
                                        
                                        (476
                                        )
                                        
                                        
                                        1,765
                                        
                                        
                                        
                                        4,192Net
      issuance of restricted stock awards
                                        
                                        
                                        (590
                                        )
                                        
                                        
                                        
                                        
                                        
                                        
                                        1,197
                                        
                                        
                                        
                                        12
                                        
                                        
                                        
                                        -
                                        
                                        
                                        
                                        -
                                        
                                        
                                        
                                        (260
                                        )
                                        
                                        
                                        -
                                        
                                        
                                        
                                        -
                                        
                                        
                                        
                                        (342
                                        )Exercise
      of stock options
                                        
                                        
                                        8
                                        
                                        
                                        
                                        
                                        
                                        
                                        
                                        -
                                        
                                        
                                        
                                        -
                                        
                                        
                                        
                                        -
                                        
                                        
                                        
                                        -
                                        
                                        
                                        
                                        3
                                        
                                        
                                        
                                        -
                                        
                                        
                                        
                                        -
                                        
                                        
                                        
                                        5Forfeitures
                                        
                                        
                                        -
                                        
                                        
                                        
                                        
                                        
                                        
                                        
                                        (11
                                        )
                                        
                                        
                                        -
                                        
                                        
                                        
                                        (11
                                        )
                                        
                                        
                                        -
                                        
                                        
                                        
                                        -
                                        
                                        
                                        
                                        -
                                        
                                        
                                        
                                        -
                                        
                                        
                                        
                                        -Equity-based
      compensation
                                        
                                        
                                        7,240
                                        
                                        
                                        
                                        
                                        
                                        
                                        
                                        -
                                        
                                        
                                        
                                        -
                                        
                                        
                                        
                                        -
                                        
                                        
                                        
                                        -
                                        
                                        
                                        
                                        3,132
                                        
                                        
                                        
                                        -
                                        
                                        
                                        
                                        -
                                        
                                        
                                        
                                        4,108Income
      tax benefit on equity-based compensation
                                        
                                        
                                        (87
                                        )
                                        
                                        
                                        
                                        
                                        
                                        
                                        -
                                        
                                        
                                        
                                        -
                                        
                                        
                                        
                                        -
                                        
                                        
                                        
                                        -
                                        
                                        
                                        
                                        (87
                                        )
                                        
                                        
                                        -
                                        
                                        
                                        
                                        -
                                        
                                        
                                        
                                        -Distributions
      to non-controlling unitholders
                                        
                                        
                                        (8,847
                                        )
                                        
                                        
                                        
                                        
                                        
                                        
                                        -
                                        
                                        
                                        
                                        -
                                        
                                        
                                        
                                        -
                                        
                                        
                                        
                                        -
                                        
                                        
                                        
                                        (3,826
                                        )
                                        
                                        
                                        -
                                        
                                        
                                        
                                        -
                                        
                                        
                                        
                                        (5,021
                                        )Change
      in ownership interests between periods
                                        
                                        
                                        -
                                        
                                        
                                        
                                        
                                        
                                        
                                        
                                        -
                                        
                                        
                                        
                                        -
                                        
                                        
                                        
                                        -
                                        
                                        
                                        
                                        -
                                        
                                        
                                        
                                        4,462
                                        
                                        
                                        
                                        6
                                        
                                        
                                        
                                        -
                                        
                                        
                                        
                                        (4,468
                                        )Deferred
      tax asset effective tax rate conversion
                                        
                                        
                                        294
                                        
                                        
                                        
                                        
                                        
                                        
                                        
                                        -
                                        
                                        
                                        
                                        -
                                        
                                        
                                        
                                        -
                                        
                                        
                                        
                                        -
                                        
                                        
                                        
                                        294
                                        
                                        
                                        
                                        -
                                        
                                        
                                        
                                        -
                                        
                                        
                                        
                                        -Balance
      as of March 31, 2009
                                        
                                        $
                                        241,258
                                        
                                        
                                        
                                        
                                        
                                        
                                        
                                        15,905
                                        
                                        
                                        $
                                        159
                                        
                                        
                                        
                                        20,878
                                        
                                        
                                        $
                                        2
                                        
                                        
                                        $
                                        104,703
                                        
                                        
                                        $
                                        (348
                                        )
                                        
                                        $
                                        638
                                        
                                        
                                        $
                                        136,104





See
accompanying notes to the condensed consolidated financial
statements.


5


DUFF
& PHELPS CORPORATION AND SUBSIDIARIES


NOTES
TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS


(In
thousands, except per share amounts)


(Unaudited)





Note
1   -   DESCRIPTION OF BUSINESS





Duff
& Phelps Corporation (the “Company”) is a leading provider of independent
financial advisory and investment banking services.  Its mission is to
help its clients protect, maximize and recover value by providing independent
advice on issues involving highly technical and complex assessments in the areas
of valuation, transactions, financial restructuring, disputes and
taxation.  The Company believes that the Duff & Phelps brand is
associated with experienced professionals who give trusted guidance in a
responsive manner.  The Company serves a global client base through
offices in 23 cities, comprised of offices in 17 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





Basis
of Presentation





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





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





Recently
Issued Accounting Pronouncements





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





Critical
Accounting Policies





There
have been no significant changes in new accounting pronouncements or in our
critical accounting policies and estimates from those that were disclosed in our
Annual Report on Form 10-K for the year ended December 31,
2009.  The Company believes that the disclosures herein are adequate
so that the information presented is not misleading; however, it is suggested
that these financial statements be read in conjunction with the financial
statements and the notes thereto in our Annual Report on Form 10-K for the year
ended December 31, 2009.  The financial data for the interim periods
may not necessarily be indicative of results to be expected for the
year.


6


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, LLC and its subsidiaries (“D&P Acquisitions”), which
collectively represent the operating subsidiaries of the Company.  As
a result, the Company consolidates the financial results of D&P Acquisitions
and records noncontrolling interest for the economic interest in D&P
Acquisitions held by the existing unitholders to the extent the book value of
their interest in D&P Acquisitions is greater than zero.  The
Company’s economic interest in D&P Acquisitions totaled 68.9% at March 31,
2010.  The noncontrolling unitholders’ interest in D&P
Acquisitions totaled 31.1% at March 31, 2010.





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





Duff &
                      
                      
                      Non-Phelps
                      
                      
                      controllingCorporation
                      
                      
                      Unitholders
                      
                      
                      TotalDecember
      31, 2009
                      
                      
                      27,290
                      
                      
                      
                      12,974
                      
                      
                      
                      40,264Issuance
      of Class A common stock for acquisitions
                      
                      
                      19
                      
                      
                      
                      -
                      
                      
                      
                      19Exchange
      to Class A common stock
                      
                      
                      22
                      
                      
                      
                      (22
                      )
                      
                      
                      -Issuance
      for exercises of IPO Options
                      
                      
                      1
                      
                      
                      
                      -
                      
                      
                      
                      1Net
      issuance of restricted stock awards
                      
                      
                      1,352
                      
                      
                      
                      -
                      
                      
                      
                      1,352Forfeitures
                      
                      
                      (63
                      )
                      
                      
                      (7
                      )
                      
                      
                      (70
                      )March
      31, 2010
                      
                      
                      28,621
                      
                      
                      
                      12,945
                      
                      
                      
                      41,566Percent
      of totalDecember
      31, 2009
                      
                      
                      67.8
                      %
                      
                      
                      32.2
                      %
                      
                      
                      100
                      %March
      31, 2010
                      
                      
                      68.9
                      %
                      
                      
                      31.1
                      %
                      
                      
                      100
                      %





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 EndedMarch
      31,
                                                  
                                                  
                                                  March
      31,2010
                                                  
                                                  
                                                  2009Income
      before income taxes
                                                  
                                                  $
                                                  11,218
                                                  
                                                  
                                                  $
                                                  8,693Less:
      provision for income taxes for entitiesother
      than Duff & Phelps Corporation(a)(b)
                                                  
                                                  
                                                  (920
                                                  )
                                                  
                                                  
                                                  (357
                                                  )Income
      before income taxes, as adjusted
                                                  
                                                  
                                                  10,298
                                                  
                                                  
                                                  
                                                  8,336Ownership
      percentage of noncontrolling interest(d)
                                                  
                                                  
                                                  32.0
                                                  %
                                                  
                                                  
                                                  57.8
                                                  %Net
      income attributable to noncontrolling interest
                                                  
                                                  
                                                  3,295
                                                  
                                                  
                                                  
                                                  4,816Income
      before income taxes, as adjusted, attributableto
      Duff & Phelps Corporation
                                                  
                                                  
                                                  7,003
                                                  
                                                  
                                                  
                                                  3,520Less:
      provision for income taxes of Duff & PhelpsCorporation(a)(c)
                                                  
                                                  
                                                  (2,730
                                                  )
                                                  
                                                  
                                                  (1,755
                                                  )Net
      income attributable to Duff & Phelps Corporation
                                                  
                                                  $
                                                  4,273
                                                  
                                                  
                                                  $
                                                  1,765


7


DUFF
& PHELPS CORPORATION AND SUBSIDIARIES


NOTES
TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS


(In
thousands, except per share amounts)


(Unaudited)





(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 $3,650 and $2,112 for the three months ended March 31, 2010 and
      2009, respectively.


(b)
            The
      provision for income taxes for entities other than Duff & Phelps
      Corporation represents taxes imposed directly on Duff & Phelps, LLC, a
      wholly-owned subsidiary of D&P Acquisitions, and its subsidiaries,
      such as taxes imposed on certain domestic subsidiaries (e.g., Rash &
      Associates, L.P.), taxes imposed by certain foreign jurisdictions, and
      taxes imposed by certain local and other jurisdictions (e.g., New York
      City).  Since Duff & Phelps, LLC is taxed as a partnership
      and a flow-through entity for U.S. federal and state income tax purposes,
      there is no provision for these taxes on income allocable to the
      noncontrolling interest.


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


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





Distributions
and Other Payments to Noncontrolling Unitholders





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





Three Months EndedMarch 31,
                            
                            
                            March 31,2010
                            
                            
                            2009Distributions
      for taxes
                            
                            $
                            608
                            
                            
                            $
                            8,847Other
      distributions
                            
                            
                            735
                            
                            
                            
                            -Payments
      pursuant tothe
      Tax Receivable Agreement
                            
                            
                            -
                            
                            
                            
                            -$
                            1,343
                            
                            
                            $
                            8,847





Distributions for
taxes


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


8


DUFF
& PHELPS CORPORATION AND SUBSIDIARIES


NOTES
TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS


(In
thousands, except per share amounts)


(Unaudited)





Other
distributions


During
the three months ended March 31, 2010, the Company distributed $735 to holders
of New Class A Units, other than Duff & Phelps
Corporation.  Concurrent with the payment of the dividend to
shareholders of record on March 16, 2010, holders of New Class A Units received
a $0.05 distribution per vested unit.  This amount totaled $573 and
will be treated as a reduction in basis of each member’s ownership
interests.  Pursuant to the terms of the Third Amended and Restated
LLC Agreement of D&P Acquisitions, an amount of $0.05 per unvested unit was
deposited into a segregated account and will be distributed once a year with
respect to units that vested during that year.  During the three months
ended March 31, 2010, the Company distributed $162 to members whose units vested
during 2009.  Any amounts related to unvested units that forfeit are
returned to the Company.





Payments pursuant to the Tax
Receivable Agreement


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





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





As of
March 31, 2010, the Company recorded a liability of $105,560, representing the
payments due to D&P Acquisitions’ unitholders under the TRA (see current and
non-current portion of “Due to noncontrolling unitholders” on the Company’s
Condensed Consolidated Balance Sheets).





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





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





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


9


DUFF
& PHELPS CORPORATION AND SUBSIDIARIES


NOTES
TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS


(In
thousands, except per share amounts)


(Unaudited)





Note  4  -   EARNINGS
PER SHARE





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





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





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


10


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 EndedMarch 31,
                                                                                
                                                                                
                                                                                March 31,2010
                                                                                
                                                                                
                                                                                2009Basic
      and diluted net income per share:NumeratorNet
      income available to holders of Class A common stock
                                                                                
                                                                                $
                                                                                4,273
                                                                                
                                                                                
                                                                                $
                                                                                1,765Earnings
      allocated to participating securities
                                                                                
                                                                                
                                                                                (269
                                                                                )
                                                                                
                                                                                
                                                                                (194
                                                                                )Earnings
      available for common stockholders
                                                                                
                                                                                $
                                                                                4,004
                                                                                
                                                                                
                                                                                $
                                                                                1,571Denominator
      for basic net income per share of Class A common stockWeighted
      average shares of Class A common stock
                                                                                
                                                                                
                                                                                24,986
                                                                                
                                                                                
                                                                                
                                                                                13,479Denominator
      for diluted net income per share of Class A common stockWeighted
      average shares of Class A common stock
                                                                                
                                                                                
                                                                                24,986
                                                                                
                                                                                
                                                                                
                                                                                13,479Add
      dilutive effect of the following:Restricted
      stock awards and units
                                                                                
                                                                                
                                                                                794
                                                                                
                                                                                
                                                                                
                                                                                494Assumed
      conversion of New Class A Units for Class A common stock(a)
                                                                                
                                                                                
                                                                                -
                                                                                
                                                                                
                                                                                
                                                                                -Dilutive
      weighted average shares of Class A common stock
                                                                                
                                                                                
                                                                                25,780
                                                                                
                                                                                
                                                                                
                                                                                13,973Basic
      income per share of Class A common stock
                                                                                
                                                                                $
                                                                                0.16
                                                                                
                                                                                
                                                                                $
                                                                                0.12Diluted
      income per share of Class A common stock
                                                                                
                                                                                $
                                                                                0.16
                                                                                
                                                                                
                                                                                $
                                                                                0.11(a)The following shares were anti-dilutive and excluded from this
      calculation:Weighted
      average New Class A Units outstanding
                                                                                
                                                                                
                                                                                12,966
                                                                                
                                                                                
                                                                                
                                                                                20,889Weighted
      average IPO Options outstanding
                                                                                
                                                                                
                                                                                1,812
                                                                                
                                                                                
                                                                                
                                                                                1,993





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





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


11


DUFF
& PHELPS CORPORATION AND SUBSIDIARIES


NOTES
TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS


(In
thousands, except per share amounts)


(Unaudited)





Note  5 
-   EQUITY-BASED COMPENSATION





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





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





Three
      Months Ended
                              
                              
                              Three
      Months EndedMarch
      31, 2010
                              
                              
                              March
      31, 2009Client
                              
                              
                              
                              
                              
                              
                              
                              
                              ClientService
                              
                              
                              SG&A
                              
                              
                              Total
                              
                              
                              Service
                              
                              
                              SG&A
                              
                              
                              TotalLegacy
      Units
                              
                              $
                              265
                              
                              
                              $
                              332
                              
                              
                              $
                              597
                              
                              
                              $
                              1,698
                              
                              
                              $
                              640
                              
                              
                              $
                              2,338IPO
      Options
                              
                              
                              333
                              
                              
                              
                              153
                              
                              
                              
                              486
                              
                              
                              
                              633
                              
                              
                              
                              282
                              
                              
                              
                              915Ongoing
      RSAs
                              
                              
                              3,119
                              
                              
                              
                              968
                              
                              
                              
                              4,087
                              
                              
                              
                              1,931
                              
                              
                              
                              970
                              
                              
                              
                              2,901Total
                              
                              $
                              3,717
                              
                              
                              $
                              1,453
                              
                              
                              $
                              5,170
                              
                              
                              $
                              4,262
                              
                              
                              $
                              1,892
                              
                              
                              $
                              6,154





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





During
the three months ended March 31, 2010, the Company issued 1,594 Ongoing RSAs
related to annual bonus incentive compensation, performance incentive
initiatives, promotions and recruiting efforts.  The restrictions on
transfer and forfeiture provisions are generally eliminated after three years
for all awards granted to non-executives with certain exceptions related to
retiree eligible employees and termination of employees without
cause.





Of the
1,594 Ongoing RSAs granted, 120 awards were granted to executives on March 10,
2010.  The restrictions on transfer and forfeiture provisions are
eliminated annually over three years based on ratable vesting for grants made to
executives.


12


DUFF
& PHELPS CORPORATION AND SUBSIDIARIES


NOTES
TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS


(In
thousands, except per share amounts)


(Unaudited)





Below is
a summary of restricted award activity during the three months ended March 31,
2010:





Weighted
                          
                          
                          
                          
                          
                          WeightedRestricted
                          
                          
                          Average
                          
                          
                          Restricted
                          
                          
                          AverageStock
                          
                          
                          Grant Date
                          
                          
                          Stock
                          
                          
                          Grant DateAwards
                          
                          
                          Fair Value
                          
                          
                          Units
                          
                          
                          Fair ValueBalance
      as of December 31, 2009
                          
                          
                          2,340
                          
                          
                          $
                          14.11
                          
                          
                          
                          173
                          
                          
                          $
                          13.43Granted
                          
                          
                          1,447
                          
                          
                          
                          17.00
                          
                          
                          
                          147
                          
                          
                          
                          17.00Converted
      to Class A common stockupon
      lapse of restrictions
                          
                          
                          (211
                          )
                          
                          
                          16.57
                          
                          
                          
                          -
                          
                          
                          
                          -Forfeited
                          
                          
                          (63
                          )
                          
                          
                          14.21
                          
                          
                          
                          -
                          
                          
                          
                          -Balance
      as of March 31, 2010
                          
                          
                          3,513
                          
                          
                          $
                          15.19
                          
                          
                          
                          320
                          
                          
                          $
                          15.32Vested
                          
                          
                          -
                          
                          
                          
                          
                          
                          
                          
                          -Unvested
                          
                          
                          3,513
                          
                          
                          
                          
                          
                          
                          
                          320








Below is
a summary of option activity during the three months ended March 31,
2010:





WeightedAverageIPO
                        
                        
                        Grant DateOptions
                        
                        
                        Fair ValueBalance
      as of December 31, 2009
                        
                        
                        1,815
                        
                        
                        $
                        7.33Granted
                        
                        
                        -
                        
                        
                        
                        -Exercised
                        
                        
                        (1
                        )
                        
                        
                        7.33Forfeited
                        
                        
                        (13
                        )
                        
                        
                        7.33Balance
      as of March 31, 2010
                        
                        
                        1,801
                        
                        
                        $
                        7.33Vested
                        
                        
                        876Unvested
                        
                        
                        925Weighted
      average exercise price
                        
                        $
                        16.00Weighted
      average remaining contractual term
                        
                        
                        7.50Total
      intrinsic value of exercised options
                        
                        $
                        2Total
      fair value of options vested
                        
                        $
                        6,420Aggregate
      intrinsic value
                        
                        $
                        1,333Options
      expected to vest
                        
                        
                        1,686Aggregate
      intrinsic value of options expected to vest
                        
                        $
                        1,248





Forfeitures
for Legacy Units, IPO Options and Ongoing RSAs are estimated at the time an
award is granted and revised, if necessary, in subsequent periods if actual
forfeitures differ from those estimates.  Pre-vesting forfeitures were
estimated to be between 2% and 21% as of March 31, 2010 based on historical
experience and future expectations.


13


DUFF
& PHELPS CORPORATION AND SUBSIDIARIES


NOTES
TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS


(In
thousands, except per share amounts)


(Unaudited)





The
following table summarizes activity for New Class A Units attributable to
equity-based compensation during the three months ended March 31,
2010:





NewClass A UnitsAttributable toEquity-BasedCompensationBalance
      as of December 31, 2009
                      
                      
                      3,231Forfeited
                      
                      
                      (7
                      )Exchanged
                      
                      
                      (22
                      )Balance
      as of March 31, 2010
                      
                      
                      3,202Vested
                      
                      
                      1,975Unvested
                      
                      
                      1,227





The total
unamortized compensation cost related to all non-vested awards was $35,482 at
March 31, 2010.  The period over which this expense is expected to be
recognized is approximately three years; the weighted-average period over which
this is expected to be recognized is approximately 1.8 years.  A tax
benefit of $229 and $439 was recognized for the stock options issued in
conjunction with the IPO and Ongoing RSAs for the three months ended March 31,
2010 and 2009, respectively.


14


DUFF
& PHELPS CORPORATION AND SUBSIDIARIES


NOTES
TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS


(In
thousands, except per share amounts)


(Unaudited)





Note
6   -   FAIR VALUE MEASUREMENTS





The
following table presents assets and liabilities measured at fair value on a
recurring basis at March 31, 2010:





Quoted Pricesin Active
                                
                                
                                SignificantMarkets for
                                
                                
                                Other
                                
                                
                                SignificantIdentical
                                
                                
                                Observable
                                
                                
                                UnobservableAssets
                                
                                
                                Inputs
                                
                                
                                InputsDescription
                                
                                (Level 1)
                                
                                
                                (Level 2)
                                
                                
                                (Level 3)
                                
                                
                                TotalInvestments
      held in conjunction withdeferred
      compensation plan(1)(2)
                                
                                $
                                -
                                
                                
                                $
                                20,400
                                
                                
                                $
                                -
                                
                                
                                $
                                20,400Total
      assets
                                
                                $
                                -
                                
                                
                                $
                                20,400
                                
                                
                                $
                                -
                                
                                
                                $
                                20,400Benefits
      payable in conjunction withdeferred
      compensation plan(1)
                                
                                $
                                -
                                
                                
                                $
                                21,769
                                
                                
                                $
                                -
                                
                                
                                $
                                21,769Interest
      rate swap(3)
                                
                                
                                -
                                
                                
                                
                                197
                                
                                
                                
                                -
                                
                                
                                
                                197Total
      liabilities
                                
                                $
                                -
                                
                                
                                $
                                21,966
                                
                                
                                $
                                -
                                
                                
                                $
                                21,966







(1)
              The
      investments held and benefits payable to participants in conjunction with
      the deferred compensation plan were primarily based on quoted prices for
      similar assets in active markets.  Changes in the fair value of
      the investments are recognized as an increase or decrease in compensation
      expense.  Changes in the fair value of the benefits payables to
      participants are recognized as a corresponding offset to compensation
      expense.  The net impact of changes in fair value is not
      material.  The deferred compensation plan is further discussed
      in Note 9.


(2)
              Investments
      held in conjunction with the deferred compensation plan exclude
      approximately $1,175 which is included in “Cash and cash equivalents” on
      the Company’s Condensed Consolidated Balance Sheet at March 31,
      2010.


(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
  7.





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


15


DUFF
& PHELPS CORPORATION AND SUBSIDIARIES


NOTES
TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS


(In
thousands, except per share amounts)


(Unaudited)





Note  7  -    LONG-TERM
DEBT





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





There
were no amounts outstanding under the Credit Facility at March 31, 2010 or
through the filing date of this Quarterly Report on Form 10-Q.  As of
March 31, 2010, the Company had $4,237 of outstanding letters of credit of which
$3,810 were issued against the Credit Facility.  There was $427 of
cash deposited into a restricted account to serve as deposits to secure the
remaining letters of credit.  These letters of credit were issued in
connection with real estate leases.





Loans
under the Credit Facility will, at the Company's option, bear interest on the
principal amount outstanding at either (a) a rate equal to LIBOR, plus an
applicable margin or (b) a base rate, plus an applicable margin.  The
applicable margin rate will be based on the Company's most recent consolidated
leverage ratio and ranges from 1.75% to 2.50% per annum depending on the
Company's consolidated leverage ratio.  In addition, the Company is
required to pay an unused commitment fee on the actual daily amount of the
unutilized portion of the commitments of the lenders at a rate ranging from
0.25% to 0.50% per annum, based on the Company's most recent consolidated
leverage ratio.  Based on the Company’s consolidated leverage ratio at
March 31, 2010, the Company qualified for the 1.75% applicable margin and 0.25%
unused commitment fee.





The
Credit Agreement contains customary representations and warranties and customary
affirmative and negative covenants, including, among others, limitations on (a)
the incurrence of liens, (b) the incurrence of indebtedness, (c) the ability to
make dividends and distributions, as well as redeem and repurchase equity
interests, and (d) acquisitions, mergers, consolidations and sales of
assets.  In addition, the Credit Agreement contains financial
covenants that do not permit (a) a total leverage ratio of greater than 2.75 to
1.00 until the quarter ending September 30, 2010, and 2.50 to 1.00 thereafter
and (b) a consolidated fixed charge coverage ratio of less than 2.00 to
1.00.  The financial covenants are tested on the last day of each
fiscal quarter based on the last four fiscal quarter
periods.  Management believes that the Company was in compliance with
all of its covenants as of March 31, 2010.  The Credit Agreement
permits dividend payments or other distributions in the Company’s common stock
or other equity interests subject to certain limitations.





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





Interest
Rate Swap





The
Company has a $8,500 notional amount interest rate swap that effectively
converted floating rate LIBOR payments to fixed payments at 4.94%.  As
a result of the termination of the Company’s former credit facility with General
Electric Capital Corporation, the underlying floating rate obligation is no
longer outstanding.  The swap agreement terminates September 30,
2010.  The Company elected not to apply hedge accounting to this
instrument.  The estimated fair value of the interest rate swap is
based on quoted market prices.  The gain or loss is recorded in “Other
expense” and has a non-cash impact on the Company’s operations.  At
March 31, 2010, the liability resulting from the interest rate swap was included
in “Other current liabilities.”


16


DUFF
& PHELPS CORPORATION AND SUBSIDIARIES


NOTES
TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS


(In
thousands, except per share amounts)


(Unaudited)





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





Three Months EndedMarch 31,
                          
                          
                          March 31,2010
                          
                          
                          2009Gain
      resulting from changein
      fair value of interest rate swap
                          
                          $
                          125
                          
                          
                          $
                          191Estimated
      fair value – (liability)
                          
                          $
                          (197
                          )
                          
                          $
                          (739
                          )




17


DUFF
& PHELPS CORPORATION AND SUBSIDIARIES


NOTES
TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS


(In
thousands, except per share amounts)


(Unaudited)





Note  8  -    INCOME
TAXES





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





Three Months EndedMarch 31,
                    
                    
                    March 31,2010
                    
                    
                    2009Provision
      for income taxes
                    
                    $
                    3,650
                    
                    
                    $
                    2,112Effective
      income tax rate
                    
                    
                    32.5
                    %
                    
                    
                    24.3
                    %





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, Income
Taxes.   A reconciliation of the beginning and ending
amount of unrecognized tax benefit is summarized as follows:





Balance
      as of December 31, 2009
                    
                    $
                    548Additional
      based on tax positions related to the current year
                    
                    
                    34Balance
      as of March 31, 2010
                    
                    $
                    582





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.


18


DUFF
& PHELPS CORPORATION AND SUBSIDIARIES


NOTES
TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS


(In
thousands, except per share amounts)


(Unaudited)





Note  9  -    DEFERRED
COMPENSATION PLAN





The
Company maintains the Duff & Phelps Deferred Compensation Plan (“Deferred
Compensation Plan”) for key employees.  This plan is detailed further
in our Annual Report on Form 10-K for the year ended December 31,
2009.





Under the
terms of the plan, the Company established a “rabbi trust” as a vehicle for
accumulating assets to pay benefits under the plan.  Payments under
the plan may be paid from the general assets of the Company or from the assets
of any such rabbi trust.  Payment from any such source reduces the
obligation owed to the participant or beneficiary.  The rabbi trust
invests in an investment vehicle structured as a corporate-owned life insurance
(“COLI”) policy with a cash surrender value that mirrors the payable to the
participants of the plan and tracks the value of the plan
assets.  Participants can earn a return on their deferred compensation
that is based on hypothetical investment funds.  The policy is
redeemable on demand in an amount equal to the cash surrender
value.  The cash surrender value approximates fair value.





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





March 31,
                      
                      
                      December 31,2010
                      
                      
                      2009Fair
      market value of investments in rabbi trust
                      
                      $
                      20,400
                      
                      
                      $
                      17,807Payable
      to participants of the plan
                      
                      
                      21,769
                      
                      
                      
                      18,051







(1)
                        The
      fair market value of investments in rabbi trust held in conjunction with
      the deferred compensation plan excludes approximately $1,175 and $251
      which is included in cash and cash equivalents at March 31, 2010 and
      December 31, 2009,
respectively.





The fair
market value of the investments in the rabbi trust is included in “Investments
related to the deferred compensation plan” with the corresponding deferred
compensation obligation included in “Current portion of liability related to
deferred compensation plan” and “Liability related to deferred compensation
plan, less current portion” on the Condensed Consolidated Balance
Sheets.  Changes in the fair value of the investments are recognized
as compensation expense (or credit).  Changes in the fair value of the
benefits payables to participants are recognized as a corresponding offset to
compensation expense (or credit).  The net impact of changes in fair
value is not material.





Note
10  -  IMPAIRMENT OF CERTAIN INTANGIBLE ASSETS





The
impairment of certain intangible assets resulted from a one-time charge incurred
to impair certain intangible assets that originated from our acquisition of
World Tax Services US, LLC (“WTS”) in July 2008.  WTS operated as part
of the Financial Advisory segment.  The impairment resulted from the
departure of the two managing directors who ran the practice and associated
staff in March 2010.





Note
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.


19


DUFF
& PHELPS CORPORATION AND SUBSIDIARIES


NOTES
TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS


(In
thousands, except per share amounts)


(Unaudited)





Note
12  -  SEGMENT INFORMATION





The
Company provides services through three segments:  Financial Advisory,
Corporate Finance Consulting and Investment Banking.  The Financial
Advisory segment provides services associated with valuation advisory, tax, and
dispute and legal management consulting.  The Corporate Finance
Consulting segment provides services related to portfolio valuation, financial
engineering, strategic value advisory and due diligence.  The
Investment Banking segment provides restructuring advisory services, transaction
opinions, and merger and acquisition advisory services.





Three Months EndedMarch 31,
                        
                        
                        March 31,2010
                        
                        
                        2009Financial
      AdvisoryRevenues
      (excluding reimbursables)
                        
                        $
                        53,882
                        
                        
                        $
                        60,891Segment
      operating income
                        
                        
                        7,538
                        
                        
                        
                        10,349Segment
      operating income margin
                        
                        
                        14.0
                        %
                        
                        
                        17.0
                        %Corporate
      Finance ConsultingRevenues
      (excluding reimbursables)
                        
                        $
                        14,936
                        
                        
                        $
                        14,616Segment
      operating income
                        
                        
                        2,982
                        
                        
                        
                        3,252Segment
      operating income margin
                        
                        
                        20.0
                        %
                        
                        
                        22.2
                        %Investment
      BankingRevenues
      (excluding reimbursables)
                        
                        $
                        20,346
                        
                        
                        $
                        13,758Segment
      operating income
                        
                        
                        5,057
                        
                        
                        
                        1,543Segment
      operating income margin
                        
                        
                        24.9
                        %
                        
                        
                        11.2
                        %TotalRevenues
      (excluding reimbursables)
                        
                        $
                        89,164
                        
                        
                        $
                        89,265Segment
      operating income
                        
                        $
                        15,577
                        
                        
                        $
                        15,144Net
      client reimbursable expenses
                        
                        
                        (56
                        )
                        
                        
                        22Equity-based
      compensation from Legacy Units and IPO Options
                        
                        
                        (1,083
                        )
                        
                        
                        (3,253
                        )Depreciation
      and amortization
                        
                        
                        (2,493
                        )
                        
                        
                        (2,562
                        )Charge
      from impairment of certain intangible assets
                        
                        
                        (674
                        )
                        
                        
                        -Operating
      income
                        
                        $
                        11,271
                        
                        
                        $
                        9,351





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





Three Months EndedMarch 31,
                      
                      
                      March 31,2010
                      
                      
                      2009United
      States
                      
                      $
                      77,071
                      
                      
                      $
                      81,367Europe
                      
                      
                      11,208
                      
                      
                      
                      6,823Asia
                      
                      
                      885
                      
                      
                      
                      1,075Revenues
      (excluding reimbursables)
                      
                      $
                      89,164
                      
                      
                      $
                      89,265





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


20


DUFF
& PHELPS CORPORATION AND SUBSIDIARIES


NOTES
TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS


(In
thousands, except per share amounts)


(Unaudited)





For
segment reporting purposes, management uses certain estimates and assumptions to
allocate revenues and expenses.  Revenues and expenses attributable to
reportable segments are generally based on which segment and product line a
client service professional is a dedicated member.  As a result,
revenues recognized that relate to the cross utilization of client service
professionals across reportable segments occur each period depending on the
expertise required for each engagement.  In particular, the Financial
Advisory segment (primarily Valuation Advisory services) recognized revenues of
$2,945 and $4,322 from the cross utilization of its client service professionals
on engagements from the Corporate Finance Consulting segment (primarily
Portfolio Valuation services) in the three months ended March 31, 2010 and 2009,
respectively.


21


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





Entities
affiliated with Lovell Minnick Partners are holders of Class B common stock and
an equivalent number of New Class A Units.  Two managing directors of
Lovell Minnick Partners serve as independent directors on the Company’s Board of
Directors.





D&P
Acquisitions made distributions to entities affiliated with Lovell Minnick
Partners as summarized in the following table:





Three Months EndedMarch 31,
                    
                    
                    March 31,2010
                    
                    
                    2009Distributions
      for taxes
                    
                    $
                    59
                    
                    
                    $
                    2,361Other
      distributions
                    
                    
                    181
                    
                    
                    
                    -Payments
      pursuant to the TRA
                    
                    
                    -
                    
                    
                    
                    -$
                    240
                    
                    
                    $
                    2,361





Distributions
for taxes, other distributions and payments pursuant to the TRA are further
described in Note 3.





An
affiliate of Lovell Minnick Partners engaged the Company to provide certain
consulting services.  As a result of services provided, the Company
recorded $31 of revenues resulting from the engagement during the three months
ended March 31, 2010.





Vestar
Capital Partners





Entities
affiliated with Vestar Capital Partners are holders of Class B common stock and
an equivalent number of New Class A Units.  A managing director of
Vestar Capital Partners serves as independent directors on the Company’s Board
of Directors.





D&P
Acquisitions made distributions to entities affiliated with Vestar Capital
Partners as summarized in the following table:





Three Months EndedMarch 31,
                    
                    
                    March 31,2010
                    
                    
                    2009Distributions
      for taxes
                    
                    $
                    74
                    
                    
                    $
                    2,846Other
      distributions
                    
                    
                    251
                    
                    
                    
                    -Payments
      pursuant to the TRA
                    
                    
                    -
                    
                    
                    
                    -$
                    325
                    
                    
                    $
                    2,846





Distributions
for taxes, other distributions and payments pursuant to the TRA are further
described in Note 3.


22


DUFF
& PHELPS CORPORATION AND SUBSIDIARIES


NOTES
TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS


(In
thousands, except per share amounts)


(Unaudited)





Note
14  -  SUBSEQUENT EVENTS





In
accordance with FASB ASC 855, Subsequent Events, management
of the Company evaluated subsequent events.





Departure
of Directors or Certain Officers





On April
22, 2010, the Company announced certain management changes, including that
Gerard Creagh, president, will leave the Company to pursue other
interests.  Noah Gottdiener, chairman and chief executive officer of
the Company, will be assuming the additional role of president.  Mr.
Creagh will not stand for election at the Company’s upcoming annual meeting of
stockholders.  The Company estimates that it will incur a one-time
charge associated with these changes of approximately $3,700 in its
second quarter of 2010 related to cash severance and the accounting impact of
accelerated vesting of equity-based awards.





Declaration
of Quarterly Dividend





On April
29, 2010, the Company announced that its board of directors had declared a
quarterly dividend of $0.06 per share on its outstanding Class A common
stock.  The dividend is payable on May 28, 2010 to shareholders of
record on May 18, 2010.  Concurrently with the payment of the
dividend, the Company will be distributing $0.06 per unit to holders of New
Class A Units.





Authorization
of Stock Repurchase Program





On April
29, 2010, the Company announced that its Board of Directors had approved a stock
repurchase program, authorizing the Company to repurchase in the aggregate up to
$50.0 million of its outstanding common stock.  Purchases by the
Company under this program may be made from time to time at prevailing market
prices in open market purchases, privately negotiated transactions, block
purchase techniques or otherwise, as determined by the Company’s
management.  The purchases will be funded from existing cash
balances.





This
program does not obligate the Company to acquire any particular amount of common
stock.  The timing, frequency and amount of repurchase activity will
depend on a variety of factors such as levels of cash generation from
operations, cash requirements for investment in the
Company’s  business, current stock price, market conditions and other
factors.  The share repurchase program may be suspended, modified or
discontinued at any time and has no set expiration date.


23


Item
2.    Management’s Discussion and Analysis of Financial
Condition and Results of Operations.





Disclosure
Regarding Forward-Looking Statements





This
report contains forward-looking statements within the meaning of Section 27A of
the Securities Act of 1933 and Section 21E of the Securities Exchange Act of
1934 (the “Exchange Act”), which reflect the Company’s current views with
respect to, among other things, future events and financial
performance.  The Company generally identifies forward looking
statements by terminology such as “outlook,” “believes,” “expects,” “potential,”
“continues,” “may,” “will,” “could,” “should,” “seeks,” “approximately,”
“predicts,” “intends,” “plans,” “estimates,” “anticipates” or the negative
version of those words or other comparable words.  Any forward-looking
statements contained in this discussion are based upon our historical
performance and on our current plans, estimates and expectations.  The
inclusion of this forward-looking information should not be regarded as a
representation by us, or any other person that the future plans, estimates or
expectations contemplated by us will be achieved.  Such
forward-looking statements are subject to various risks and uncertainties and
assumptions relating to our operations, financial results, financial condition,
business prospects, growth strategy and liquidity.  If one or more of
these or other risks or uncertainties materialize, or if our underlying
assumptions prove to be incorrect, our actual results may vary materially from
those indicated in these statements.  These factors should not be
construed as exhaustive and should be read in conjunction with the other
cautionary statements and the risk factors section that are included in our
Annual Report on Form 10-K for the year ended December 31, 2009 and any
subsequent filings of our Quarterly Reports on Form 10-Q.  The
forward-looking statements included in this Quarterly Report on Form 10-Q are
made only as of the date of this filing with the Securities and Exchange
Commission.  The Company does not undertake any obligation to publicly
update or review any forward-looking statement, whether as a result of new
information, future developments or otherwise.





Critical
Accounting Policies and Estimates





Management’s
discussion and analysis of the Company’s financial condition and results of
operations is based upon the Company’s consolidated financial statements, which
have been prepared in accordance with accounting principles generally accepted
in the United States (“GAAP”).  The preparation of financial
statements in conformity with GAAP requires management to make estimates and
assumptions that affect amounts of assets and liabilities and disclosures of
contingent assets and liabilities as of the date of the financial statements and
reported amounts of revenues and expenses during the periods
presented.  Actual results could differ from these
estimates.  Estimates and assumptions are reviewed periodically and
the effects of revisions are reflected in the consolidated financial statements
in the period they are deemed to be necessary.  Significant estimates
made in the accompanying consolidated financial statements include, but are not
limited to the following:





·
            proportional
      performance under client engagements for the purpose of determining
      revenue recognition,


·
            accounts
      receivable and unbilled services
valuation,


·
            incentive
      compensation and other accrued
benefits,


·
            useful
      lives of intangible assets,


·
            the
      carrying value of goodwill and intangible
  assets,


·
            amounts
      due to noncontrolling unitholders,


·
            reserves
      for estimated tax liabilities,


·
            contingent
      liabilities,


·
            certain
      estimates and assumptions used in the allocation of revenues and expenses
      for our segment reporting, and


·
            certain
      estimates and assumptions used in the calculation of the fair value of
      equity compensation issued to
employees.





A summary
of the Company’s critical accounting policies and estimates can be found in our
Annual Report on Form 10-K for the year ended December 31,
2009.  During the three months ended March 31, 2009, there were no
significant changes to our critical accounting policies and
estimates.





Results
of Operations





We are a
leading provider of independent financial advisory and investment banking
services.  Our mission is to help our clients protect, maximize and
recover value by providing independent advice on issues involving highly
technical and complex assessments in the areas of valuation, transactions,
financial restructuring, disputes and taxation.  We believe that the
Duff & Phelps brand is associated with experienced professionals who give
trusted guidance in a responsive manner.  We serve a global client
base through offices in 23 cities, comprised of offices in 17 U.S. cities,
including New York, Chicago, Dallas and Los Angeles, and six international
offices located in Amsterdam, London, Munich, Paris, Shanghai and
Tokyo.


24





We
provide services through three segments:  Financial Advisory,
Corporate Finance Consulting and Investment Banking.











Equity-based
compensation discussed herein includes (a) grants of units of D&P
Acquisitions prior to the recapitalization transaction that were effectuated in
conjunction with the IPO (“Legacy Units”), (b) options to purchase shares of the
Company’s Class A common stock granted in connection with the IPO (“IPO
Options”) and (c) restricted stock awards and units issued in connection with
the Company’s ongoing long-term compensation program (“Ongoing
RSAs”).  The IPO, Recapitalization Transactions and the Company’s
capital structure are further detailed in our Annual Report on Form 10-K for the
year ended December 31, 2009.





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


25


Three
months ended March 31, 2010 versus three months ended March 31,
2009





The
results of operations are summarized as follows:





Three Months EndedMarch
      31,
                      
                      
                      March
      31,
                      
                      
                      Unit
                      
                      
                      Percent2010
                      
                      
                      2009
                      
                      
                      Change
                      
                      
                      ChangeRevenues
                      
                      $
                      89,164
                      
                      
                      $
                      89,265
                      
                      
                      $
                      (101
                      )
                      
                      
                      (0.1
                      )%Reimbursable
      expenses
                      
                      
                      2,798
                      
                      
                      
                      2,037
                      
                      
                      
                      761
                      
                      
                      
                      37.4
                      %Total
      revenues
                      
                      
                      91,962
                      
                      
                      
                      91,302
                      
                      
                      
                      660
                      
                      
                      
                      0.7
                      %Direct
      client service costsCompensation
      and benefits(1)
                      
                      
                      48,598
                      
                      
                      
                      51,130
                      
                      
                      
                      (2,532
                      )
                      
                      
                      (5.0
                      )%Other
      direct client service costs
                      
                      
                      2,605
                      
                      
                      
                      1,304
                      
                      
                      
                      1,301
                      
                      
                      
                      99.8
                      %Reimbursable
      expenses
                      
                      
                      2,854
                      
                      
                      
                      2,015
                      
                      
                      
                      839
                      
                      
                      
                      41.6
                      %54,057
                      
                      
                      
                      54,449
                      
                      
                      
                      (392
                      )
                      
                      
                      (0.7
                      )%Operating
      expensesSelling,
      general and administrative(2)
                      
                      
                      23,467
                      
                      
                      
                      24,940
                      
                      
                      
                      (1,473
                      )
                      
                      
                      (5.9
                      )%Depreciation
      and amortization
                      
                      
                      2,493
                      
                      
                      
                      2,562
                      
                      
                      
                      (69
                      )
                      
                      
                      (2.7
                      )%Charge
      from impairment of certain intangible assets
                      
                      
                      674
                      
                      
                      
                      -
                      
                      
                      
                      674
                      
                      
                      
                      -26,634
                      
                      
                      
                      27,502
                      
                      
                      
                      (868
                      )
                      
                      
                      (3.2
                      )%Operating
      income
                      
                      
                      11,271
                      
                      
                      
                      9,351
                      
                      
                      
                      1,920
                      
                      
                      
                      20.5
                      %Other
      expense, netInterest
      income
                      
                      
                      (24
                      )
                      
                      
                      (14
                      )
                      
                      
                      (10
                      )
                      
                      
                      71.4
                      %Interest
      expense
                      
                      
                      92
                      
                      
                      
                      655
                      
                      
                      
                      (563
                      )
                      
                      
                      (86.0
                      )%Other
      (income)/expense
                      
                      
                      (15
                      )
                      
                      
                      17
                      
                      
                      
                      (32
                      )
                      
                      
                      (188.2
                      )%53
                      
                      
                      
                      658
                      
                      
                      
                      (605
                      )
                      
                      
                      (91.9
                      )%Income
      before income taxes
                      
                      
                      11,218
                      
                      
                      
                      8,693
                      
                      
                      
                      2,525
                      
                      
                      
                      29.0
                      %Provision
      for income taxes
                      
                      
                      3,650
                      
                      
                      
                      2,112
                      
                      
                      
                      1,538
                      
                      
                      
                      72.8
                      %Net
      income
                      
                      
                      7,568
                      
                      
                      
                      6,581
                      
                      
                      
                      987
                      
                      
                      
                      15.0
                      %Less:  Net
      income attributable to noncontrolling interest
                      
                      
                      3,295
                      
                      
                      
                      4,816
                      
                      
                      
                      (1,521
                      )
                      
                      
                      (31.6
                      )%Net
      income attributable to Duff & Phelps Corporation
                      
                      $
                      4,273
                      
                      
                      $
                      1,765
                      
                      
                      $
                      2,508
                      
                      
                      
                      142.1
                      %Other
      financial and operating dataAdjusted
      EBITDA(3)
                      
                      $
                      15,521
                      
                      
                      $
                      15,166
                      
                      
                      $
                      355
                      
                      
                      
                      2.3
                      %Adjusted
      EBITDA(3)
      as a percentage of revenues
                      
                      
                      17.4
                      %
                      
                      
                      17.0
                      %
                      
                      
                      0.4
                      %
                      
                      
                      2.5
                      %End
      of period managing directors
                      
                      
                      158
                      
                      
                      
                      169
                      
                      
                      
                      (11
                      )
                      
                      
                      (6.5
                      )%End
      of period client service professionals
                      
                      
                      830
                      
                      
                      
                      948
                      
                      
                      
                      (118
                      )
                      
                      
                      (12.4
                      )%







(1)
              Compensation
      and benefits include $3,717 and $4,262 of equity-based compensation
      expense for the three months ended March 31, 2010 and 2009,
      respectively.




(2)
              Selling,
      general and administrative expenses include $1,453 and $1,892 of
      equity-based compensation expense for the three months ended March 31,
      2010 and 2009, respectively.




26





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





Reconciliation
of Adjusted EBITDA





Three Months EndedMarch
      31,
                            
                            
                            March
      31,2010
                            
                            
                            2009Revenues
      (excluding client reimbursables)
                            
                            $
                            89,164
                            
                            
                            $
                            89,265Net
      income attributable to Duff & Phelps Corporation
                            
                            $
                            4,273
                            
                            
                            $
                            1,765Net
      income attributable to noncontrolling interest
                            
                            
                            3,295
                            
                            
                            
                            4,816Provision
      for income taxes
                            
                            
                            3,650
                            
                            
                            
                            2,112Other
      expense, net
                            
                            
                            53
                            
                            
                            
                            658Depreciation
      and amortization
                            
                            
                            2,493
                            
                            
                            
                            2,562Charge
      from impairment of certain intangible assets
                            
                            
                            674
                            
                            
                            
                            -Equity-based
      compensation associated with Legacy Units and IPO Options
                            
                            
                            1,083
                            
                            
                            
                            3,253Adjusted
      EBITDA
                            
                            $
                            15,521
                            
                            
                            $
                            15,166Adjusted
      EBITDA as a percentage of revenues
                            
                            
                            17.4
                            %
                            
                            
                            17.0
                            %





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 or loss attributable to Duff & Phelps Corporation for
(a) net income or loss attributable to noncontrolling interest, (b) provision
for income taxes, (c) interest expense and depreciation and amortization (a
significant portion of which relates to debt and capital investments that have
been incurred as the result of acquisitions and investments in stand-alone
infrastructure which we do not expect to incur at the same levels in the
future), (d) equity-based compensation associated with the Legacy Units of
D&P Acquisitions, a significant portion of which is due to certain one-time
grants associated with acquisitions prior to our IPO, and options to purchase
shares of the Company’s Class A common stock granted in connection with the IPO
(“IPO Options”), and (e) impairment charges, acquisition retention expenses and
other merger and acquisition costs, which are generally non-recurring in nature
or are related to deferred payments associated with prior
acquisitions.





Given the
level of acquisition activity during the period prior to our IPO, and related
capital investments and one time equity grants associated with acquisitions
during the this period (which we do not expect to incur at the same levels post
IPO) and the IPO, and our belief that, as a professional services organization,
our operations are not capital intensive on an ongoing basis, we believe the
Adjusted EBITDA measure, in addition to GAAP financial measures, provides a
relevant and useful benchmark for investors, in order to assess our financial
performance and comparability to other companies in our industry.  The
Adjusted EBITDA measure is utilized by our senior management to evaluate our
overall performance and operating expense characteristics and to compare our
performance to that of certain of our competitors.  A measure similar
to Adjusted EBITDA is the principal measure that determines the compensation of
our senior management team.  In addition, a measure similar to
Adjusted EBITDA is a key measure that determines compliance with certain
financial covenants under our credit facility.  Management compensates
for the inherent limitations associated with using the Adjusted EBITDA measure
through disclosure of such limitations, presentation of our financial statements
in accordance with GAAP and reconciliation of Adjusted EBITDA to the most
directly comparable GAAP measure, net income or loss.  Furthermore,
management also reviews GAAP measures, and evaluates individual measures that
are not included in Adjusted EBITDA such as our level of capital expenditures,
equity issuance and interest expense, among other measures.





Adjusted
EBITDA, as defined by the Company, consists of net income or loss attributable
to Duff & Phelps Corporation before (a) net income or loss attributable to
the noncontrolling interest, (b) provision for income taxes, (c) other expense,
net, (d) depreciation and amortization, (e) charges from impairment of
intangible assets, (f) equity-based compensation associated with Legacy Units
and IPO Options included in both compensation and benefits and in selling,
general and administrative expenses, (g) acquisition retention expenses, and (h)
merger and acquisition costs.





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.


27





Overview





As we
enter what appears to be a period of economic recovery, we are beginning to see
modest improvements in certain areas of our business.  Certain of our
services typically correlated to the volume of M&A transactions have seen
recent improvements over the corresponding prior year quarter, including
revenues from M&A advisory, transaction opinions and due
diligence.  Although demand for valuation advisory services has
decreased when compared to the corresponding prior year quarter, these services
have begun to show sequential improvement since late 2009.  In
addition, revenues from global restructuring advisory have continued to increase
over the corresponding prior year quarter.  Overall, we believe that
revenue and earnings for the quarter demonstrate the resiliency of our balanced
portfolio of services and diversified client base, whose demand for complex
financial advisory and valuation services continues.





Revenues





Revenues
excluding reimbursable expenses decreased $101 or 0.1% to $89,164 for the three
months ended March 31, 2010, compared to $89,265 for the three months ended
March 31, 2009.  The decrease in revenues primarily resulted from an
11.5% decrease in revenues from our Financial Advisory segment.  These
decreases were partially offset by a 47.9% increase in revenues from our
Investment Banking segment and a 2.2% increase in revenues from our Corporate
Finance Consulting segment, as summarized in the following table:





Three Months EndedMarch
      31,
                        
                        
                        March
      31,
                        
                        
                        Dollar
                        
                        
                        Percent2010
                        
                        
                        2009
                        
                        
                        Change
                        
                        
                        ChangeFinancial
      AdvisoryValuation
      Advisory
                        
                        $
                        35,020
                        
                        
                        $
                        40,370
                        
                        
                        $
                        (5,350
                        )
                        
                        
                        (13.3
                        )%Tax
      Services
                        
                        
                        9,447
                        
                        
                        
                        10,878
                        
                        
                        
                        (1,431
                        )
                        
                        
                        (13.2
                        )%Dispute
      & Legal Management Consulting
                        
                        
                        9,415
                        
                        
                        
                        9,643
                        
                        
                        
                        (228
                        )
                        
                        
                        (2.4
                        )%53,882
                        
                        
                        
                        60,891
                        
                        
                        
                        (7,009
                        )
                        
                        
                        (11.5
                        )%Corporate
      Finance ConsultingPortfolio
      Valuation
                        
                        
                        5,482
                        
                        
                        
                        6,295
                        
                        
                        
                        (813
                        )
                        
                        
                        (12.9
                        )%Financial
      Engineering
                        
                        
                        4,126
                        
                        
                        
                        4,148
                        
                        
                        
                        (22
                        )
                        
                        
                        (0.5
                        )%Strategic
      Value Advisory
                        
                        
                        3,158
                        
                        
                        
                        2,620
                        
                        
                        
                        538
                        
                        
                        
                        20.5
                        %Due
      Diligence
                        
                        
                        2,170
                        
                        
                        
                        1,553
                        
                        
                        
                        617
                        
                        
                        
                        39.7
                        %14,936
                        
                        
                        
                        14,616
                        
                        
                        
                        320
                        
                        
                        
                        2.2
                        %Investment
      BankingGlobal
      Restructuring Advisory
                        
                        
                        9,841
                        
                        
                        
                        5,578
                        
                        
                        
                        4,263
                        
                        
                        
                        76.4
                        %Transaction
      Opinions
                        
                        
                        6,823
                        
                        
                        
                        6,101
                        
                        
                        
                        722
                        
                        
                        
                        11.8
                        %M&A
      Advisory
                        
                        
                        3,682
                        
                        
                        
                        2,079
                        
                        
                        
                        1,603
                        
                        
                        
                        77.1
                        %20,346
                        
                        
                        
                        13,758
                        
                        
                        
                        6,588
                        
                        
                        
                        47.9
                        %Total
      Revenues (excluding reimbursables)
                        
                        $
                        89,164
                        
                        
                        $
                        89,265
                        
                        
                        $
                        (101
                        )
                        
                        
                        (0.1
                        )%





Our
Financial Advisory segment was impacted by lower revenues from valuation
advisory and to a lesser extent tax services.  Services within
valuation advisory were impacted by a reduction of goodwill impairment testing
due to improvement in the overall economic environment and a lower volume of
real estate valuation activity, partially offset by an increase in revenues from
purchase price allocations from an increase in M&A activity.  The
decrease in revenues from tax services primarily resulted from lower revenues
from transactional tax and tax compliance due to the departure of staff
principally affiliated with our acquisition of World Tax Services US, LLC
(“WTS”) in July 2008.  Portfolio valuation decreased from the timing
of workflow on several key engagements.  Decreases in Financial Advisory
and portfolio valuation were partially offset by increases in revenues from
global restructuring advisory, M&A advisory, transaction opinions and due
diligence.





Our
client service headcount decreased to 830 client service professionals at March
31, 2010, compared to 878 client service professionals at December 31,
2009.  This decrease resulted from targeted reductions and attrition
primarily in our Financial Advisory segment and to a lesser extent in our
Corporate Finance Consulting segment.


28





Direct
Client Service Costs





Direct
client service costs decreased $392 or 0.7% to $54,057 for the three months
ended March 31, 2010, compared to $54,449 for the three months ended March 31,
2009.  Direct client service costs include compensation and benefits
for client service employees, fees payable to contractors and other
expenses related to the execution of engagements.  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 S ervice Costs





Three Months EndedMarch
      31,
                              
                              
                              March
      31,2010
                              
                              
                              2009Revenues
      (excluding reimbursables)
                              
                              $
                              89,164
                              
                              
                              $
                              89,265Total
      direct client service costs
                              
                              $
                              54,057
                              
                              
                              $
                              54,449Less:
      equity-based compensation associatedwith
      Legacy Units and IPO Options
                              
                              
                              (598
                              )
                              
                              
                              (2,331
                              )Less:
      reimbursable expenses
                              
                              
                              (2,854
                              )
                              
                              
                              (2,015
                              )Direct
      client service costs, as adjusted
                              
                              $
                              50,605
                              
                              
                              $
                              50,103Direct
      client service costs, as adjusted,as
      a percentage of revenues
                              
                              
                              56.8
                              %
                              
                              
                              56.1
                              %





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





In
aggregate, 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 and changes in
estimates of forfeiture rates, partially offset by an increase in expense from
grants of Ongoing RSAs.


29





Operating
Expenses





Operating
expenses decreased $868 or 3.2% to $26,634 for the three months ended March 31,
2010, compared to $27,502 for the three months ended March 31,
2009.  The decrease in operating expenses resulted from a $1,473 or
5.9% decrease in selling, general and administrative expenses, partially offset
by a $674 one-time charge from the impairment of certain intangible assets that
originated from our acquisition of WTS in July 2008.  The impairment
resulted from the departure of the two managing directors who ran this group and
associated staff in March 2010.  WTS operated as part of our Financial
Advisory segment.





The
following table adjusts operating expenses for equity-based compensation
associated with Legacy Units and IPO Options, depreciation and amortization, and
a charge to impair certain intangible assets:





Operating
Expenses





Three Months EndedMarch
      31,
                            
                            
                            March
      31,2010
                            
                            
                            2009Revenues
      (excluding reimbursables)
                            
                            $
                            89,164
                            
                            
                            $
                            89,265Total
      operating expenses
                            
                            $
                            26,634
                            
                            
                            $
                            27,502Less:
      equity-based compensation associatedwith
      Legacy Units and IPO Options
                            
                            
                            (485
                            )
                            
                            
                            (922
                            )Less:
      depreciation and amortization
                            
                            
                            (2,493
                            )
                            
                            
                            (2,562
                            )Less:
      charge to impair certain intangible assets
                            
                            
                            (674
                            )
                            
                            
                            -Operating
      expenses, as adjusted
                            
                            $
                            22,982
                            
                            
                            $
                            24,018Operating
      expenses, as adjusted,as
      a percentage of revenues
                            
                            
                            25.8
                            %
                            
                            
                            26.9
                            %





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





In
aggregate, 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 and changes in
estimates of forfeiture rates.





Other
Income and Expenses





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





Provision
for Income Taxes





The
provision for income taxes was $3,650 or 32.5% of income before income taxes for
the three months ended March 31, 2010, compared to $2,112 or 24.3% of income
before income taxes for the three months ended March 31, 2009.  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.  The increase in the provision for income taxes as a
percentage of income before income taxes resulted primarily from a decrease in
the rate benefit from operating as an LLC, due to an increase in Duff &
Phelps Corporation’s ownership of D&P Acquisitions, LLC.





Net
Income Attributable to the Noncontrolling Interest





Net income attributable to the
noncontrolling interest represents the portion of net income or loss before
income taxes attributable to the ownership interest in D&P Acquisitions held
by the existing unitholders to the extent the book value of their interest in
D&P Acquisitions is greater than zero.  This interest totaled
31.1% and 56.8% at March 31, 2010 and 2009, respectively.





30




Segment
Results – Three months ended March 31, 2010 versus three months ended March
31, 2009





The
following table sets forth selected segment operating results:





Results
of Operations by Segment





Three Months EndedMarch
      31,
                                                
                                                
                                                March
      31,
                                                
                                                
                                                Unit
                                                
                                                
                                                Percent2010
                                                
                                                
                                                2009
                                                
                                                
                                                Change
                                                
                                                
                                                ChangeFinancial
      AdvisoryRevenues
      (excluding reimbursables)
                                                
                                                $
                                                53,882
                                                
                                                
                                                $
                                                60,891
                                                
                                                
                                                $
                                                (7,009
                                                )
                                                
                                                
                                                (11.5
                                                )%Segment
      operating income
                                                
                                                $
                                                7,538
                                                
                                                
                                                $
                                                10,349
                                                
                                                
                                                $
                                                (2,811
                                                )
                                                
                                                
                                                (27.2
                                                )%Segment
      operating income margin
                                                
                                                
                                                14.0
                                                %
                                                
                                                
                                                17.0
                                                %
                                                
                                                
                                                (3.0
                                                )%
                                                
                                                
                                                (17.7
                                                )%Corporate
      Finance ConsultingRevenues
      (excluding reimbursables)
                                                
                                                $
                                                14,936
                                                
                                                
                                                $
                                                14,616
                                                
                                                
                                                $
                                                320
                                                
                                                
                                                
                                                2.2
                                                %Segment
      operating income
                                                
                                                $
                                                2,982
                                                
                                                
                                                $
                                                3,252
                                                
                                                
                                                $
                                                (270
                                                )
                                                
                                                
                                                (8.3
                                                )%Segment
      operating income margin
                                                
                                                
                                                20.0
                                                %
                                                
                                                
                                                22.2
                                                %
                                                
                                                
                                                (2.2
                                                )%
                                                
                                                
                                                (9.9
                                                )%Investment
      BankingRevenues
      (excluding reimbursables)
                                                
                                                $
                                                20,346
                                                
                                                
                                                $
                                                13,758
                                                
                                                
                                                $
                                                6,588
                                                
                                                
                                                
                                                47.9
                                                %Segment
      operating income
                                                
                                                $
                                                5,057
                                                
                                                
                                                $
                                                1,543
                                                
                                                
                                                $
                                                3,514
                                                
                                                
                                                
                                                227.7
                                                %Segment
      operating income margin
                                                
                                                
                                                24.9
                                                %
                                                
                                                
                                                11.2
                                                %
                                                
                                                
                                                13.7
                                                %
                                                
                                                
                                                121.4
                                                %TotalRevenues
      (excluding reimbursables)
                                                
                                                $
                                                89,164
                                                
                                                
                                                $
                                                89,265Segment
      operating income
                                                
                                                $
                                                15,577
                                                
                                                
                                                $
                                                15,144Net
      client reimbursable expenses
                                                
                                                
                                                (56
                                                )
                                                
                                                
                                                22Equity-based
      compensation fromLegacy
      Units and IPO Options
                                                
                                                
                                                (1,083
                                                )
                                                
                                                
                                                (3,253
                                                )Depreciation
      and amortization
                                                
                                                
                                                (2,493
                                                )
                                                
                                                
                                                (2,562
                                                )Charge
      from impairment of certain intangible assets
                                                
                                                
                                                (674
                                                )Operating
      income
                                                
                                                $
                                                11,271
                                                
                                                
                                                $
                                                9,351
  
  Average
      Client Service ProfessionalsFinancial
      Advisory
                                                
                                                
                                                607
                                                
                                                
                                                
                                                700
                                                
                                                
                                                
                                                (93
                                                )
                                                
                                                
                                                (13.3
                                                )%Corporate
      Finance Consulting
                                                
                                                
                                                124
                                                
                                                
                                                
                                                131
                                                
                                                
                                                
                                                (7
                                                )
                                                
                                                
                                                (5.3
                                                )%Investment
      Banking
                                                
                                                
                                                131
                                                
                                                
                                                
                                                136
                                                
                                                
                                                
                                                (5
                                                )
                                                
                                                
                                                (3.7
                                                )%Total
                                                
                                                
                                                862
                                                
                                                
                                                
                                                967
                                                
                                                
                                                
                                                (105
                                                )
                                                
                                                
                                                (10.9
                                                )%End
      of Period Client Service ProfessionalsFinancial
      Advisory
                                                
                                                
                                                585
                                                
                                                
                                                
                                                681
                                                
                                                
                                                
                                                (96
                                                )
                                                
                                                
                                                (14.1
                                                )%Corporate
      Finance Consulting
                                                
                                                
                                                117
                                                
                                                
                                                
                                                130
                                                
                                                
                                                
                                                (13
                                                )
                                                
                                                
                                                (10.0
                                                )%Investment
      Banking
                                                
                                                
                                                128
                                                
                                                
                                                
                                                137
                                                
                                                
                                                
                                                (9
                                                )
                                                
                                                
                                                (6.6
                                                )%Total
                                                
                                                
                                                830
                                                
                                                
                                                
                                                948
                                                
                                                
                                                
                                                (118
                                                )
                                                
                                                
                                                (12.4
                                                )%Revenue
      per Client Service ProfessionalFinancial
      Advisory
                                                
                                                $
                                                89
                                                
                                                
                                                $
                                                87
                                                
                                                
                                                $
                                                2
                                                
                                                
                                                
                                                2.3
                                                %Corporate
      Finance Consulting
                                                
                                                $
                                                120
                                                
                                                
                                                $
                                                112
                                                
                                                
                                                $
                                                8
                                                
                                                
                                                
                                                7.1
                                                %Investment
      Banking
                                                
                                                $
                                                155
                                                
                                                
                                                $
                                                101
                                                
                                                
                                                $
                                                54
                                                
                                                
                                                
                                                53.5
                                                %Total
                                                
                                                $
                                                103
                                                
                                                
                                                $
                                                92
                                                
                                                
                                                $
                                                11
                                                
                                                
                                                
                                                12.0
                                                %




31





Results
of Operations by Segment – Continued





Three Months EndedMarch
      31,
                                                      
                                                      
                                                      March
      31,
                                                      
                                                      
                                                      Unit
                                                      
                                                      
                                                      Percent2010
                                                      
                                                      
                                                      2009
                                                      
                                                      
                                                      Change
                                                      
                                                      
                                                      ChangeUtilization(1)Financial
      Advisory
                                                      
                                                      
                                                      65.3
                                                      %
                                                      
                                                      
                                                      67.1
                                                      %
                                                      
                                                      
                                                      -1.8
                                                      %
                                                      
                                                      
                                                      (2.7
                                                      )%Corporate
      Finance Consulting
                                                      
                                                      
                                                      58.3
                                                      %
                                                      
                                                      
                                                      55.6
                                                      %
                                                      
                                                      
                                                      2.7
                                                      %
                                                      
                                                      
                                                      4.9
                                                      %Rate-Per-Hour(2)Financial
      Advisory
                                                      
                                                      $
                                                      328
                                                      
                                                      
                                                      $
                                                      306
                                                      
                                                      
                                                      $
                                                      22
                                                      
                                                      
                                                      
                                                      7.2
                                                      %Corporate
      Finance Consulting
                                                      
                                                      $
                                                      465
                                                      
                                                      
                                                      $
                                                      428
                                                      
                                                      
                                                      $
                                                      37
                                                      
                                                      
                                                      
                                                      8.6
                                                      %Revenues
      (excluding reimbursables)Financial
      Advisory
                                                      
                                                      $
                                                      53,882
                                                      
                                                      
                                                      $
                                                      60,891
                                                      
                                                      
                                                      $
                                                      (7,009
                                                      )
                                                      
                                                      
                                                      (11.5
                                                      )%Corporate
      Finance Consulting
                                                      
                                                      
                                                      14,936
                                                      
                                                      
                                                      
                                                      14,616
                                                      
                                                      
                                                      
                                                      320
                                                      
                                                      
                                                      
                                                      2.2
                                                      %Investment
      Banking
                                                      
                                                      
                                                      20,346
                                                      
                                                      
                                                      
                                                      13,758
                                                      
                                                      
                                                      
                                                      6,588
                                                      
                                                      
                                                      
                                                      47.9
                                                      %Total
                                                      
                                                      $
                                                      89,164
                                                      
                                                      
                                                      $
                                                      89,265
                                                      
                                                      
                                                      $
                                                      (101
                                                      )
                                                      
                                                      
                                                      (0.1
                                                      )%
  Average
      Number of Managing DirectorsFinancial
      Advisory
                    
                    
                    91
                    
                    
                    
                    101
                    
                    
                    
                    (10
                    )
                    
                    
                    (9.9
                    )%Corporate
      Finance Consulting
                    
                    
                    32
                    
                    
                    
                    30
                    
                    
                    
                    2
                    
                    
                    
                    6.7
                    %Investment
      Banking
                    
                    
                    40
                    
                    
                    
                    36
                    
                    
                    
                    4
                    
                    
                    
                    11.1
                    %Total
                    
                    
                    163
                    
                    
                    
                    167
                    
                    
                    
                    (4
                    )
                    
                    
                    (2.4
                    )%End
      of Period Managing DirectorsFinancial
      Advisory
                    
                    
                    88
                    
                    
                    
                    101
                    
                    
                    
                    (13
                    )
                    
                    
                    (12.9
                    )%Corporate
      Finance Consulting
                    
                    
                    31
                    
                    
                    
                    30
                    
                    
                    
                    1
                    
                    
                    
                    3.3
                    %Investment
      Banking
                    
                    
                    39
                    
                    
                    
                    38
                    
                    
                    
                    1
                    
                    
                    
                    2.6
                    %Total
                    
                    
                    158
                    
                    
                    
                    169
                    
                    
                    
                    (11
                    )
                    
                    
                    (6.5
                    )%Revenue
      per Managing DirectorFinancial
      Advisory
                    
                    $
                    592
                    
                    
                    $
                    603
                    
                    
                    $
                    (11
                    )
                    
                    
                    (1.8
                    )%Corporate
      Finance Consulting
                    
                    $
                    467
                    
                    
                    $
                    487
                    
                    
                    $
                    (20
                    )
                    
                    
                    (4.1
                    )%Investment
      Banking
                    
                    $
                    509
                    
                    
                    $
                    382
                    
                    
                    $
                    127
                    
                    
                    
                    33.2
                    %Total
                    
                    $
                    547
                    
                    
                    $
                    535
                    
                    
                    $
                    12
                    
                    
                    
                    2.2
                    %







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


(2)
            Average
      billing rate-per-hour is calculated by dividing applicable revenues for
      the period by the number of hours worked on client assignments (including
      internal projects for the Company) during the same
      period.  Financial Advisory revenues used to calculate
      rate-per-hour exclude approximately $1,583 and $1,892 of revenues
      associated with Rash in the three months ended March 31, 2010 and 2009,
      respectively.





For
segment reporting purposes, management uses certain estimates and assumptions to
allocate revenues and expenses.  Revenues and expenses attributable to
reportable segments are generally based on which segment and product line a
client service professional is a dedicated member.  As a result,
revenues recognized that relate to the cross utilization of client service
professionals across reportable segments occur each period depending on the
expertise required for each engagement.  In particular, the Financial
Advisory segment (primarily Valuation Advisory services) recognized revenues of
$2,945 and $4,322 from the cross utilization of its client service professionals
on engagements from the Corporate Finance Consulting segment (primarily
Portfolio Valuation services) in the three months ended March 31, 2010 and 2009,
respectively.


32




Financial
Advisory





Revenues




Revenues
from the Financial Advisory segment decreased $7,009 or 11.5% to $53,882 for the
three months ended March 31, 2010, compared to $60,891 for the three months
ended March 31, 2009.  The overall decline resulted from a decrease in
revenues from each business unit, as summarized in the following
table:





Three
      MonthsMarch
      31,
                              
                              
                              March
      31,
                              
                              
                              Dollar
                              
                              
                              Percent2010
                              
                              
                              2009
                              
                              
                              Change
                              
                              
                              ChangeFinancial
      AdvisoryValuation
      Advisory
                              
                              $
                              35,020
                              
                              
                              $
                              40,370
                              
                              
                              $
                              (5,350
                              )
                              
                              
                              (13.3
                              )%Tax
      Services
                              
                              
                              9,447
                              
                              
                              
                              10,878
                              
                              
                              
                              (1,431
                              )
                              
                              
                              (13.2
                              )%Dispute
      & Legal Management Consulting
                              
                              
                              9,415
                              
                              
                              
                              9,643
                              
                              
                              
                              (228
                              )
                              
                              
                              (2.4
                              )%$
                              53,882
                              
                              
                              $
                              60,891
                              
                              
                              $
                              (7,009
                              )
                              
                              
                              (11.5
                              )%


Our
Financial Advisory segment was impacted by lower revenues from valuation
advisory and to a lesser extent tax services.  Services within
valuation advisory were impacted by a reduction of goodwill impairment testing
due to improvement in the overall economic environment and a lower volume of
real estate valuation activity, partially offset by an increase in revenues from
purchase price allocations from an increase in M&A activity.  The
decrease in revenues from tax services primarily resulted from lower revenues
from transactional tax and tax compliance due to the departure of staff
principally affiliated with our acquisition of WTS in July 2008.





Dispute
and legal management consulting includes revenues from an engagement to serve as
a financial advisor to the court appointed examiner of a large financial
services company under bankruptcy protection.  This engagement wound
down during the first quarter of 2010.   Our results for the
first quarter of 2010 include approximately $5,500 of revenue from this
assignment, primarily recognized in the Financial Advisory and Corporate Finance
Consulting segments.  We expect approximately $3,700 of deferred
revenues related to the court-mandated holdbacks to be recognized hereafter
(primarily between the Financial Advisory and Corporate Finance Consulting
segments), as and if approved by the bankruptcy court or its fee
examiner.





Segment
Operating Income




Financial
Advisory segment operating income decreased $2,811 or 27.2% to $7,538 for the
three months ended March 31, 2010, compared to $10,349 for the three months
ended March 31, 2009.  Segment operating income margin, defined as
segment operating income expressed as a percentage of segment revenues, was
14.0% for the three months ended March 31, 2010, compared to 17.0% for the three
months ended March 31, 2009.  Despite a decrease in expenses, segment
operating income and margin decreased as a result of lower revenues which led to
a corresponding increase in direct client service costs as a percentage of
revenues.


33


Corporate
Finance Consulting





Revenues




Revenues
from the Corporate Finance Consulting segment increased $320 or 2.2% to $14,936
for the three months ended March 31, 2010, compared to $14,616 for the three
months ended March 31, 2009.  Growth was primarily driven by demand
for services related to due diligence, partially offset by a decrease in
revenues from portfolio valuation, financial engineering and strategic value
advisory on a combined basis, as summarized in the following table:




Three
      Months EndedMarch
      31,
                              
                              
                              March
      31,
                              
                              
                              Dollar
                              
                              
                              Percent2010
                              
                              
                              2009
                              
                              
                              Change
                              
                              
                              ChangeCorporate
      Finance ConsultingPortfolio
      Valuation
                              
                              $
                              5,482
                              
                              
                              $
                              6,295
                              
                              
                              $
                              (813
                              )
                              
                              
                              (12.9
                              )%Financial
      Engineering
                              
                              
                              4,126
                              
                              
                              
                              4,148
                              
                              
                              
                              (22
                              )
                              
                              
                              (0.5
                              )%Strategic
      Value Advisory
                              
                              
                              3,158
                              
                              
                              
                              2,620
                              
                              
                              
                              538
                              
                              
                              
                              20.5
                              %Due
      Diligence
                              
                              
                              2,170
                              
                              
                              
                              1,553
                              
                              
                              
                              617
                              
                              
                              
                              39.7
                              %$
                              14,936
                              
                              
                              $
                              14,616
                              
                              
                              $
                              320
                              
                              
                              
                              2.2
                              %




Revenues
from portfolio valuation decreased from the timing of workflow on several key
engagements.  Due diligence benefited from an increase in M&A
activity.




Segment
Operating Income




Operating
income from the Corporate Finance Consulting segment decreased $270 or 8.3% to
$2,982 for the three months ended March 31, 2010, compared to $3,252 for the
three months ended March 31, 2009.  Segment operating income margin
was 20.0% for the three months ended March 31, 2010, compared to 22.2% for the
three months ended March 31, 2009.  The decrease in segment operating
income and margin primarily resulted from an increase in direct client service
costs as a percentage of revenues, principally from higher equity-compensation
expense from incremental grants of Ongoing RSAs.





Investment
Banking





Revenues




Revenues
from the Investment Banking segment increased $6,588 or 47.9% to $20,346 for the
three months ended March 31, 2010, compared to $13,758 for the three months
ended March 31, 2009, as summarized in the following table:





Three Months EndedMarch
      31,
              
              
              March
      31,
              
              
              Dollar
              
              
              Percent2010
              
              
              2009
              
              
              Change
              
              
              ChangeInvestment
      BankingGlobal
      Restructuring Advisory
              
              $
              9,841
              
              
              $
              5,578
              
              
              $
              4,263
              
              
              
              76.4
              %Transaction
      Opinions
              
              
              6,823
              
              
              
              6,101
              
              
              
              722
              
              
              
              11.8
              %M&A
      Advisory
              
              
              3,682
              
              
              
              2,079
              
              
              
              1,603
              
              
              
              77.1
              %$
              20,346
              
              
              $
              13,758
              
              
              $
              6,588
              
              
              
              47.9
              %





Global
restructuring advisory benefited from an increase in demand for our domestic and
international restructuring services.  Revenues from M&A advisory
and transaction opinions increased as a result of a higher level of
transactional activity.





Segment
Operating Income




Operating
income from the Investment Banking segment increased $3,514 or 227.7% to $5,057
for the three months ended March 31, 2010, compared to $1,543 for the three
months ended March 31, 2009.  Operating income margin was 24.9% for
the three months ended March 31, 2010, compared to 11.2% for the three months
ended March 31, 2009.  The increase in segment operating income and
margin resulted from higher revenues driven in part by additional
success fees.


34


Liquidity
and Capital Resources





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





Cash and
cash equivalents decreased by $17,332 to $89,979 at March 31, 2010, compared to
$107,311 at December 31, 2009.  The decrease in cash primarily
resulted from $6,493 used in operating activities, $4,974 used in investing
activities and $4,339 used in financing activities.





Operating
Activities




During
the three months ended March 31, 2010, cash of $6,493 was used in operating
activities, compared to $13,541 used in the corresponding prior
period.  The decrease of amounts used in operating activities
primarily resulted from (i) an increase in amounts used by accounts payable and
accrued expenses, (ii) a decrease in amounts used by unbilled services and (iii)
an increase in deferred tax assets.





Investing
Activities




During
the three months ended March 31, 2010, cash of $4,974 was used in investing
activities, compared to $7,792 used in the corresponding prior
period.  Investing activities during the current period included (i)
purchases of property and equipment to support our business, (ii) payments of
earn-outs for acquisitions which primarily consisted of an earn-out payment to
the sellers of Financial and IP Analysis, Inc. (d/b/a The Lumin Expert Group),
and (iii) purchases of investments related to the Company’s deferred
compensation plan.  Management believes these investments pose limited
liquidity risk.





Financing
Activities




During
the three months ended March 31, 2010, cash of $4,339 was used in financing
activities, compared to $9,568 used in the prior year
period.  Significant financing activities are summarized as
follows:





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





Three Months
      EndedMarch
      31,
                                    
                                    March
      31,2010
                                    
                                    2009Distributions
      for taxes
                                    
                                    $
                                    608
                                    
                                    
                                    $
                                    8,847Other
      distributions
                                    
                                    
                                    735
                                    
                                    
                                    
                                    -Payments
      pursuant tothe Tax Receivable Agreement
                                    
                                    
                                    -
                                    
                                    
                                    
                                    -$
                                    1,343
                                    
                                    
                                    $
                                    8,847





Distributions for
taxes


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


35


Other
distributions


During
the three months ended March 31, 2010, the Company distributed $735 to holders
of New Class A Units, other than Duff & Phelps
Corporation.  Concurrent with the payment of the dividend to
shareholders of record on March 16, 2010, holders of New Class A Units received
a $0.05 distribution per vested unit.  This amount totaled $573 and
will be treated as a reduction in basis of each member’s ownership
interests.  Pursuant to the terms of the Third Amended and Restated
LLC Agreement of D&P Acquisitions, an amount of $0.05 per unvested unit was
deposited into a segregated account and will be distributed once a year with
respect to units that vested during that year.  During the three months
ended March 31, 2010, the Company distributed $162 to members whose units vested
during 2009.  Any amounts related to unvested units that forfeit are
returned to the Company.





Payments pursuant to the Tax
Receivable Agreement


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





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





As of
March 31, 2010, the Company recorded a liability of $105,560, representing the
payments due to D&P Acquisitions’ unitholders under the TRA (see current and
non-current portion of “Due to noncontrolling unitholders” on the Company’s
Condensed Consolidated Balance Sheets).





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





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





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





·
            Dividends
      – Cash dividends of $1,403 reflects the payment of quarterly cash
      dividends of $0.05 per share of our Class A common stock to holders of
      record as of March 16, 2010.





·
            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.


36


Credit
Facility




On July
15, 2009, Duff & Phelps, LLC entered into a credit agreement with Bank of
America, N.A., as administrative agent and the lenders from time to time party
thereto ("Credit Agreement"), providing for a $30,000 senior secured revolving
credit facility (“Credit Facility”), including a $10,000 sub-limit for the
issuance of letters of credit.  The proceeds of the facility are
permitted to be used for working capital, permitted acquisitions and general
corporate purposes.  The maturity date is July 15, 2012 and amounts
borrowed may be voluntarily prepaid at any time without penalty or premium,
subject to customary breakage costs.  There were no amounts
outstanding under the Credit Facility at March 31, 2010 or through the filing
date of this Quarterly Report on Form 10-Q.  As of March 31, 2010, the
Company had $4,237 of outstanding letters of credit of which $3,810 were issued
against the Credit Facility.  There was $427 of cash deposited into a
restricted account to serve as deposits to secure the remaining letters of
credit.  These letters of credit were issued in connection with real
estate leases.





Loans
under the Credit Facility will, at the Company's option, bear interest on the
principal amount outstanding at either (a) a rate equal to LIBOR, plus an
applicable margin or (b) a base rate, plus an applicable margin.  The
applicable margin rate will be based on the Company's most recent consolidated
leverage ratio and ranges from 1.75% to 2.50% per annum depending on the
Company's consolidated leverage ratio.  In addition, the Company is
required to pay an unused commitment fee on the actual daily amount of the
unutilized portion of the commitments of the lenders at a rate ranging from
0.25% to 0.50% per annum, based on the Company's most recent consolidated
leverage ratio.  Based on the Company’s consolidated leverage ratio at
March 31, 2010, the Company qualified for the 1.75% applicable margin and 0.25%
unused commitment fee.





The
Credit Agreement contains customary representations and warranties and customary
affirmative and negative covenants, including, among others, limitations on (a)
the incurrence of liens, (b) the incurrence of indebtedness, (c) the ability to
make dividends and distributions, as well as redeem and repurchase equity
interests, and (d) acquisitions, mergers, consolidations and sales of
assets.  In addition, the Credit Agreement contains financial
covenants that do not permit (a) a total leverage ratio of greater than 2.75 to
1.00 until the quarter ending September 30, 2010, and 2.50 to 1.00 thereafter
and (b) a consolidated fixed charge coverage ratio of less than 2.00 to
1.00.  The financial covenants are tested on the last day of each
fiscal quarter based on the last four fiscal quarter
periods.  Management believes that the Company was in compliance with
all of its covenants as of March 31, 2010.  The Credit Agreement
permits dividend payments or other distributions in the Company’s common stock
or other equity interests subject to certain limitations.





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





Future
Needs





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





Recent Accounting Pronouncements





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


37


Item
      3.
            Quantitative
      and Qualitative Disclosures About Market
Risk.





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





Item
      4.
            Controls
      and Procedures.





Disclosure
Controls and Procedures




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





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





Changes
in Internal Controls





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


38


PART
II


OTHER
INFORMATION





Item
      1.
            Legal
      Proceedings.





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





Item
      1A.
            Risk
      Factors.





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





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





Issuer Purchases of Equity
Securities





During
the first quarter of 2010, we withheld shares of our Class A common stock from
holders of restricted stock awards to satisfy the holders’ tax liabilities in
connection with the lapse of restrictions on such shares, as summarized in the
following table:





TotalNumber of
                    
                    
                    AverageShares
                    
                    
                    Price PaidClass A Common Stock
                    
                    Purchased
                    
                    
                    Per ShareJanuary
      1 through January 31, 2010
                    
                    
                    -
                    
                    
                    
                    -February
      1 through February 28, 2010
                    
                    
                    34
                    
                    
                    $
                    16.68March
      1 through March 31, 2010
                    
                    
                    60
                    
                    
                    
                    17.40Total
                    
                    
                    94
                    
                    
                    $
                    17.14





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.





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





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





In March
2010, 22 New Class A Units were exchanged for 22 shares of Class A common stock
and 22 shares of Class B common stock were cancelled.  We filed a
registration statement in order to permit the resale of these shares from time
to time, subject to certain blackouts and other restrictions.  We
received no other consideration in connection with these
exchanges.




Item 3.
              Defaults
      Upon Senior Securities.


None.





Item
      4.
            (Removed
      and Reserved).





Item
      5.
            Other
      Information.





None.


39




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.


40


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:  April
      29, 2010
                  /s/ Jacob L. SilvermanJACOB
      L. SILVERMANChief
      Financial Officer


41