UNITED
STATES


SECURITIES
AND EXCHANGE COMMISSION


Washington,
D.C. 20549





FORM
10-Q





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


For
the quarterly period ended September 30, 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.  YesþNo ̈





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





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


Large accelerated filer ̈Accelerated
filerþNon-accelerated
filer ̈Smaller reporting company ̈





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





The
number of shares outstanding of the registrant’s Class A common stock, par value
$0.01 per share, was 28,110,978 as of October 15, 2010.  The number of
shares outstanding of the registrant’s Class B common stock, par value $0.0001
per share, was 12,895,690 as of October 15, 2010.







DUFF
& PHELPS CORPORATION


AND
SUBSIDIARIES





TABLE
OF CONTENTS





Part
      I.
                        Financial
      InformationItem
      1.
                        Financial
      Statements
                        1Item
      2.
                        Management’s
      Discussion and Analysis of Financial Condition and Results of
      Operations.
                        24Item
      3.
                        Quantitative
      and Qualitative Disclosures About Market Risk.
                        51Item
      4.
                        Controls
      and Procedures.
                        51Part
      II.
                        Other
      InformationItem
      1.
                        Legal
      Proceedings
                        52Item
      1A.
                        Risk
      Factors
                        52Item
      2.
                        Unregistered
      Sales of Equity Securities and Use of Proceeds
                        52Item
      3.
                        Defaults
      Upon Senior Securities
                        53Item
      4.
                        (Removed
      and Reserved)
                        53Item
      5.
                        Other
      Information
                        53Item
      6.
                        Exhibits
                        53Signatures
                        54





PART
I – FINANCIAL INFORMATION





Item
1.  Financial Statements.





DUFF
& PHELPS CORPORATION AND SUBSIDIARIES


CONDENSED
CONSOLIDATED STATEMENTS OF INCOME


(In
thousands, except per share amounts)


(Unaudited)





Three
      Months Ended
                    
                    
                    Nine
      Months EndedSeptember
      30,
                    
                    
                    September
      30,
                    
                    
                    September
      30,
                    
                    
                    September
      30,2010
                    
                    
                    2009
                    
                    
                    2010
                    
                    
                    2009Revenues
                    
                    $
                    84,427
                    
                    
                    $
                    93,240
                    
                    
                    $
                    262,333
                    
                    
                    $
                    272,558Reimbursable
      expenses
                    
                    
                    2,403
                    
                    
                    
                    3,394
                    
                    
                    
                    7,163
                    
                    
                    
                    8,057Total
      revenues
                    
                    
                    86,830
                    
                    
                    
                    96,634
                    
                    
                    
                    269,496
                    
                    
                    
                    280,615Direct
      client service costsCompensation
      and benefits (includes $3,430 and $4,294 of equity- based compensation for
      the three months ended September 30, 2010 and 2009, respectively, and
      $11,362 and $13,631 for the nine months ended September 30, 2010 and 2009,
      respectively)
                    
                    
                    47,829
                    
                    
                    
                    52,287
                    
                    
                    
                    146,842
                    
                    
                    
                    155,115Other
      direct client service costs
                    
                    
                    1,342
                    
                    
                    
                    2,954
                    
                    
                    
                    5,211
                    
                    
                    
                    5,801Reimbursable
      expenses
                    
                    
                    2,330
                    
                    
                    
                    3,468
                    
                    
                    
                    7,223
                    
                    
                    
                    8,12051,501
                    
                    
                    
                    58,709
                    
                    
                    
                    159,276
                    
                    
                    
                    169,036Operating
      expensesSelling,
      general and administrative (includes $1,004 and $2,018 of equity-based
      compensation for the three months ended September 30, 2010 and 2009,
      respectively, and $4,462 and $5,574 for the nine months ended September
      30, 2010 and 2009, respectively)
                    
                    
                    23,485
                    
                    
                    
                    24,620
                    
                    
                    
                    73,873
                    
                    
                    
                    74,048Depreciation
      and amortization
                    
                    
                    2,567
                    
                    
                    
                    2,594
                    
                    
                    
                    7,410
                    
                    
                    
                    7,712Charge
      from impairment of certain intangible assets (Note 11)
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    674
                    
                    
                    
                    -Merger
      and acquisition costs
                    
                    
                    76
                    
                    
                    
                    -
                    
                    
                    
                    397
                    
                    
                    
                    -26,128
                    
                    
                    
                    27,214
                    
                    
                    
                    82,354
                    
                    
                    
                    81,760Operating
      income
                    
                    
                    9,201
                    
                    
                    
                    10,711
                    
                    
                    
                    27,866
                    
                    
                    
                    29,819Other
      expense/(income), netInterest
      income
                    
                    
                    (29
                    )
                    
                    
                    (17
                    )
                    
                    
                    (106
                    )
                    
                    
                    (34
                    )Interest
      expense
                    
                    
                    66
                    
                    
                    
                    91
                    
                    
                    
                    234
                    
                    
                    
                    1,079Loss
      on early extinguishment of debt
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    1,737Other
      expense
                    
                    
                    (43
                    )
                    
                    
                    50
                    
                    
                    
                    189
                    
                    
                    
                    137(6
                    )
                    
                    
                    124
                    
                    
                    
                    317
                    
                    
                    
                    2,919Income
      before income taxes
                    
                    
                    9,207
                    
                    
                    
                    10,587
                    
                    
                    
                    27,549
                    
                    
                    
                    26,900Provision
      for income taxes
                    
                    
                    2,010
                    
                    
                    
                    2,999
                    
                    
                    
                    8,166
                    
                    
                    
                    7,532Net
      income
                    
                    
                    7,197
                    
                    
                    
                    7,588
                    
                    
                    
                    19,383
                    
                    
                    
                    19,368Less:  Net
      income attributable to noncontrolling interest
                    
                    
                    3,088
                    
                    
                    
                    4,136
                    
                    
                    
                    8,494
                    
                    
                    
                    12,417Net
      income attributable to Duff & Phelps Corporation
                    
                    $
                    4,109
                    
                    
                    $
                    3,452
                    
                    
                    $
                    10,889
                    
                    
                    $
                    6,951Weighted
      average shares of Class A common stock outstandingBasic
                    
                    
                    24,873
                    
                    
                    
                    21,625
                    
                    
                    
                    24,972
                    
                    
                    
                    17,517Diluted
                    
                    
                    24,954
                    
                    
                    
                    22,448
                    
                    
                    
                    25,741
                    
                    
                    
                    18,197Net
      income per share attributable to stockholders of Class A common stock of
      Duff & Phelps Corporation (Note 5)Basic
                    
                    $
                    0.15
                    
                    
                    $
                    0.15
                    
                    
                    $
                    0.41
                    
                    
                    $
                    0.37Diluted
                    
                    $
                    0.15
                    
                    
                    $
                    0.14
                    
                    
                    $
                    0.40
                    
                    
                    $
                    0.35Cash
      dividends declared per common share
                    
                    $
                    0.06
                    
                    
                    $
                    0.05
                    
                    
                    $
                    0.17
                    
                    
                    $
                    0.10





See
accompanying notes to the condensed consolidated financial
statements.


1


DUFF
& PHELPS CORPORATION AND SUBSIDIARIES


CONDENSED
CONSOLIDATED BALANCE SHEETS


(In
thousands, except per share amounts)


(Unaudited)





September
      30,
                                  
                                  
                                  December
      31,2010
                                  
                                  
                                  2009ASSETSCurrent
      assetsCash
      and cash equivalents
                                  
                                  $
                                  98,798
                                  
                                  
                                  $
                                  107,311Accounts
      receivable (net of allowance for doubtful accountsof $1,332 at
      September 30, 2010 and $1,690 at December 31, 2009)
                                  
                                  
                                  52,043
                                  
                                  
                                  
                                  55,079Unbilled
      services
                                  
                                  
                                  27,518
                                  
                                  
                                  
                                  22,456Prepaid
      expenses and other current assets
                                  
                                  
                                  6,357
                                  
                                  
                                  
                                  6,100Net
      deferred income taxes, current
                                  
                                  
                                  1,687
                                  
                                  
                                  
                                  4,601Total
      current assets
                                  
                                  
                                  186,403
                                  
                                  
                                  
                                  195,547Property
      and equipment (net of accumulated depreciation of $24,836 at September 30,
      2010 and $20,621 at December 31, 2009)
                                  
                                  
                                  28,484
                                  
                                  
                                  
                                  27,413Goodwill
                                  
                                  
                                  132,894
                                  
                                  
                                  
                                  122,876Intangible
      assets (net of accumulated amortization of $19,670 at September 30, 2010
      and $16,881 at December 31, 2009)
                                  
                                  
                                  29,936
                                  
                                  
                                  
                                  27,907Other
      assets
                                  
                                  
                                  2,880
                                  
                                  
                                  
                                  3,218Investments
      related to deferred compensation plan (Note 10)
                                  
                                  
                                  21,780
                                  
                                  
                                  
                                  17,807Net
      deferred income taxes, non-current
                                  
                                  
                                  108,780
                                  
                                  
                                  
                                  112,265Total
      non-current assets
                                  
                                  
                                  324,754
                                  
                                  
                                  
                                  311,486Total
      assets
                                  
                                  $
                                  511,157
                                  
                                  
                                  $
                                  507,033LIABILITIES
      AND STOCKHOLDERS' EQUITYCurrent
      liabilitiesAccounts
      payable
                                  
                                  $
                                  2,996
                                  
                                  
                                  $
                                  2,459Accrued
      expenses
                                  
                                  
                                  8,226
                                  
                                  
                                  
                                  11,609Accrued
      compensation and benefits
                                  
                                  
                                  21,611
                                  
                                  
                                  
                                  35,730Liability
      related to deferred compensation plan, current portion (Note
      10)
                                  
                                  
                                  1,537
                                  
                                  
                                  
                                  -Deferred
      revenues
                                  
                                  
                                  3,692
                                  
                                  
                                  
                                  3,633Other
      current liabilities
                                  
                                  
                                  127
                                  
                                  
                                  
                                  993Due
      to noncontrolling unitholders, current portion
                                  
                                  
                                  4,303
                                  
                                  
                                  
                                  4,303Total
      current liabilities
                                  
                                  
                                  42,492
                                  
                                  
                                  
                                  58,727Liability
      related to deferred compensation plan, less current portion (Note
      10)
                                  
                                  
                                  20,386
                                  
                                  
                                  
                                  18,051Other
      long-term liabilities
                                  
                                  
                                  15,387
                                  
                                  
                                  
                                  15,400Due
      to noncontrolling unitholders, less current portion
                                  
                                  
                                  102,499
                                  
                                  
                                  
                                  101,098Total
      non-current liabilities
                                  
                                  
                                  138,272
                                  
                                  
                                  
                                  134,549Total
      liabilities
                                  
                                  
                                  180,764
                                  
                                  
                                  
                                  193,276Commitments
      and contingencies (Note 12)Stockholders'
      equityPreferred
      stock (50,000 shares authorized; zero issued and
    outstanding)
                                  
                                  
                                  -
                                  
                                  
                                  
                                  -Class
      A common stock, par value $0.01 per share (100,000 shares authorized;
      28,120 and 27,290 shares issued and outstanding at September 30, 2010 and
      December 31, 2009, respectively)
                                  
                                  
                                  281
                                  
                                  
                                  
                                  273Class
      B common stock, par value $0.0001 per share (50,000 shares authorized;
      12,898 and 12,974 shares issued and outstanding at September 30, 2010 and
      December 31, 2009, respectively)
                                  
                                  
                                  1
                                  
                                  
                                  
                                  1Additional
      paid-in capital
                                  
                                  
                                  212,834
                                  
                                  
                                  
                                  207,210Accumulated
      other comprehensive income
                                  
                                  
                                  564
                                  
                                  
                                  
                                  693Retained
      earnings
                                  
                                  
                                  12,820
                                  
                                  
                                  
                                  6,709Total
      stockholders' equity of Duff & Phelps Corporation
                                  
                                  
                                  226,500
                                  
                                  
                                  
                                  214,886Noncontrolling
      interest
                                  
                                  
                                  103,893
                                  
                                  
                                  
                                  98,871Total
      stockholders' equity
                                  
                                  
                                  330,393
                                  
                                  
                                  
                                  313,757Total
      liabilities and stockholders' equity
                                  
                                  $
                                  511,157
                                  
                                  
                                  $
                                  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)





Nine Months EndedSeptember
      30,
                          
                          
                          September
      30,2010
                          
                          
                          2009Cash
      flows from operating activities:Net
      income
                          
                          $
                          19,383
                          
                          
                          $
                          19,368Adjustments
      to reconcile net income to net cash provided by operating
      activities:Depreciation
      and amortization
                          
                          
                          7,410
                          
                          
                          
                          7,712Equity-based
      compensation
                          
                          
                          15,824
                          
                          
                          
                          19,205Bad
      debt expense
                          
                          
                          1,141
                          
                          
                          
                          1,698Net
      deferred income taxes
                          
                          
                          4,741
                          
                          
                          
                          4,637Charge
      from impairment of certain intangible assets
                          
                          
                          674
                          
                          
                          
                          -Loss
      on early extinguishment of debt
                          
                          
                          -
                          
                          
                          
                          1,674Other
                          
                          
                          (570
                          )
                          
                          
                          (582
                          )Changes
      in assets and liabilities providing/(using) cash:Accounts
      receivable
                          
                          
                          4,765
                          
                          
                          
                          (8,065
                          )Unbilled
      services
                          
                          
                          (4,544
                          )
                          
                          
                          (9,012
                          )Prepaid
      expenses and other current assets
                          
                          
                          (31
                          )
                          
                          
                          973Other
      assets
                          
                          
                          (597
                          )
                          
                          
                          (2,396
                          )Accounts
      payable and accrued expenses
                          
                          
                          (3,506
                          )
                          
                          
                          4,668Accrued
      compensation and benefits
                          
                          
                          (14,507
                          )
                          
                          
                          (10,019
                          )Deferred
      revenues
                          
                          
                          (113
                          )
                          
                          
                          1,219Other
      liabilities
                          
                          
                          395
                          
                          
                          
                          (1,399
                          )Net
      cash provided by operating activities
                          
                          
                          30,465
                          
                          
                          
                          29,681Cash
      flows from investing activities:Purchase
      of property and equipment
                          
                          
                          (4,998
                          )
                          
                          
                          (4,744
                          )Business
      acquisitions, net of cash acquired
                          
                          
                          (11,807
                          )
                          
                          
                          (61
                          )Purchase
      of investments for deferred compensation plan
                          
                          
                          (3,175
                          )
                          
                          
                          (6,409
                          )Net
      cash used in investing activities
                          
                          
                          (19,980
                          )
                          
                          
                          (11,214
                          )Cash
      flows from financing activities:Repurchases
      of Class A common stock
                          
                          
                          (8,608
                          )
                          
                          
                          (821
                          )Distributions
      and other payments to noncontrolling unitholders
                          
                          
                          (5,480
                          )
                          
                          
                          (15,510
                          )Dividends
                          
                          
                          (4,828
                          )
                          
                          
                          (2,394
                          )Net
      proceeds from sale of Class A common stock
                          
                          
                          (3
                          )
                          
                          
                          111,808Proceeds
      from exercises of IPO Options
                          
                          
                          82
                          
                          
                          
                          456Redemption
      of noncontrolling unitholders
                          
                          
                          -
                          
                          
                          
                          (67,112
                          )Repayments
      of debt
                          
                          
                          -
                          
                          
                          
                          (42,763
                          )Increase
      in restricted cash
                          
                          
                          -
                          
                          
                          
                          (689
                          )Fees
      associated with early extinguishment of debt
                          
                          
                          -
                          
                          
                          
                          (63
                          )Net
      cash used in financing activities
                          
                          
                          (18,837
                          )
                          
                          
                          (17,088
                          )Effect
      of exchange rate on cash and cash equivalents
                          
                          
                          (161
                          )
                          
                          
                          1,436Net
      increase/(decrease) in cash and cash equivalents
                          
                          
                          (8,513
                          )
                          
                          
                          2,815Cash
      and cash equivalents at beginning of period
                          
                          
                          107,311
                          
                          
                          
                          81,381Cash
      and cash equivalents at end of period
                          
                          $
                          98,798
                          
                          
                          $
                          84,196





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 nine months ended September 30, 2010
                  
                  
                  19,383
                  
                  
                  $
                  19,383
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  10,889
                  
                  
                  
                  8,494Currency
      translation adjustment
                  
                  
                  (238
                  )
                  
                  
                  (238
                  )
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  (155
                  )
                  
                  
                  -
                  
                  
                  
                  (83
                  )Amortization
      of post-retirement benefits
                  
                  
                  39
                  
                  
                  
                  39
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  26
                  
                  
                  
                  -
                  
                  
                  
                  13Total
      comprehensive income
                  
                  
                  19,184
                  
                  
                  $
                  19,184
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  (129
                  )
                  
                  
                  10,889
                  
                  
                  
                  8,424Sale
      of Class A common stock
                  
                  
                  (3
                  )
                  
                  
                  
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  (3
                  )
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -Issuance
      of Class A common stock for acquisitions
                  
                  
                  1,204
                  
                  
                  
                  
                  
                  
                  
                  93
                  
                  
                  
                  1
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  827
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  376Exchange
      of New Class A Units
                  
                  
                  -
                  
                  
                  
                  
                  
                  
                  
                  45
                  
                  
                  
                  -
                  
                  
                  
                  (45
                  )
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -Net
      issuance of restricted stock awards
                  
                  
                  (2,577
                  )
                  
                  
                  
                  
                  
                  
                  1,354
                  
                  
                  
                  13
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  (1,777
                  )
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  (813
                  )Adjustment
      to Tax Receivable Agreement as a result of the exchange of New Class A
      Units
                  
                  
                  62
                  
                  
                  
                  
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  62
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -Issuance
      for exercises of IPO Options
                  
                  
                  66
                  
                  
                  
                  
                  
                  
                  
                  4
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  45
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  21Forfeitures
                  
                  
                  (2
                  )
                  
                  
                  
                  
                  
                  
                  (222
                  )
                  
                  
                  (2
                  )
                  
                  
                  (31
                  )
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -Equity-based
      compensation
                  
                  
                  16,316
                  
                  
                  
                  
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  11,178
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  5,138Income
      tax benefit on equity-based compensation
                  
                  
                  72
                  
                  
                  
                  
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  72
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -Distributions
      to noncontrolling unitholders
                  
                  
                  (5,480
                  )
                  
                  
                  
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  (3,755
                  )
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  (1,725
                  )Change
      in ownership interests between periods
                  
                  
                  -
                  
                  
                  
                  
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  4,113
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  (4,113
                  )Deferred
      tax asset effective tax rate conversion
                  
                  
                  (1,411
                  )
                  
                  
                  
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  (1,007
                  )
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  (404
                  )Repurchases
      of Class A common stock pursuant to publicly announced
    program
                  
                  
                  (6,017
                  )
                  
                  
                  
                  
                  
                  
                  (444
                  )
                  
                  
                  (4
                  )
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  (4,131
                  )
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  (1,882
                  )Dividends
      on Class A common stock
                  
                  
                  (4,778
                  )
                  
                  
                  
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  (4,778
                  )
                  
                  
                  -Balance
      as of September 30, 2010
                  
                  $
                  330,393
                  
                  
                  
                  
                  
                  
                  
                  28,120
                  
                  
                  $
                  281
                  
                  
                  
                  12,898
                  
                  
                  $
                  1
                  
                  
                  $
                  212,834
                  
                  
                  $
                  564
                  
                  
                  $
                  12,820
                  
                  
                  $
                  103,893





See
accompanying notes to the condensed consolidated financial
statements.


4





DUFF
& PHELPS CORPORATION AND SUBSIDIARIES


CONDENSED
CONSOLIDATED STATEMENT OF STOCKHOLDERS’ EQUITY


AND
COMPREHENSIVE INCOME/(LOSS)


(In
thousands)


(Unaudited)





Stockholders
      of Duff & Phelps
    CorporationAccumulated
                    
                    
                    RetainedTotal
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    Other
                    
                    
                    Earnings/Stockholders'
                    
                    
                    Comprehensive
                    
                    
                    Common
      Stock - Class A
                    
                    
                    Common
      Stock - Class B
                    
                    
                    Additional
                    
                    
                    Comprehensive
                    
                    
                    (Accumulated
                    
                    
                    NoncontrollingEquity
                    
                    
                    Income
                    
                    
                    Shares
                    
                    
                    Dollars
                    
                    
                    Shares
                    
                    
                    Dollars
                    
                    
                    Paid-in-Capital
                    
                    
                    Income
                    
                    
                    Deficit)
                    
                    
                    InterestBalance
      as of December 31, 2008
                    
                    $
                    237,759
                    
                    
                    
                    
                    
                    
                    14,719
                    
                    
                    $
                    147
                    
                    
                    
                    20,889
                    
                    
                    $
                    2
                    
                    
                    $
                    100,985
                    
                    
                    $
                    122
                    
                    
                    $
                    (1,127
                    )
                    
                    $
                    137,630Comprehensive
      incomeNet
      income for the nine months ended September 30, 2009
                    
                    
                    19,368
                    
                    
                    $
                    19,368
                    
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    6,951
                    
                    
                    
                    12,417Currency
      translation adjustment
                    
                    
                    1,435
                    
                    
                    
                    1,435
                    
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    1,035
                    
                    
                    
                    -
                    
                    
                    
                    400Amortization
      of post-retirement benefits
                    
                    
                    28
                    
                    
                    
                    28
                    
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    16
                    
                    
                    
                    -
                    
                    
                    
                    12Total
      comprehensive income
                    
                    
                    20,831
                    
                    
                    $
                    20,831
                    
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    1,051
                    
                    
                    
                    6,951
                    
                    
                    
                    12,829Sale
      of Class A common stock
                    
                    
                    111,808
                    
                    
                    
                    
                    
                    
                    
                    8,050
                    
                    
                    
                    81
                    
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    111,727
                    
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    -Allocation
      of noncontrolling interest in D&P Acquisitions
                    
                    
                    -
                    
                    
                    
                    
                    
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    (62,153
                    )
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    62,153Issuance
      of Class A common stock
                    
                    
                    180
                    
                    
                    
                    
                    
                    
                    
                    10
                    
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    78
                    
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    102Net
      issuance of restricted stock awards
                    
                    
                    (807
                    )
                    
                    
                    
                    
                    
                    
                    1,292
                    
                    
                    
                    13
                    
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    (371
                    )
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    (449
                    )Redemption
      of New Class A Units
                    
                    
                    (67,112
                    )
                    
                    
                    
                    
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    (4,550
                    )
                    
                    
                    -
                    
                    
                    
                    (29,060
                    )
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    (38,052
                    )Adjustment
      to Tax Receivable Agreement as a result of the redemption of New Class A
      Units
                    
                    
                    (543
                    )
                    
                    
                    
                    
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    (543
                    )
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    -Exercise
      of IPO Options
                    
                    
                    793
                    
                    
                    
                    
                    
                    
                    
                    51
                    
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    448
                    
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    345Forfeitures
                    
                    
                    1
                    
                    
                    
                    
                    
                    
                    
                    (138
                    )
                    
                    
                    (1
                    )
                    
                    
                    (95
                    )
                    
                    
                    -
                    
                    
                    
                    2
                    
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    -Equity-based
      compensation
                    
                    
                    19,798
                    
                    
                    
                    
                    
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    10,457
                    
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    9,341Income
      tax benefit on equity-based compensation
                    
                    
                    (103
                    )
                    
                    
                    
                    
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    (103
                    )
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    -Distributions
      to noncontrolling unitholders
                    
                    
                    (15,510
                    )
                    
                    
                    
                    
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    (6,187
                    )
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    (9,323
                    )Change
      in ownership interests between periods
                    
                    
                    -
                    
                    
                    
                    
                    
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    51,791
                    
                    
                    
                    (125
                    )
                    
                    
                    -
                    
                    
                    
                    (51,666
                    )Adjustment
      to due to noncontrolling unitholders
                    
                    
                    (3,579
                    )
                    
                    
                    
                    
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    (3,579
                    )
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    -Deferred
      tax asset effective tax rate conversion
                    
                    
                    3,513
                    
                    
                    
                    
                    
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    3,412
                    
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    101Dividends
      on Class A common stock
                    
                    
                    (2,378
                    )
                    
                    
                    
                    
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    (2,378
                    )
                    
                    
                    -Balance
      as of September 30, 2009
                    
                    $
                    304,651
                    
                    
                    
                    
                    
                    
                    
                    23,984
                    
                    
                    $
                    240
                    
                    
                    
                    16,244
                    
                    
                    $
                    2
                    
                    
                    $
                    176,904
                    
                    
                    $
                    1,048
                    
                    
                    $
                    3,446
                    
                    
                    $
                    123,011




See
accompanying notes to the condensed consolidated financial
statements.




5


DUFF
& PHELPS CORPORATION AND SUBSIDIARIES


NOTES
TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS


(In
thousands, except per share amounts)


(Unaudited)





Note
1   -   DESCRIPTION OF BUSINESS





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





Note
2   -   BASIS OF PRESENTATION





Basis
of Presentation





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





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





Recently
Issued Accounting Pronouncements





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


6


DUFF
& PHELPS CORPORATION AND SUBSIDIARIES


NOTES
TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS


(In
thousands, except per share amounts)


(Unaudited)





Critical
Accounting Policies





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





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





Note
3   -   NONCONTROLLING INTEREST





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





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





Duff
      &
                      
                      
                      Non-Phelps
                      
                      
                      controllingCorporation
                      
                      
                      Unitholders
                      
                      
                      TotalDecember
      31, 2009
                      
                      
                      27,290
                      
                      
                      
                      12,974
                      
                      
                      
                      40,264Issuance
      of Class A common stock for acquisitions
                      
                      
                      93
                      
                      
                      
                      -
                      
                      
                      
                      93Exchange
      to Class A common stock
                      
                      
                      45
                      
                      
                      
                      (45
                      )
                      
                      
                      -Net
      issuance of restricted stock awards
                      
                      
                      1,354
                      
                      
                      
                      -
                      
                      
                      
                      1,354Issuance
      for exercises of IPO Options
                      
                      
                      4
                      
                      
                      
                      -
                      
                      
                      
                      4Repurchases
      of Class A common stock pursuant to publicly announced
    program
                      
                      
                      (444
                      )
                      
                      
                      -
                      
                      
                      
                      (444
                      )Forfeitures
                      
                      
                      (222
                      )
                      
                      
                      (31
                      )
                      
                      
                      (253
                      )September
      30, 2010
                      
                      
                      28,120
                      
                      
                      
                      12,898
                      
                      
                      
                      41,018Percent
      of totalDecember
      31, 2009
                      
                      
                      67.8
                      %
                      
                      
                      32.2
                      %
                      
                      
                      100
                      %September
      30, 2010
                      
                      
                      68.6
                      %
                      
                      
                      31.4
                      %
                      
                      
                      100
                      %


7


DUFF
& PHELPS CORPORATION AND SUBSIDIARIES


NOTES
TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS


(In
thousands, except per share amounts)


(Unaudited)





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





Three
      Months Ended
                              
                              
                              Nine
      Months EndedSeptember
      30,
                              
                              
                              September
      30,
                              
                              
                              September
      30,
                              
                              
                              September
      30,2010
                              
                              
                              2009
                              
                              
                              2010
                              
                              
                              2009Income
      before income taxes
                              
                              $
                              9,207
                              
                              
                              $
                              10,587
                              
                              
                              $
                              27,549
                              
                              
                              $
                              26,900Less:  provision
      for income taxes for entities other than Duff & Phelps
      Corporation(a)(b)
                              
                              
                              618
                              
                              
                              
                              (292
                              )
                              
                              
                              (712
                              )
                              
                              
                              (964
                              )Income
      before income taxes, as adjusted
                              
                              
                              9,825
                              
                              
                              
                              10,295
                              
                              
                              
                              26,837
                              
                              
                              
                              25,936Ownership percentage
      of noncontrolling interest(d)
                              
                              
                              31.4
                              %
                              
                              
                              40.2
                              %
                              
                              
                              31.7
                              %
                              
                              
                              47.9
                              %Net
      income attributable to noncontrolling interest
                              
                              
                              3,088
                              
                              
                              
                              4,136
                              
                              
                              
                              8,494
                              
                              
                              
                              12,417Income
      before income taxes, as adjusted, attributable to Duff & Phelps
      Corporation
                              
                              
                              6,737
                              
                              
                              
                              6,159
                              
                              
                              
                              18,343
                              
                              
                              
                              13,519Less:  provision
      for income taxes of Duff & Phelps Corporation(a)(c)
                              
                              
                              (2,628
                              )
                              
                              
                              (2,707
                              )
                              
                              
                              (7,454
                              )
                              
                              
                              (6,568
                              )Net
      income attributable to Duff & Phelps Corporation
                              
                              $
                              4,109
                              
                              
                              $
                              3,452
                              
                              
                              $
                              10,889
                              
                              
                              $
                              6,951





(a)
            The
      consolidated provision for income taxes is equal to the sum of (i) the
      provision for income taxes for entities other than Duff & Phelps
      Corporation and (ii) the provision for income taxes of Duff & Phelps
      Corporation.  The consolidated provision for income taxes
      totaled $2,010 and $2,999 for the three months ended September 30, 2010
      and 2009, respectively, and $8,166 and $7,532 for the nine months ended
      September 30, 2010 and 2009,
respectively.


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


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


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





Distributions
and Other Payments to Noncontrolling Unitholders





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





Nine Months EndedSeptember
      30,
                  
                  
                  September
      30,2010
                  
                  
                  2009Distributions
      for taxes
                  
                  $
                  3,359
                  
                  
                  $
                  14,197Other
      distributions
                  
                  
                  2,121
                  
                  
                  
                  1,313Payments
      pursuant to the Tax Receivable Agreement
                  
                  
                  -
                  
                  
                  
                  -$
                  5,480
                  
                  
                  $
                  15,510


8


DUFF
& PHELPS CORPORATION AND SUBSIDIARIES


NOTES
TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS


(In
thousands, except per share amounts)


(Unaudited)





Distributions for
taxes


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





Other
distributions


During
the nine months ended September 30, 2010, the Company distributed $2,121 to
holders of New Class A Units, other than Duff & Phelps
Corporation.  Concurrent with the payment of the dividend to
shareholders of record, holders of New Class A Units received a $0.05
distribution per vested unit on March 16, 2010 and a $0.06 distribution per
vested unit on May 28, 2010 and August 27, 2010.  These amounts
totaled $1,959 and will be treated as a reduction in basis of each member’s
ownership interests.  Pursuant to the terms of the Third Amended and
Restated LLC Agreement of D&P Acquisitions, a corresponding amount per
unvested unit was deposited into a segregated account and will be distributed
once a year with respect to units that vested during that year.  During the
nine months ended September 30, 2010, the Company distributed $162 to members
whose units vested during 2009.  Any amounts related to unvested units
that forfeit are returned to the Company.





Payments pursuant to the Tax
Receivable Agreement


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





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





As of
September 30, 2010, the Company recorded a liability of $106,802, 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).


9


DUFF
& PHELPS CORPORATION AND SUBSIDIARIES


NOTES
TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS


(In
thousands, except per share amounts)


(Unaudited)





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





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





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





Note  4  -   ACQUISITIONS





On June
15, 2010, a subsidiary of the Company acquired Cole Valuation Partners Limited
(“Cole”), a Canadian-based independent financial advisory
firm.  Headquartered in Toronto, Cole specializes in financial
litigation support, business valuation, corporate finance advisory, and forensic
and investigative accounting.  Cole has five managing directors and 31
total employees located in its Toronto office.  The purchase price was
not material to the Company’s consolidated financial statements.  Cole
operates as part of the Financial Advisory segment.  The Company
recognized $2,907 and $3,454 of revenue from Cole during the three and nine
months ended September 30, 2010, respectively.





Note  5  -   EARNINGS
PER SHARE





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





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


10


DUFF
& PHELPS CORPORATION AND SUBSIDIARIES


NOTES
TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS


(In
thousands, except per share amounts)


(Unaudited)





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





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





Three
      Months Ended
                                                                              
                                                                              
                                                                              Nine
      Months EndedSeptember
      30,
                                                                              
                                                                              
                                                                              September
      30,
                                                                              
                                                                              
                                                                              September
      30,
                                                                              
                                                                              
                                                                              September
      30,2010
                                                                              
                                                                              
                                                                              2009
                                                                              
                                                                              
                                                                              2010
                                                                              
                                                                              
                                                                              2009Basic
      and diluted net income per share:NumeratorNet
      income available to holders of Class A common stock
                                                                              
                                                                              $
                                                                              4,109
                                                                              
                                                                              
                                                                              $
                                                                              3,452
                                                                              
                                                                              
                                                                              $
                                                                              10,889
                                                                              
                                                                              
                                                                              $
                                                                              6,951Earnings
      allocated to participating securities
                                                                              
                                                                              
                                                                              (283
                                                                              )
                                                                              
                                                                              
                                                                              (220
                                                                              )
                                                                              
                                                                              
                                                                              (672
                                                                              )
                                                                              
                                                                              
                                                                              (493
                                                                              )Earnings
      available for common stockholders
                                                                              
                                                                              $
                                                                              3,826
                                                                              
                                                                              
                                                                              $
                                                                              3,232
                                                                              
                                                                              
                                                                              $
                                                                              10,217
                                                                              
                                                                              
                                                                              $
                                                                              6,458Denominator
      for basic net income per share of Class A common stockWeighted
      average shares of Class A common stock
                                                                              
                                                                              
                                                                              24,873
                                                                              
                                                                              
                                                                              
                                                                              21,625
                                                                              
                                                                              
                                                                              
                                                                              24,972
                                                                              
                                                                              
                                                                              
                                                                              17,517Denominator
      for diluted net income per share of Class A common stockWeighted
      average shares of Class A common stock
                                                                              
                                                                              
                                                                              24,873
                                                                              
                                                                              
                                                                              
                                                                              21,625
                                                                              
                                                                              
                                                                              
                                                                              24,972
                                                                              
                                                                              
                                                                              
                                                                              17,517Add
      dilutive effect of the following:Restricted
      stock awards and units
                                                                              
                                                                              
                                                                              81
                                                                              
                                                                              
                                                                              
                                                                              823
                                                                              
                                                                              
                                                                              
                                                                              769
                                                                              
                                                                              
                                                                              
                                                                              680Assumed conversion
      of New Class A Units for Class A common stock(a)
                                                                              
                                                                              
                                                                              -
                                                                              
                                                                              
                                                                              
                                                                              -
                                                                              
                                                                              
                                                                              
                                                                              -
                                                                              
                                                                              
                                                                              
                                                                              -Dilutive
      weighted average shares of Class A common stock
                                                                              
                                                                              
                                                                              24,954
                                                                              
                                                                              
                                                                              
                                                                              22,448
                                                                              
                                                                              
                                                                              
                                                                              25,741
                                                                              
                                                                              
                                                                              
                                                                              18,197Basic
      income per share of Class A common stock
                                                                              
                                                                              $
                                                                              0.15
                                                                              
                                                                              
                                                                              $
                                                                              0.15
                                                                              
                                                                              
                                                                              $
                                                                              0.41
                                                                              
                                                                              
                                                                              $
                                                                              0.37Diluted
      income per share of Class A common stock
                                                                              
                                                                              $
                                                                              0.15
                                                                              
                                                                              
                                                                              $
                                                                              0.14
                                                                              
                                                                              
                                                                              $
                                                                              0.40
                                                                              
                                                                              
                                                                              $
                                                                              0.35______________________________(a)
      The following shares were anti-dilutive and excluded from this
      calculation:Weighted
      average New Class A Units outstanding
                                                                              
                                                                              
                                                                              12,903
                                                                              
                                                                              
                                                                              
                                                                              16,246
                                                                              
                                                                              
                                                                              
                                                                              12,932
                                                                              
                                                                              
                                                                              
                                                                              18,584Weighted
      average IPO Options outstanding
                                                                              
                                                                              
                                                                              1,707
                                                                              
                                                                              
                                                                              
                                                                              1,889
                                                                              
                                                                              
                                                                              
                                                                              1,763
                                                                              
                                                                              
                                                                              
                                                                              1,935





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  6 
      -
            EQUITY-BASED
      COMPENSATION





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





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





Three
      Months Ended
                            
                            
                            Three
      Months EndedSeptember
      30, 2010
                            
                            
                            September
      30, 2009Client
                            
                            
                            
                            
                            
                            
                            
                            
                            ClientService
                            
                            
                            SG&A
                            
                            
                            Total
                            
                            
                            Service
                            
                            
                            SG&A
                            
                            
                            TotalLegacy Units(1)
                            
                            $
                            (46
                            )
                            
                            $
                            265
                            
                            
                            $
                            219
                            
                            
                            $
                            1,610
                            
                            
                            $
                            758
                            
                            
                            $
                            2,368IPO Options(1)
                            
                            
                            (38
                            )
                            
                            
                            210
                            
                            
                            
                            172
                            
                            
                            
                            514
                            
                            
                            
                            347
                            
                            
                            
                            861Ongoing
      RSAs
                            
                            
                            3,514
                            
                            
                            
                            529
                            
                            
                            
                            4,043
                            
                            
                            
                            2,170
                            
                            
                            
                            913
                            
                            
                            
                            3,083Total
                            
                            $
                            3,430
                            
                            
                            $
                            1,004
                            
                            
                            $
                            4,434
                            
                            
                            $
                            4,294
                            
                            
                            $
                            2,018
                            
                            
                            $
                            6,312





Nine
      Months Ended
                      
                      
                      Nine
      Months EndedSeptember
      30, 2010
                      
                      
                      September
      30, 2009Client
                      
                      
                      
                      
                      
                      
                      
                      
                      ClientService
                      
                      
                      SG&A
                      
                      
                      Total
                      
                      
                      Service
                      
                      
                      SG&A
                      
                      
                      TotalLegacy
      Units
                      
                      $
                      517
                      
                      
                      $
                      1,184
                      
                      
                      $
                      1,701
                      
                      
                      $
                      6,138
                      
                      
                      $
                      2,046
                      
                      
                      $
                      8,184IPO
      Options
                      
                      
                      633
                      
                      
                      
                      634
                      
                      
                      
                      1,267
                      
                      
                      
                      1,866
                      
                      
                      
                      913
                      
                      
                      
                      2,779Ongoing
      RSAs
                      
                      
                      10,212
                      
                      
                      
                      2,644
                      
                      
                      
                      12,856
                      
                      
                      
                      5,627
                      
                      
                      
                      2,615
                      
                      
                      
                      8,242Total
                      
                      $
                      11,362
                      
                      
                      $
                      4,462
                      
                      
                      $
                      15,824
                      
                      
                      $
                      13,631
                      
                      
                      $
                      5,574
                      
                      
                      $
                      19,205







(1)The
credit to expense is the result of the true-up of estimated to actual
forfeitures upon the occurrence of vesting events during the
period.





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 nine months ended September 30, 2010, the Company issued 1,671 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
1,671 Ongoing RSAs granted, 120 awards were granted to executives on March 10,
2010.  The restrictions on transfer and forfeiture provisions are
eliminated annually over three years based on ratable vesting for grants made to
executives.  In addition, 23 awards were granted to members of the
board of directors on May 6, 2010.  The restrictions on transfer and
forfeiture provisions are eliminated annually over four years based on ratable
vesting for grants made to members of the board of directors.


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 stock award activity during the nine months ended
September 30, 2010:





Weighted
                  
                  
                  
                  
                  
                  WeightedRestricted
                  
                  
                  Average
                  
                  
                  Restricted
                  
                  
                  AverageStock
                  
                  
                  Grant
      Date
                  
                  
                  Stock
                  
                  
                  Grant
      DateAwards
                  
                  
                  Fair
      Value
                  
                  
                  Units
                  
                  
                  Fair
      ValueBalance
      as of December 31, 2009
                  
                  
                  2,340
                  
                  
                  $
                  14.11
                  
                  
                  
                  173
                  
                  
                  $
                  13.43Granted
                  
                  
                  1,517
                  
                  
                  
                  16.85
                  
                  
                  
                  154
                  
                  
                  
                  16.92Converted
      to Class A common stock upon lapse of restrictions
                  
                  
                  (375
                  )
                  
                  
                  16.12
                  
                  
                  
                  -
                  
                  
                  
                  13.84Forfeited
                  
                  
                  (222
                  )
                  
                  
                  14.88
                  
                  
                  
                  (4
                  )
                  
                  
                  15.76Balance
      as of September 30, 2010
                  
                  
                  3,260
                  
                  
                  $
                  15.15
                  
                  
                  
                  323
                  
                  
                  $
                  15.31Vested
                  
                  
                  -
                  
                  
                  
                  
                  
                  
                  
                  -Unvested
                  
                  
                  3,260
                  
                  
                  
                  
                  
                  
                  
                  323





Below is
a summary of option activity during the nine months ended September 30,
2010:





WeightedAverageIPO
                  
                  
                  Grant
      DateOptions
                  
                  
                  Fair
      ValueBalance
      as of December 31, 2009
                  
                  
                  1,815
                  
                  
                  $
                  7.33Granted
                  
                  
                  -
                  
                  
                  
                  -Exercised
                  
                  
                  (4
                  )
                  
                  
                  7.33Forfeited
                  
                  
                  (120
                  )
                  
                  
                  7.33Balance
      as of September 30, 2010
                  
                  
                  1,691
                  
                  
                  $
                  7.33Vested
                  
                  
                  1,294Unvested
                  
                  
                  397Weighted
      average exercise price
                  
                  $
                  16.00Weighted
      average remaining contractual term
                  
                  
                  7.00Total
      intrinsic value of exercised options
                  
                  $
                  3Total
      fair value of options vested
                  
                  $
                  9,484Aggregate
      intrinsic value
                  
                  $
                  -Options
      expected to vest
                  
                  
                  1,675Aggregate
      intrinsic value of options expected to vest
                  
                  $
                  -





Forfeitures
for Legacy Units, IPO Options and Ongoing RSAs are estimated at the time an
award is granted and revised, if necessary, in subsequent periods if actual
forfeitures differ from those estimates.  Pre-vesting forfeitures were
estimated to be between 2% and 21% as of September 30, 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 nine months ended September 30,
2010:





NewClass
      A UnitsAttributable
      toEquity-BasedCompensationBalance
      as of December 31, 2009
                  
                  
                  3,231Forfeited
                  
                  
                  (31
                  )Exchanged
                  
                  
                  (45
                  )Balance
      as of September 30, 2010
                  
                  
                  3,155Vested
                  
                  
                  2,382Unvested
                  
                  
                  773





The total
unamortized compensation cost related to all non-vested awards was $25,517 at
September 30, 2010.  A tax benefit of $1,971 and $1,581 was
recognized for the stock options issued in conjunction with the IPO and Ongoing
RSAs for the nine months ended September 30, 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  7  -   FAIR
VALUE MEASUREMENTS





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





Quoted
      Pricesin
      Active
                    
                    
                    SignificantMarkets
      for
                    
                    
                    Other
                    
                    
                    SignificantIdentical
                    
                    
                    Observable
                    
                    
                    UnobservableAssets
                    
                    
                    Inputs
                    
                    
                    InputsDescription
                    
                    (Level
      1)
                    
                    
                    (Level
      2)
                    
                    
                    (Level
      3)
                    
                    
                    TotalInvestments held in
      conjunction with deferred compensation plan(1)(2)
                    
                    $
                    -
                    
                    
                    $
                    21,780
                    
                    
                    $
                    -
                    
                    
                    $
                    21,780Total
      assets
                    
                    $
                    -
                    
                    
                    $
                    21,780
                    
                    
                    $
                    -
                    
                    
                    $
                    21,780Benefits payable in
      conjunction with deferred compensation plan(1)
                    
                    $
                    -
                    
                    
                    $
                    21,923
                    
                    
                    $
                    -
                    
                    
                    $
                    21,923Total
      liabilities
                    
                    $
                    -
                    
                    
                    $
                    21,923
                    
                    
                    $
                    -
                    
                    
                    $
                    21,923





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


(2)Investments
held in conjunction with the deferred compensation plan exclude approximately
$200 which is included in “Cash and cash equivalents” on the Company’s Condensed
Consolidated Balance Sheets at September 30, 2010.





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  8  -   LONG-TERM
DEBT





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





There
were no amounts outstanding under the Credit Facility at September 30, 2010 or
through the filing date of this Quarterly Report on Form 10-Q.  As of
September 30, 2010, the Company had $4,115 of outstanding letters of credit of
which $3,685 were issued against the Credit Facility.  There was $430
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
September 30, 2010, the Company qualifies 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 September 30, 2010.  The Credit Agreement
permits dividend payments or other distributions in the Company’s common stock
or other equity interests subject to certain limitations.





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


16


DUFF
& PHELPS CORPORATION AND SUBSIDIARIES


NOTES
TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS


(In
thousands, except per share amounts)


(Unaudited)





Note  9  -    INCOME
TAXES





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





Three Months Ended
                  
                  
                  Nine Months EndedSeptember
      30,
                  
                  
                  September
      30,
                  
                  
                  September
      30,
                  
                  
                  September
      30,2010
                  
                  
                  2009
                  
                  
                  2010
                  
                  
                  2009Provision
      for income taxes
                  
                  $
                  2,010
                  
                  
                  $
                  2,999
                  
                  
                  $
                  8,166
                  
                  
                  $
                  7,532Effective
      income tax rate
                  
                  
                  21.8
                  %
                  
                  
                  28.3
                  %
                  
                  
                  29.6
                  %
                  
                  
                  28.0
                  %





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.  During the quarter ended September 30, 2010, the Company
recorded discrete items that resulted in a benefit to income tax expense,
including (i) an immaterial adjustment to correct the purchase accounting of a
prior acquisition and (ii) provision to actual adjustments.





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
                    
                    
                    87Lapse
      of statute of limitations
                    
                    
                    (128
                    )Balance
      as of September 30, 2010
                    
                    $
                    507





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.


17


DUFF
& PHELPS CORPORATION AND SUBSIDIARIES


NOTES
TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS


(In
thousands, except per share amounts)


(Unaudited)





Note
10  -  DEFERRED COMPENSATION PLAN





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





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





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





September
      30,
                  
                  
                  December
      31,2010
                  
                  
                  2009Fair
      market value of investments in rabbi trust(1)
                  
                  $
                  21,780
                  
                  
                  $
                  17,807Payable
      to participants of the plan
                  
                  
                  21,923
                  
                  
                  
                  18,051





(1)The
fair market value of investments in rabbi trust held in conjunction with the
deferred compensation plan excludes approximately $200 and $251 which is
included in cash and cash equivalents at September 30, 2010 and December 31,
2009, respectively.





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





Note
11  -  IMPAIRMENT OF CERTAIN INTANGIBLE ASSETS





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


18


DUFF
& PHELPS CORPORATION AND SUBSIDIARIES


NOTES
TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS


(In
thousands, except per share amounts)


(Unaudited)





Note
12  -  COMMITMENTS AND CONTINGENCIES





The
Company is involved in various claims or disputes arising in the normal course
of business.  Management does not believe that these matters would
have a material adverse effect on the Company's financial position, results of
operations or liquidity.





Note
13  - CHARGE FROM REALIGNMENT OF SENIOR MANAGEMENT





On April
22, 2010, the Company announced the departure of its former president and one of
its segment leaders.  The Company incurred a onetime charge associated
with these changes of approximately $3,550 in the three months ended June 30,
2010 related to cash severance and the accounting impact of accelerated vesting
of equity-based awards.  Approximately $540 of this amount is included
in direct client service costs as a component of compensation and benefits and
approximately $3,010 in operating expenses as a component of selling, general
and administrative expenses.  These charges were not allocated to any
of the Company’s segments or associated with a restructuring, exit or disposal
activity.


19


DUFF
& PHELPS CORPORATION AND SUBSIDIARIES


NOTES
TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS


(In
thousands, except per share amounts)


(Unaudited)





Note
14  -  SEGMENT INFORMATION





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





Three
      Months Ended
                          
                          
                          Nine
      Months EndedSeptember
      30,
                          
                          
                          September
      30,
                          
                          
                          September
      30,
                          
                          
                          September
      30,2010
                          
                          
                          2009
                          
                          
                          2010
                          
                          
                          2009Financial
      AdvisoryRevenues
      (excluding reimbursables)
                          
                          $
                          52,901
                          
                          
                          $
                          57,634
                          
                          
                          $
                          161,017
                          
                          
                          $
                          176,431Segment
      operating income
                          
                          $
                          5,743
                          
                          
                          $
                          8,855
                          
                          
                          $
                          21,730
                          
                          
                          $
                          29,543Segment
      operating income margin
                          
                          
                          10.9
                          %
                          
                          
                          15.4
                          %
                          
                          
                          13.5
                          %
                          
                          
                          16.7
                          %Corporate
      Finance ConsultingRevenues
      (excluding reimbursables)
                          
                          $
                          12,848
                          
                          
                          $
                          17,445
                          
                          
                          $
                          41,103
                          
                          
                          $
                          47,039Segment
      operating income
                          
                          $
                          2,754
                          
                          
                          $
                          5,389
                          
                          
                          $
                          6,913
                          
                          
                          $
                          11,819Segment
      operating income margin
                          
                          
                          21.4
                          %
                          
                          
                          30.9
                          %
                          
                          
                          16.8
                          %
                          
                          
                          25.1
                          %Investment
      BankingRevenues
      (excluding reimbursables)
                          
                          $
                          18,678
                          
                          
                          $
                          18,161
                          
                          
                          $
                          60,213
                          
                          
                          $
                          49,088Segment
      operating income
                          
                          $
                          3,665
                          
                          
                          $
                          2,364
                          
                          
                          $
                          13,772
                          
                          
                          $
                          7,195Segment
      operating income margin
                          
                          
                          19.6
                          %
                          
                          
                          13.0
                          %
                          
                          
                          22.9
                          %
                          
                          
                          14.7
                          %TotalRevenues
      (excluding reimbursables)
                          
                          $
                          84,427
                          
                          
                          $
                          93,240
                          
                          
                          $
                          262,333
                          
                          
                          $
                          272,558Segment
      operating income
                          
                          $
                          12,162
                          
                          
                          $
                          16,608
                          
                          
                          $
                          42,415
                          
                          
                          $
                          48,557Net
      client reimbursable expenses
                          
                          
                          73
                          
                          
                          
                          (74
                          )
                          
                          
                          (60
                          )
                          
                          
                          (63
                          )Equity-based
      compensation from Legacy Units and IPO Options
                          
                          
                          (391
                          )
                          
                          
                          (3,229
                          )
                          
                          
                          (2,968
                          )
                          
                          
                          (10,963
                          )Depreciation
      and amortization
                          
                          
                          (2,567
                          )
                          
                          
                          (2,594
                          )
                          
                          
                          (7,410
                          )
                          
                          
                          (7,712
                          )Charge
      from impairment of certain intangible assets
                          
                          
                          -
                          
                          
                          
                          -
                          
                          
                          
                          (674
                          )
                          
                          
                          -Charge
      from realignment of senior management (not included in equity-based
      compensation from Legacy Units and IPO Options above)(Note
    13)
                          
                          
                          -
                          
                          
                          
                          -
                          
                          
                          
                          (3,040
                          )
                          
                          
                          -Merger
      and acquisition costs
                          
                          
                          (76
                          )
                          
                          
                          -
                          
                          
                          
                          (397
                          )
                          
                          
                          -Operating
      income
                          
                          $
                          9,201
                          
                          
                          $
                          10,711
                          
                          
                          $
                          27,866
                          
                          
                          $
                          29,819




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





Three
      Months Ended
                      
                      
                      Nine
      Months EndedSeptember
      30,
                      
                      
                      September
      30,
                      
                      
                      September
      30,
                      
                      
                      September
      30,2010
                      
                      
                      2009
                      
                      
                      2010
                      
                      
                      2009North
      America
                      
                      $
                      77,331
                      
                      
                      $
                      83,745
                      
                      
                      $
                      233,248
                      
                      
                      $
                      246,649Europe
                      
                      
                      6,226
                      
                      
                      
                      7,668
                      
                      
                      
                      26,308
                      
                      
                      
                      21,499Asia
                      
                      
                      870
                      
                      
                      
                      1,827
                      
                      
                      
                      2,777
                      
                      
                      
                      4,410Revenues
      (excluding reimbursables)
                      
                      $
                      84,427
                      
                      
                      $
                      93,240
                      
                      
                      $
                      262,333
                      
                      
                      $
                      272,558




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 the three months ended
September 30, 2010 and 2009, the Financial Advisory segment (primarily Valuation
Advisory services) recognized revenues of $2,950 and $2,972 from the cross
utilization of its client service professionals on engagements from the
Corporate Finance Consulting segment (primarily Portfolio Valuation services),
respectively.  In the nine months ended September 30, 2010 and 2009,
the Financial Advisory segment (primarily Valuation Advisory services)
recognized revenues of $7,142 and $9,539 from the cross utilization of its
client service professionals on engagements from the Corporate Finance
Consulting segment (primarily Portfolio Valuation services),
respectively.


21


DUFF
& PHELPS CORPORATION AND SUBSIDIARIES


NOTES
TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS


(In
thousands, except per share amounts)


(Unaudited)





Note 15  -  RELATED
PARTY TRANSACTIONS





Lovell
Minnick Partners





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





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





Nine Months EndedSeptember
      30,
                  
                  
                  September
      30,2010
                  
                  
                  2009Distributions
      for taxes
                  
                  $
                  751
                  
                  
                  $
                  3,584Other
      distributions
                  
                  
                  615
                  
                  
                  
                  362$
                  1,366
                  
                  
                  $
                  3,946





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





An
affiliate of Lovell Minnick Partners engaged the Company to provide certain
consulting services.  As a result of services provided, the Company
recorded $36 of revenues resulting from the engagement during the nine months
ended September 30, 2010.





Vestar
Capital Partners





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





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





Nine Months EndedSeptember
      30,
                  
                  
                  September
      30,2010
                  
                  
                  2009Distributions
      for taxes
                  
                  $
                  1,036
                  
                  
                  $
                  4,429Other
      distributions
                  
                  
                  854
                  
                  
                  
                  502$
                  1,890
                  
                  
                  $
                  4,931





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
16  -  SUBSEQUENT EVENTS





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





Declaration
of Quarterly Dividend





On
October 28, 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 December 3, 2010 to shareholders of
record on November 23, 2010.  Concurrent with the payment of the
dividend, the Company will also be distributing $0.06 per unit to holders of New
Class A Units.


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


24





Results
of Operations





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





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










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





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


25





Three
months ended September 30, 2010 versus three months ended September 30,
2009





The
results of operations are summarized as follows:





Three Months EndedSeptember
      30,
                        
                        
                        September
      30,
                        
                        
                        Unit
                        
                        
                        Percent2010
                        
                        
                        2009
                        
                        
                        Change
                        
                        
                        ChangeRevenues
                        
                        $
                        84,427
                        
                        
                        $
                        93,240
                        
                        
                        $
                        (8,813
                        )
                        
                        
                        (9.5
                        )%Reimbursable
      expenses
                        
                        
                        2,403
                        
                        
                        
                        3,394
                        
                        
                        
                        (991
                        )
                        
                        
                        (29.2
                        )%Total
      revenues
                        
                        
                        86,830
                        
                        
                        
                        96,634
                        
                        
                        
                        (9,804
                        )
                        
                        
                        (10.1
                        )%Direct
      client service costsCompensation
      and benefits(1)
                        
                        
                        47,829
                        
                        
                        
                        52,287
                        
                        
                        
                        (4,458
                        )
                        
                        
                        (8.5
                        )%Other
      direct client service costs
                        
                        
                        1,342
                        
                        
                        
                        2,954
                        
                        
                        
                        (1,612
                        )
                        
                        
                        (54.6
                        )%Reimbursable
      expenses
                        
                        
                        2,330
                        
                        
                        
                        3,468
                        
                        
                        
                        (1,138
                        )
                        
                        
                        (32.8
                        )%51,501
                        
                        
                        
                        58,709
                        
                        
                        
                        (7,208
                        )
                        
                        
                        (12.3
                        )%Operating
      expensesSelling,
      general and administrative(2)
                        
                        
                        23,485
                        
                        
                        
                        24,620
                        
                        
                        
                        (1,135
                        )
                        
                        
                        (4.6
                        )%Depreciation
      and amortization
                        
                        
                        2,567
                        
                        
                        
                        2,594
                        
                        
                        
                        (27
                        )
                        
                        
                        (1.0
                        )%Merger
      and acquisition costs
                        
                        
                        76
                        
                        
                        
                        -
                        
                        
                        
                        76
                        
                        
                        
                        -26,128
                        
                        
                        
                        27,214
                        
                        
                        
                        (1,086
                        )
                        
                        
                        (4.0
                        )%Operating
      income
                        
                        
                        9,201
                        
                        
                        
                        10,711
                        
                        
                        
                        (1,510
                        )
                        
                        
                        (14.1
                        )%Other
      expense/(income), netInterest
      income
                        
                        
                        (29
                        )
                        
                        
                        (17
                        )
                        
                        
                        (12
                        )
                        
                        
                        70.6
                        %Interest
      expense
                        
                        
                        66
                        
                        
                        
                        91
                        
                        
                        
                        (25
                        )
                        
                        
                        (27.5
                        )%Other
      expense
                        
                        
                        (43
                        )
                        
                        
                        50
                        
                        
                        
                        (93
                        )
                        
                        
                        (186.0
                        )%(6
                        )
                        
                        
                        124
                        
                        
                        
                        (130
                        )
                        
                        
                        (104.8
                        )%Income
      before income taxes
                        
                        
                        9,207
                        
                        
                        
                        10,587
                        
                        
                        
                        (1,380
                        )
                        
                        
                        (13.0
                        )%Provision
      for income taxes
                        
                        
                        2,010
                        
                        
                        
                        2,999
                        
                        
                        
                        (989
                        )
                        
                        
                        (33.0
                        )%Net
      income
                        
                        
                        7,197
                        
                        
                        
                        7,588
                        
                        
                        
                        (391
                        )
                        
                        
                        (5.2
                        )%Less:  Net
      income attributable to noncontrolling interest
                        
                        
                        3,088
                        
                        
                        
                        4,136
                        
                        
                        
                        (1,048
                        )
                        
                        
                        (25.3
                        )%Net
      income attributable to Duff & Phelps Corporation
                        
                        $
                        4,109
                        
                        
                        $
                        3,452
                        
                        
                        $
                        657
                        
                        
                        
                        19.0
                        %Other
      financial and operating dataAdjusted
      EBITDA(3)
                        
                        $
                        12,235
                        
                        
                        $
                        16,534
                        
                        
                        $
                        (4,299
                        )
                        
                        
                        (26.0
                        )%Adjusted
      EBITDA(3)
      as a percentage of revenues
                        
                        
                        14.5
                        %
                        
                        
                        17.7
                        %
                        
                        
                        (3.2
                        )%
                        
                        
                        (18.3
                        )%Adusted
      Pro Forma Net Income(3)
                        
                        $
                        5,697
                        
                        
                        $
                        8,359
                        
                        
                        $
                        (2,662
                        )
                        
                        
                        (31.8
                        )%Adusted
      Pro Forma Net Income per fully exchanged,fully diluted share
      outstanding(3)
                        
                        $
                        0.15
                        
                        
                        $
                        0.22
                        
                        
                        $
                        (0.07
                        )
                        
                        
                        (31.8
                        )%End
      of period managing directors
                        
                        
                        158
                        
                        
                        
                        162
                        
                        
                        
                        (4
                        )
                        
                        
                        (2.5
                        )%End
      of period client service professionals
                        
                        
                        789
                        
                        
                        
                        902
                        
                        
                        
                        (113
                        )
                        
                        
                        (12.5
                        )%





(1)
            Compensation
      and benefits include $3,430 and $4,294 of equity-based compensation
      expense for the three months ended September 30, 2010 and 2009,
      respectively.




(2)
            Selling,
      general and administrative expenses include $1,004 and $2,018 of
      equity-based compensation expense for the three months ended September 30,
      2010 and 2009, respectively.


26





(3)
            Adjusted
      EBITDA, Adjusted Pro Forma Net Income, and Adjusted Pro Forma Net Income
      per share are non-GAAP financial measures.  We believe that
      Adjusted EBITDA provides a relevant and useful alternative measure of our
      ongoing profitability and performance, when viewed in conjunction with
      GAAP measures, as it adjusts net income or loss attributable to Duff &
      Phelps Corporation for (a) net income or loss attributable to
      noncontrolling interest, (b) provision for income taxes, (c) interest
      expense and depreciation and amortization (a significant portion of which
      relates to debt and capital investments that have been incurred as the
      result of acquisitions and investments in stand-alone infrastructure which
      we do not expect to incur at the same levels in the future), (d)
      equity-based compensation associated with the Legacy Units of D&P
      Acquisitions, a significant portion of which is due to certain onetime
      grants associated with acquisitions prior to our IPO, and options to
      purchase shares of the Company’s Class A common stock granted in
      connection with the IPO, (e) impairment charges, acquisition retention
      expenses and other merger and acquisition costs, which are generally
      non-recurring in nature or are related to deferred payments associated
      with prior acquisitions, and (f) costs incurred from the realignment of
      our senior management which are generally non-recurring in nature and
      primarily include cash severance and charges from the accounting impact of
      the acceleration of vesting of restricted stock
  awards.





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





Adjusted
EBITDA, as defined by the Company and reconciled below, consists of net income
or loss attributable to Duff & Phelps Corporation before (a) net income or
loss attributable to the noncontrolling interest, (b) provision for income
taxes, (c) other expense/(income), net, (d) depreciation and amortization, (e)
charges from impairment of intangible assets, (f) equity-based compensation
associated with Legacy Units and IPO Options included in both compensation and
benefits and in selling, general and administrative expenses, (g) acquisition
retention expenses, (h) cash severance and equity-compensation expense from the
acceleration of vesting of restricted stock awards due to the realignment of our
senior management, and (i) merger and acquisition costs:





Reconciliation
of Adjusted EBITDA





Three Months EndedSeptember
      30,
                      
                      
                      September
      30,2010
                      
                      
                      2009Revenues
      (excluding client reimbursables)
                      
                      $
                      84,427
                      
                      
                      $
                      93,240Net
      income attributable to Duff & Phelps Corporation
                      
                      $
                      4,109
                      
                      
                      $
                      3,452Net
      income attributable to noncontrolling interest
                      
                      
                      3,088
                      
                      
                      
                      4,136Provision
      for income taxes
                      
                      
                      2,010
                      
                      
                      
                      2,999Other
      expense/(income), net
                      
                      
                      (6
                      )
                      
                      
                      124Depreciation
      and amortization
                      
                      
                      2,567
                      
                      
                      
                      2,594Equity-based
      compensation associated with Legacy Units and IPO Options
                      
                      
                      391
                      
                      
                      
                      3,229Merger
      and acquisition costs
                      
                      
                      76
                      
                      
                      
                      -Adjusted
      EBITDA
                      
                      $
                      12,235
                      
                      
                      $
                      16,534Adjusted
      EBITDA as a percentage of revenues
                      
                      
                      14.5
                      %
                      
                      
                      17.7
                      %





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


27





Reconciliation
of Adjusted Pro Forma Net Income





Three Months EndedSeptember 30,
                  
                  
                  September 30,2010
                  
                  
                  2009Net
      income attributable to Duff & Phelps Corporation
                  
                  $
                  4,109
                  
                  
                  $
                  3,452Net
      income attributable to noncontrolling interest(a)
                  
                  
                  3,088
                  
                  
                  
                  4,136Equity-based
      compensation associated with Legacy Units and IPO Options(c)
                  
                  
                  391
                  
                  
                  
                  3,229Merger
      and acquisition costs
                  
                  
                  76
                  
                  
                  
                  -Adjustment
      to provision for income taxes(d)
                  
                  
                  (1,967
                  )
                  
                  
                  (2,458
                  )Adjusted
      Pro Forma Net Income, as defined
                  
                  $
                  5,697
                  
                  
                  $
                  8,359Pro
      forma fully exchanged, fully diluted shares outstanding(e)
                  
                  
                  37,857
                  
                  
                  
                  38,694Adjusted
      Pro Forma Net Income per fully exchanged, fully diluted share
      outstanding
                  
                  $
                  0.15
                  
                  
                  $
                  0.22








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


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


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


(d)
            Represents
      an adjustment to reflect an assumed effective corporate tax rate of
      approximately 40.6% and 40.8% for the full year, as applied to the three
      months ended September 30, 2010 and 2009, respectively, which includes a
      provision for U.S. federal income taxes and assumes the highest statutory
      rates apportioned to each state, local and/or foreign
      jurisdiction.  For the three months ended September 30, 2010 and
      2009, the pro forma tax rates of approximately 41.1% and 39.5% reflect a
      true-up adjustment relating to the three months ended June 30, 2010 and
      2009, respectively.  Assumes full exchange of existing
      unitholders' partnership units and Class B common stock of the Company
      into Class A common stock of the
Company.


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





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


28





Revenues





Revenues
excluding reimbursable expenses decreased $8,813 or 9.5% to $84,427 for the
three months ended September 30, 2010, compared to $93,240 for the three months
ended September 30, 2009.  The decrease in revenues primarily resulted
from a decrease in revenues from our Financial Advisory and Corporate Finance
Consulting segments, partially offset by an increase in revenues from our
Investment Banking segment, as summarized in the following table:





Three Months EndedSeptember
      30,
                      
                      
                      September
      30,
                      
                      
                      Dollar
                      
                      
                      Percent2010
                      
                      
                      2009
                      
                      
                      Change
                      
                      
                      ChangeFinancial
      AdvisoryValuation
      Advisory
                      
                      $
                      31,173
                      
                      
                      $
                      29,692
                      
                      
                      $
                      1,481
                      
                      
                      
                      5.0
                      %Tax
      Services
                      
                      
                      11,157
                      
                      
                      
                      15,045
                      
                      
                      
                      (3,888
                      )
                      
                      
                      (25.8
                      )%Dispute
      & Legal Management Consulting(1)
                      
                      
                      10,571
                      
                      
                      
                      12,897
                      
                      
                      
                      (2,326
                      )
                      
                      
                      (18.0
                      )%52,901
                      
                      
                      
                      57,634
                      
                      
                      
                      (4,733
                      )
                      
                      
                      (8.2
                      )%Corporate
      Finance ConsultingPortfolio
      Valuation
                      
                      
                      4,455
                      
                      
                      
                      5,858
                      
                      
                      
                      (1,403
                      )
                      
                      
                      (24.0
                      )%Financial
      Engineering
                      
                      
                      2,481
                      
                      
                      
                      5,201
                      
                      
                      
                      (2,720
                      )
                      
                      
                      (52.3
                      )%Strategic
      Value Advisory
                      
                      
                      2,840
                      
                      
                      
                      4,034
                      
                      
                      
                      (1,194
                      )
                      
                      
                      (29.6
                      )%Due
      Diligence
                      
                      
                      3,072
                      
                      
                      
                      2,352
                      
                      
                      
                      720
                      
                      
                      
                      30.6
                      %12,848
                      
                      
                      
                      17,445
                      
                      
                      
                      (4,597
                      )
                      
                      
                      (26.4
                      )%Investment
      BankingGlobal
      Restructuring Advisory
                      
                      
                      7,363
                      
                      
                      
                      11,038
                      
                      
                      
                      (3,675
                      )
                      
                      
                      (33.3
                      )%Transaction
      Opinions
                      
                      
                      6,711
                      
                      
                      
                      2,714
                      
                      
                      
                      3,997
                      
                      
                      
                      147.3
                      %M&A
      Advisory
                      
                      
                      4,604
                      
                      
                      
                      4,409
                      
                      
                      
                      195
                      
                      
                      
                      4.4
                      %18,678
                      
                      
                      
                      18,161
                      
                      
                      
                      517
                      
                      
                      
                      2.8
                      %Total
      Revenues (excluding reimbursables)
                      
                      $
                      84,427
                      
                      
                      $
                      93,240
                      
                      
                      $
                      (8,813
                      )
                      
                      
                      (9.5
                      )%








(1)
            Includes
      $2,907 of revenue from our acquisition of Cole Valuation Partners Limited
      effective June 15, 2010.





Our
Financial Advisory segment was impacted by lower revenues from Tax Services and
Dispute & Legal Management Consulting, partially offset by an increase in
revenues from Valuation Advisory.  The decrease in revenues from Tax
Services primarily resulted from the departure of staff during the first half of
2010 associated with World Tax Service US, LLC (which we acquired in July 2008)
and lower revenues from property tax contingent fees.





Dispute
& Legal Management Consulting (and to a lesser extent certain business units
in our Corporate Finance Consulting segment) was impacted by lower revenues from
an engagement to serve as a financial advisor to the court appointed examiner of
a large financial services company under bankruptcy protection.  This
engagement wound down during the first half of 2010.  Revenues from
this engagement were primarily recognized in our Dispute & Legal Management
Consulting business unit as well as our Corporate Finance Consulting
segment.  Results for the three months ended September 30, 2010 did
not include any revenue from this engagement, compared to approximately $10,200
of revenue recognized in the corresponding prior year quarter (of which
approximately 70% was recognized in Dispute & Legal and approximately 30% in
Corporate Finance Consulting).  The decrease from this engagement was
partially offset by (i) $2,907 of revenue from our acquisition of Cole Valuation
Partners Limited and (ii) additional growth from increased demand for these
services.





Valuation
Advisory benefited from an improvement in revenues from purchase price
allocations and a higher volume of real estate valuation work, partially offset
by a reduction in revenues related to goodwill impairment testing.





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


29




Our
Investment Banking segment benefited from an increase in revenues from
Transaction Opinions and to a lesser extent M&A Advisory versus the
corresponding prior year quarter.  Transaction Opinions and M&A
Advisory benefited from a higher volume of M&A transactions in the current
year.  Revenues from Global Restructuring Advisory decreased as a
result of the slowdown in global restructuring markets.




Our
client service headcount decreased to 789 client service professionals at
September 30, 2010, compared to 878 client service professionals at December 31,
2009.  This decrease resulted from targeted reductions and attrition,
partially offset by the addition of 20 client service professionals from our
acquisition of Cole Valuation Partners Limited (“Cole”) and targeted hiring of
professionals with specific expertise.





We had
158 client service managing directors at September 30, 2010, compared to 163 at
December 31, 2009.  We added 18 managing directors from our
acquisition of Cole, internal promotions and limited hiring.  These
additions were principally offset by targeted reductions.





Direct
Client Service Costs





Direct
client service costs decreased $7,208 or 12.3% to $51,501 for the three months
ended September 30, 2010, compared to $58,709 for the three months ended
September 30, 2009.  Direct client service costs include compensation
and benefits for client service employees, fees payable to contractors and other
expenses related to the execution of engagements.





The
following table adjusts direct client service costs for equity-based
compensation associated with Legacy Units and IPO Options and reimbursable
expenses:





Direct
Client Service Costs





Three Months EndedSeptember 30,
                        
                        
                        September 30,2010
                        
                        
                        2009Revenues
      (excluding reimbursables)
                        
                        $
                        84,427
                        
                        
                        $
                        93,240Total
      direct client service costs
                        
                        $
                        51,501
                        
                        
                        $
                        58,709Less:
      equity-based compensation associated with Legacy Units and IPO
      Options
                        
                        
                        84
                        
                        
                        
                        (2,124
                        )Less:
      reimbursable expenses
                        
                        
                        (2,330
                        )
                        
                        
                        (3,468
                        )Direct
      client service costs, as adjusted
                        
                        $
                        49,255
                        
                        
                        $
                        53,117Direct
      client service costs, as adjusted, as a percentage of
    revenues
                        
                        
                        58.3
                        %
                        
                        
                        57.0
                        %





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




Equity-based
compensation from Legacy Units and IPO Options decreased between periods
primarily as a result of the true-up of forfeiture expense upon the occurrence
of vesting dates as well as the accelerated attribution of expense on awards
with graded-tranche vesting in prior periods. The true-up of estimated to actual
forfeiture expense upon the occurrence of vesting events for Legacy Units and
IPO Options resulted in a benefit during the current period.




30





Operating
Expenses





Operating
expenses decreased $1,086 or 4.0% to $26,128 for the three months ended
September 30, 2010, compared to $27,214 for the three months ended September 30,
2009. Operating expenses include selling, general and administrative expenses,
depreciation and amortization, and merger and acquisition costs. Merger and
acquisition costs resulted from our acquisition of Cole and include professional
fees, incremental marketing expenses and incremental travel and
entertainment.





The
following table adjusts operating expenses for equity-based compensation
associated with Legacy Units and IPO Options, depreciation and amortization, and
merger and acquisition costs:




Operating
Expenses





Three Months EndedSeptember 30,
                              
                              
                              September 30,2010
                              
                              
                              2009Revenues
      (excluding reimbursables)
                              
                              $
                              84,427
                              
                              
                              $
                              93,240Total
      operating expenses
                              
                              $
                              26,128
                              
                              
                              $
                              27,214Less:
      equity-based compensation associated with Legacy Units and IPO
      Options
                              
                              
                              (475
                              )
                              
                              
                              (1,105
                              )Less:
      depreciation and amortization
                              
                              
                              (2,567
                              )
                              
                              
                              (2,594
                              )Less:
      merger and acquisition costs
                              
                              
                              (76
                              )
                              
                              
                              -Operating
      expenses, as adjusted
                              
                              $
                              23,010
                              
                              
                              $
                              23,515Operating
      expenses, as adjusted, as a percentage of revenues
                              
                              
                              27.3
                              %
                              
                              
                              25.2
                              %





Operating
expenses, as adjusted, decreased between periods primarily from continued
efforts to contain costs.





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




Provision
for Income Taxes





The
provision for income taxes was $2,010 or 21.8% of income before income taxes for
the three months ended September 30, 2010, compared to $2,999 or 28.3% of income
before income taxes for the three months ended September 30, 2009. The U.S.
statutory income tax rate of 35% plus state and local statutory rates were
decreased to the effective tax rate due to the fact that D&P Acquisitions,
LLC and many of its subsidiaries operate as limited liability companies or other
flow-through entities which are not subject to federal income tax.  This
operating structure results in a rate benefit because a portion of the Company’s
earnings are not subject to corporate level taxes.  This favorable impact
is partially offset by an increase due to state and local taxes, the effect of
permanent differences and foreign taxes. The increase in the provision for
income taxes as a percentage of income before income taxes resulted primarily
from a decrease in the rate benefit from operating as an LLC, due to an increase
in Duff & Phelps Corporation’s ownership of D&P Acquisitions, LLC.
During the quarter ended September 30, 2010, the Company recorded discrete items
that resulted in a benefit to income tax expense, including (i) an immaterial
adjustment to correct the purchase accounting of a prior acquisition and (ii)
provision to actual adjustments.





Net
Income Attributable to the Noncontrolling Interest





Net income attributable to the
noncontrolling interest represents the portion of net income or loss before
income taxes attributable to the ownership interest in D&P Acquisitions held
by the existing unitholders to the extent the book value of their interest in
D&P Acquisitions is greater than zero. This interest totaled 31.4% and 40.2%
for the three months ended September 30, 2010 and 2009,
respectively.





31




Segment
Results – Three months ended September 30, 2010 versus three months ended
September 30, 2009





The
following table sets forth selected segment operating results:





Results
of Operations by Segment





Three Months EndedSeptember 30,
                      
                      
                      September 30,
                      
                      
                      Unit
                      
                      
                      Percent2010
                      
                      
                      2009
                      
                      
                      Change
                      
                      
                      ChangeFinancial
      AdvisoryRevenues
      (excluding reimbursables)
                      
                      $
                      52,901
                      
                      
                      $
                      57,634
                      
                      
                      $
                      (4,733
                      )
                      
                      
                      (8.2
                      )%Segment
      operating income
                      
                      $
                      5,743
                      
                      
                      $
                      8,855
                      
                      
                      $
                      (3,112
                      )
                      
                      
                      (35.1
                      )%Segment
      operating income margin
                      
                      
                      10.9
                      %
                      
                      
                      15.4
                      %
                      
                      
                      (4.5
                      )%
                      
                      
                      (29.2
                      )%Corporate
      Finance ConsultingRevenues
      (excluding reimbursables)
                      
                      $
                      12,848
                      
                      
                      $
                      17,445
                      
                      
                      $
                      (4,597
                      )
                      
                      
                      (26.4
                      )%Segment
      operating income
                      
                      $
                      2,754
                      
                      
                      $
                      5,389
                      
                      
                      $
                      (2,635
                      )
                      
                      
                      (48.9
                      )%Segment
      operating income margin
                      
                      
                      21.4
                      %
                      
                      
                      30.9
                      %
                      
                      
                      (9.5
                      )%
                      
                      
                      (30.7
                      )%Investment
      BankingRevenues
      (excluding reimbursables)
                      
                      $
                      18,678
                      
                      
                      $
                      18,161
                      
                      
                      $
                      517
                      
                      
                      
                      2.8
                      %Segment
      operating income
                      
                      $
                      3,665
                      
                      
                      $
                      2,364
                      
                      
                      $
                      1,301
                      
                      
                      
                      55.0
                      %Segment
      operating income margin
                      
                      
                      19.6
                      %
                      
                      
                      13.0
                      %
                      
                      
                      6.6
                      %
                      
                      
                      50.8
                      %TotalRevenues
      (excluding reimbursables)
                      
                      $
                      84,427
                      
                      
                      $
                      93,240Segment
      operating income
                      
                      $
                      12,162
                      
                      
                      $
                      16,608Net
      client reimbursable expenses
                      
                      
                      73
                      
                      
                      
                      (74
                      )Equity-based
      compensation from Legacy Units and IPO Options
                      
                      
                      (391
                      )
                      
                      
                      (3,229
                      )Depreciation
      and amortization
                      
                      
                      (2,567
                      )
                      
                      
                      (2,594
                      )Merger
      and acquisition costs
                      
                      
                      (76
                      )
                      
                      
                      -Operating
      income
                      
                      $
                      9,201
                      
                      
                      $
                      10,711









Average
      Client Service ProfessionalsFinancial
      Advisory
                      
                      
                      546
                      
                      
                      
                      642
                      
                      
                      
                      (96
                      )
                      
                      
                      (15.0
                      )%Corporate
      Finance Consulting
                      
                      
                      107
                      
                      
                      
                      133
                      
                      
                      
                      (26
                      )
                      
                      
                      (19.5
                      )%Investment
      Banking
                      
                      
                      124
                      
                      
                      
                      130
                      
                      
                      
                      (6
                      )
                      
                      
                      (4.6
                      )%Total
                      
                      
                      777
                      
                      
                      
                      905
                      
                      
                      
                      (128
                      )
                      
                      
                      (14.1
                      )%End
      of Period Client Service ProfessionalsFinancial
      Advisory
                      
                      
                      555
                      
                      
                      
                      641
                      
                      
                      
                      (86
                      )
                      
                      
                      (13.4
                      )%Corporate
      Finance Consulting
                      
                      
                      106
                      
                      
                      
                      131
                      
                      
                      
                      (25
                      )
                      
                      
                      (19.1
                      )%Investment
      Banking
                      
                      
                      128
                      
                      
                      
                      130
                      
                      
                      
                      (2
                      )
                      
                      
                      (1.5
                      )%Total
                      
                      
                      789
                      
                      
                      
                      902
                      
                      
                      
                      (113
                      )
                      
                      
                      (12.5
                      )%Revenue
      per Client Service ProfessionalFinancial
      Advisory
                      
                      $
                      97
                      
                      
                      $
                      90
                      
                      
                      $
                      7
                      
                      
                      
                      7.8
                      %Corporate
      Finance Consulting
                      
                      $
                      120
                      
                      
                      $
                      131
                      
                      
                      $
                      (11
                      )
                      
                      
                      (8.4
                      )%Investment
      Banking
                      
                      $
                      151
                      
                      
                      $
                      140
                      
                      
                      $
                      11
                      
                      
                      
                      7.9
                      %Total
                      
                      $
                      109
                      
                      
                      $
                      103
                      
                      
                      $
                      6
                      
                      
                      
                      5.8
                      %




32





Results
of Operations by Segment – Continued





Three Months EndedSeptember 30,
                  
                  
                  September 30,
                  
                  
                  Unit
                  
                  
                  Percent2010
                  
                  
                  2009
                  
                  
                  Change
                  
                  
                  ChangeUtilization(1)Financial
      Advisory
                  
                  
                  66.3
                  %
                  
                  
                  62.4
                  %
                  
                  
                  3.9
                  %
                  
                  
                  6.3
                  %Corporate
      Finance Consulting
                  
                  
                  62.0
                  %
                  
                  
                  70.0
                  %
                  
                  
                  (8.0
                  )%
                  
                  
                  (11.4
                  )%Rate-Per-Hour(2)Financial
      Advisory
                  
                  $
                  346
                  
                  
                  $
                  336
                  
                  
                  $
                  10
                  
                  
                  
                  3.0
                  %Corporate
      Finance Consulting
                  
                  $
                  428
                  
                  
                  $
                  402
                  
                  
                  $
                  26
                  
                  
                  
                  6.5
                  %









Revenues
      (excluding reimbursables)Financial
      Advisory
                        
                        $
                        52,901
                        
                        
                        $
                        57,634
                        
                        
                        $
                        (4,733
                        )
                        
                        
                        (8.2
                        )%Corporate
      Finance Consulting
                        
                        
                        12,848
                        
                        
                        
                        17,445
                        
                        
                        
                        (4,597
                        )
                        
                        
                        (26.4
                        )%Investment
      Banking
                        
                        
                        18,678
                        
                        
                        
                        18,161
                        
                        
                        
                        517
                        
                        
                        
                        2.8
                        %Total
                        
                        $
                        84,427
                        
                        
                        $
                        93,240
                        
                        
                        $
                        (8,813
                        )
                        
                        
                        (9.5
                        )%Average
      Number of Managing DirectorsFinancial
      Advisory
                        
                        
                        92
                        
                        
                        
                        95
                        
                        
                        
                        (3
                        )
                        
                        
                        (3.2
                        )%Corporate
      Finance Consulting
                        
                        
                        29
                        
                        
                        
                        31
                        
                        
                        
                        (2
                        )
                        
                        
                        (6.5
                        )%Investment
      Banking
                        
                        
                        40
                        
                        
                        
                        40
                        
                        
                        
                        -
                        
                        
                        
                        0.0
                        %Total
                        
                        
                        161
                        
                        
                        
                        166
                        
                        
                        
                        (5
                        )
                        
                        
                        (3.0
                        )%End
      of Period Managing DirectorsFinancial
      Advisory
                        
                        
                        90
                        
                        
                        
                        93
                        
                        
                        
                        (3
                        )
                        
                        
                        (3.2
                        )%Corporate
      Finance Consulting
                        
                        
                        28
                        
                        
                        
                        29
                        
                        
                        
                        (1
                        )
                        
                        
                        (3.4
                        )%Investment
      Banking
                        
                        
                        40
                        
                        
                        
                        40
                        
                        
                        
                        -
                        
                        
                        
                        0.0
                        %Total
                        
                        
                        158
                        
                        
                        
                        162
                        
                        
                        
                        (4
                        )
                        
                        
                        (2.5
                        )%Revenue
      per Managing DirectorFinancial
      Advisory
                        
                        $
                        575
                        
                        
                        $
                        607
                        
                        
                        $
                        (32
                        )
                        
                        
                        (5.3
                        )%Corporate
      Finance Consulting
                        
                        $
                        443
                        
                        
                        $
                        563
                        
                        
                        $
                        (120
                        )
                        
                        
                        (21.3
                        )%Investment
      Banking
                        
                        $
                        467
                        
                        
                        $
                        454
                        
                        
                        $
                        13
                        
                        
                        
                        2.9
                        %Total
                        
                        $
                        524
                        
                        
                        $
                        562
                        
                        
                        $
                        (38
                        )
                        
                        
                        (6.8
                        )%








(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
      client service professionals associated with Rash & Associates, L.P.
      (“Rash”), a wholly-owned subsidiary, due to the nature of the work
      performed, and client service professionals from our acquisition of Cole
      Valuation Partners Limited prior to their transition to the Company’s
      financial system.


(2)
              Average
      billing rate-per-hour is calculated by dividing revenues (excluding
      revenues associated with Rash) for the period by the number of hours
      worked on client assignments (including internal projects for the Company)
      during the same period. The average billing rate excludes certain hours
      from our acquisition of Cole Valuation Partners Limited prior to their
      transition to the Company’s financial
system.





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 $2,950 and $2,972 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 September 30, 2010 and 2009, respectively.





33




Financial
Advisory





Revenues




Revenues
from the Financial Advisory segment decreased $4,733 or 8.2% to $52,901 for the
three months ended September 30, 2010, compared to $57,634 for the three months
ended September 30, 2009. The overall decline resulted from a decrease in
revenues from our Tax Services and Dispute & Legal Management Consulting
business units, partially offset by an increase in revenues from our Valuation
Advisory business unit, as summarized in the following table:





Three Months EndedSeptember 30,
                          
                          
                          September 30,
                          
                          
                          Dollar
                          
                          
                          Percent2010
                          
                          
                          2009
                          
                          
                          Change
                          
                          
                          ChangeFinancial
      AdvisoryValuation
      Advisory
                          
                          $
                          31,173
                          
                          
                          $
                          29,692
                          
                          
                          $
                          1,481
                          
                          
                          
                          5.0
                          %Tax
      Services
                          
                          
                          11,157
                          
                          
                          
                          15,045
                          
                          
                          
                          (3,888
                          )
                          
                          
                          (25.8
                          )%Dispute
      & Legal Management Consulting(1)
                          
                          
                          10,571
                          
                          
                          
                          12,897
                          
                          
                          
                          (2,326
                          )
                          
                          
                          (18.0
                          )%$
                          52,901
                          
                          
                          $
                          57,634
                          
                          
                          $
                          (4,733
                          )
                          
                          
                          (8.2
                          )%










(1)Includes $2,907 of revenue from our acquisition of Cole Valuation
      Partners Limited effective June 15,
2010.





Our
Financial Advisory segment was impacted by lower revenues from Tax Services and
Dispute & Legal Management Consulting, partially offset by an increase in
revenues from Valuation Advisory. The decrease in revenues from Tax Services
primarily resulted from the departure of staff during the first half of 2010
associated with World Tax Service US, LLC (which we acquired in July 2008) and
lower revenues from property tax contingent fees.




Dispute
& Legal Management Consulting (and to a lesser extent certain business units
in our Corporate Finance Consulting segment) was impacted by lower revenues from
an engagement to serve as a financial advisor to the court appointed examiner of
a large financial services company under bankruptcy protection. This engagement
wound down during the first half of 2010. Revenues from this engagement were
primarily recognized in our Dispute & Legal Management Consulting business
unit as well as our Corporate Finance Consulting segment. Results for the three
months ended September 30, 2010 did not include any revenue from this
engagement, compared to approximately $10,200 of revenue recognized in the
corresponding prior year quarter (of which approximately 70% was recognized in
Dispute & Legal and approximately 30% in Corporate Finance Consulting). The
decrease from this engagement was partially offset by (i) $2,907 of revenue from
our acquisition of Cole Valuation Partners Limited and (ii) additional growth
from increased demand for these services.





Valuation
Advisory benefited from an improvement in revenues from purchase price
allocations and a higher volume of real estate valuation work, partially offset
by a reduction in revenues related to goodwill impairment testing.





Segment
Operating Income




Financial
Advisory segment operating income decreased $3,112 or 35.1% to $5,743 for the
three months ended September 30, 2010, compared to $8,855 for the three months
ended September 30, 2009. Segment operating income margin, defined as segment
operating income expressed as a percentage of segment revenues, was 10.9% for
the three months ended September 30, 2010, compared to 15.4% for the three
months ended September 30, 2009. Segment operating income decreased primarily as
a result of lower revenues, partially offset by a reduction in allocated
overhead expenses.




34





Corporate
Finance Consulting





Revenues




Revenues
from the Corporate Finance Consulting segment decreased $4,597 or 26.4% to
$12,848 for the three months ended September 30, 2010, compared to $17,445 for
the three months ended September 30, 2009. Lower revenues from Portfolio
Valuation, Financial Engineering and Strategic Value Advisory were partially
offset by higher revenues from Due Diligence, as summarized in the following
table:





Three
      Months EndedSeptember
      30,
                          
                          
                          September
      30,
                          
                          
                          Dollar
                          
                          
                          Percent2010
                          
                          
                          2009
                          
                          
                          Change
                          
                          
                          ChangeCorporate
      Finance ConsultingPortfolio
      Valuation
                          
                          $
                          4,455
                          
                          
                          $
                          5,858
                          
                          
                          $
                          (1,403
                          )
                          
                          
                          (24.0
                          )%Financial
      Engineering
                          
                          
                          2,481
                          
                          
                          
                          5,201
                          
                          
                          
                          (2,720
                          )
                          
                          
                          (52.3
                          )%Strategic
      Value Advisory
                          
                          
                          2,840
                          
                          
                          
                          4,034
                          
                          
                          
                          (1,194
                          )
                          
                          
                          (29.6
                          )%Due
      Diligence
                          
                          
                          3,072
                          
                          
                          
                          2,352
                          
                          
                          
                          720
                          
                          
                          
                          30.6
                          %$
                          12,848
                          
                          
                          $
                          17,445
                          
                          
                          $
                          (4,597
                          )
                          
                          
                          (26.4
                          )%





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





Segment
Operating Income




Operating
income from the Corporate Finance Consulting segment decreased $2,635 or 48.9%
to $2,754 for the three months ended September 30, 2010, compared to $5,389 for
the three months ended September 30, 2009. Segment operating income margin was
21.4% for the three months ended September 30, 2010, compared to 30.9% for the
three months ended September 30, 2009. Segment operating income decreased
primarily as a result of lower revenues, partially offset by a reduction in
direct costs and allocated overhead expenses.




Investment
Banking





Revenues




Revenues
from the Investment Banking segment increased $517 or 2.8% to $18,678 for the
three months ended September 30, 2010, compared to $18,161 for the three months
ended September 30, 2009, as summarized in the following table:





Three Months EndedSeptember
      30,
                  
                  
                  September
      30,
                  
                  
                  Dollar
                  
                  
                  Percent2010
                  
                  
                  2009
                  
                  
                  Change
                  
                  
                  ChangeInvestment
      BankingGlobal
      Restructuring Advisory
                  
                  $
                  7,363
                  
                  
                  $
                  11,038
                  
                  
                  $
                  (3,675
                  )
                  
                  
                  (33.3
                  )%Transaction
      Opinions
                  
                  
                  6,711
                  
                  
                  
                  2,714
                  
                  
                  
                  3,997
                  
                  
                  
                  147.3
                  %M&A
      Advisory
                  
                  
                  4,604
                  
                  
                  
                  4,409
                  
                  
                  
                  195
                  
                  
                  
                  4.4
                  %$
                  18,678
                  
                  
                  $
                  18,161
                  
                  
                  $
                  517
                  
                  
                  
                  2.8
                  %





Our
Investment Banking segment benefited from an increase in revenues from
Transaction Opinions and to a lesser extent M&A Advisory versus the
corresponding prior year quarter. Transaction Opinions and M&A Advisory
benefited from a higher volume of M&A transactions in the current year.
Revenues from Global Restructuring Advisory decreased as a result of the
slowdown in global restructuring markets.





Segment
Operating Income




Operating income from the Investment
Banking segment increased $1,301 or 55.0% to $3,665 for the three months ended
September 30, 2010, compared to $2,364 for the three months ended September 30,
2009. Operating income margin was 19.6% for the three months ended September 30,
2010, compared to 13.0% for the three months ended September 30, 2009. The
increase in segment operating income primarily resulted from a decrease
in direct costs and an increase in revenue.





35





Nine
months ended September 30, 2010 versus nine months ended September 30,
2009





The
results of operations are summarized as follows:





Nine Months EndedSeptember 30,
                          
                          
                          September 30,
                          
                          
                          Unit
                          
                          
                          Percent2010
                          
                          
                          2009
                          
                          
                          Change
                          
                          
                          ChangeRevenues
                          
                          $
                          262,333
                          
                          
                          $
                          272,558
                          
                          
                          $
                          (10,225
                          )
                          
                          
                          (3.8
                          )%Reimbursable
      expenses
                          
                          
                          7,163
                          
                          
                          
                          8,057
                          
                          
                          
                          (894
                          )
                          
                          
                          (11.1
                          )%Total
      revenues
                          
                          
                          269,496
                          
                          
                          
                          280,615
                          
                          
                          
                          (11,119
                          )
                          
                          
                          (4.0
                          )%Direct
      client service costsCompensation
      and benefits(1)
                          
                          
                          146,842
                          
                          
                          
                          155,115
                          
                          
                          
                          (8,273
                          )
                          
                          
                          (5.3
                          )%Other
      direct client service costs
                          
                          
                          5,211
                          
                          
                          
                          5,801
                          
                          
                          
                          (590
                          )
                          
                          
                          (10.2
                          )%Reimbursable
      expenses
                          
                          
                          7,223
                          
                          
                          
                          8,120
                          
                          
                          
                          (897
                          )
                          
                          
                          (11.0
                          )%159,276
                          
                          
                          
                          169,036
                          
                          
                          
                          (9,760
                          )
                          
                          
                          (5.8
                          )%Operating
      expensesSelling,
      general and administrative(2)
                          
                          
                          73,873
                          
                          
                          
                          74,048
                          
                          
                          
                          (175
                          )
                          
                          
                          (0.2
                          )%Depreciation
      and amortization
                          
                          
                          7,410
                          
                          
                          
                          7,712
                          
                          
                          
                          (302
                          )
                          
                          
                          (3.9
                          )%Charge
      from impairment of certain intangible assets
                          
                          
                          674
                          
                          
                          
                          -
                          
                          
                          
                          674
                          
                          
                          
                          -Merger
      and acquisition costs
                          
                          
                          397
                          
                          
                          
                          -
                          
                          
                          
                          397
                          
                          
                          
                          -82,354
                          
                          
                          
                          81,760
                          
                          
                          
                          594
                          
                          
                          
                          0.7
                          %Operating
      income
                          
                          
                          27,866
                          
                          
                          
                          29,819
                          
                          
                          
                          (1,953
                          )
                          
                          
                          (6.5
                          )%Other
      expense/(income), netInterest
      income
                          
                          
                          (106
                          )
                          
                          
                          (34
                          )
                          
                          
                          (72
                          )
                          
                          
                          211.8
                          %Interest
      expense
                          
                          
                          234
                          
                          
                          
                          1,079
                          
                          
                          
                          (845
                          )
                          
                          
                          (78.3
                          )%Loss
      on early extinguishment of debt
                          
                          
                          -
                          
                          
                          
                          1,737
                          
                          
                          
                          (1,737
                          )
                          
                          
                          (100.0
                          )%Other
      expense
                          
                          
                          189
                          
                          
                          
                          137
                          
                          
                          
                          52
                          
                          
                          
                          38.0
                          %317
                          
                          
                          
                          2,919
                          
                          
                          
                          (2,602
                          )
                          
                          
                          (89.1
                          )%Income
      before income taxes
                          
                          
                          27,549
                          
                          
                          
                          26,900
                          
                          
                          
                          649
                          
                          
                          
                          2.4
                          %Provision
      for income taxes
                          
                          
                          8,166
                          
                          
                          
                          7,532
                          
                          
                          
                          634
                          
                          
                          
                          8.4
                          %Net
      income
                          
                          
                          19,383
                          
                          
                          
                          19,368
                          
                          
                          
                          15
                          
                          
                          
                          0.1
                          %Less:
      Net income attributable to noncontrolling interest
                          
                          
                          8,494
                          
                          
                          
                          12,417
                          
                          
                          
                          (3,923
                          )
                          
                          
                          (31.6
                          )%Net
      income attributable to Duff & Phelps Corporation
                          
                          $
                          10,889
                          
                          
                          $
                          6,951
                          
                          
                          $
                          3,938
                          
                          
                          
                          56.7
                          %Other
      financial and operating dataAdjusted
      EBITDA(3)(4)
                          
                          $
                          42,355
                          
                          
                          $
                          48,494
                          
                          
                          $
                          (6,139
                          )
                          
                          
                          (12.7
                          )%Adjusted
      EBITDA(3)(4)
      as a percentage of revenues
                          
                          
                          16.1
                          %
                          
                          
                          17.8
                          %
                          
                          
                          (1.7
                          )%
                          
                          
                          (9.3
                          )%Adusted
      Pro Forma Net Income(3)(4)
                          
                          $
                          20,182
                          
                          
                          $
                          23,443
                          
                          
                          $
                          (3,261
                          )
                          
                          
                          (13.9
                          )%Adusted
      Pro Forma Net Income per fully exchanged, fully diluted share
      outstanding(3)(4)
                          
                          $
                          0.52
                          
                          
                          $
                          0.64
                          
                          
                          $
                          (0.12
                          )
                          
                          
                          (18.8
                          )%End
      of period managing directors
                          
                          
                          158
                          
                          
                          
                          162
                          
                          
                          
                          (4
                          )
                          
                          
                          (2.5
                          )%End
      of period client service professionals
                          
                          
                          789
                          
                          
                          
                          902
                          
                          
                          
                          (113
                          )
                          
                          
                          (12.5
                          )%










(1)
            Compensation
      and benefits include $11,362 and $13,631 of equity-based compensation
      expense for the nine months ended September 30, 2010 and 2009,
      respectively.




(2)
            Selling,
      general and administrative expenses include $4,462 and $5,574 of
      equity-based compensation expense for the nine months ended September 30,
      2010 and 2009, respectively.




36




(3)
            Adjusted
      EBITDA, Adjusted Pro Forma Net Income, and Adjusted Pro Forma Net Income
      per share are non-GAAP financial measures. We believe that Adjusted EBITDA
      provides a relevant and useful alternative measure of our ongoing
      profitability and performance, when viewed in conjunction with GAAP
      measures, as it adjusts net income or loss attributable to Duff &
      Phelps Corporation for (a) net income or loss attributable to
      noncontrolling interest, (b) provision for income taxes, (c) interest
      expense and depreciation and amortization (a significant portion of which
      relates to debt and capital investments that have been incurred as the
      result of acquisitions and investments in stand-alone infrastructure which
      we do not expect to incur at the same levels in the future), (d)
      equity-based compensation associated with the Legacy Units of D&P
      Acquisitions, a significant portion of which is due to certain onetime
      grants associated with acquisitions prior to our IPO, and options to
      purchase shares of the Company’s Class A common stock granted in
      connection with the IPO, (e) impairment charges, acquisition retention
      expenses and other merger and acquisition costs, which are generally
      non-recurring in nature or are related to deferred payments associated
      with prior acquisitions, and (f) costs incurred from the realignment of
      our senior management which are generally non-recurring in nature and
      primarily include cash severance and charges from the accounting impact of
      the acceleration of vesting of restricted stock
  awards.





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





Adjusted
EBITDA, as defined by the Company and reconciled below, consists of net income
or loss attributable to Duff & Phelps Corporation before (a) net income or
loss attributable to the noncontrolling interest, (b) provision for income
taxes, (c) other expense/(income), net, (d) depreciation and amortization, (e)
charges from impairment of intangible assets, (f) equity-based compensation
associated with Legacy Units and IPO Options included in both compensation and
benefits and in selling, general and administrative expenses, (g) acquisition
retention expenses, (h) cash severance and equity-compensation expense from the
acceleration of vesting of restricted stock awards due to the realignment of our
senior management, and (i) merger and acquisition costs:





Reconciliation
of Adjusted EBITDA





Nine Months EndedSeptember 30,
                            
                            
                            September 30,2010
                            
                            
                            2009Revenues
      (excluding client reimbursables)
                            
                            $
                            262,333
                            
                            
                            $
                            272,558Net
      income attributable to Duff & Phelps Corporation
                            
                            $
                            10,889
                            
                            
                            $
                            6,951Net
      income attributable to noncontrolling interest
                            
                            
                            8,494
                            
                            
                            
                            12,417Provision
      for income taxes
                            
                            
                            8,166
                            
                            
                            
                            7,532Other
      expense/(income), net
                            
                            
                            317
                            
                            
                            
                            2,919Depreciation
      and amortization
                            
                            
                            7,410
                            
                            
                            
                            7,712Charge
      from impairment of certain intangible assets
                            
                            
                            674
                            
                            
                            
                            -Equity-based
      compensation associated with Legacy Units and IPO Options
                            
                            
                            2,968
                            
                            
                            
                            10,963Charge
      from realignment of senior management (not included in equity-based
      compensation from Legacy Units and IPO Options above)(4)
                            
                            
                            3,040
                            
                            
                            
                            -Merger
      and acquisition costs
                            
                            
                            397
                            
                            
                            
                            -Adjusted
      EBITDA
                            
                            $
                            42,355
                            
                            
                            $
                            48,494Adjusted
      EBITDA as a percentage of revenues
                            
                            
                            16.1
                            %
                            
                            
                            17.8
                            %




37


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





Reconciliation
of Adjusted Pro Forma Net Income





Nine Months EndedSeptember 30,
                      
                      
                      September 30,2010
                      
                      
                      2009Net
      income attributable to Duff & Phelps Corporation
                      
                      $
                      10,889
                      
                      
                      $
                      6,951Net
      income attributable to noncontrolling interest(a)
                      
                      
                      8,494
                      
                      
                      
                      12,417Loss
      on early extinguishment of debt(b)
                      
                      
                      -
                      
                      
                      
                      1,737Equity-based
      compensation associated with Legacy Units and IPO Options(c)
                      
                      
                      2,968
                      
                      
                      
                      10,963Charge
      from realignment of senior management (not included in equity-based
      compensation from Legacy Units and IPO Options above)(4)
                      
                      
                      3,040
                      
                      
                      
                      -Merger
      and acquisition costs
                      
                      
                      397
                      
                      
                      
                      -Adjustment
      to provision for income taxes(d)
                      
                      
                      (5,606
                      )
                      
                      
                      (8,625
                      )Adjusted
      Pro Forma Net Income, as defined
                      
                      $
                      20,182
                      
                      
                      $
                      23,443Pro
      forma fully exchanged, fully diluted shares outstanding(e)
                      
                      
                      38,673
                      
                      
                      
                      36,781Adjusted
      Pro Forma Net Income per fully exchanged, fully diluted share
      outstanding
                      
                      $
                      0.52
                      
                      
                      $
                      0.64










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


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


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


(d)
            Represents
      an adjustment to reflect an assumed effective corporate tax rate of
      approximately 40.6% and 40.8% for the full year, as applied to the nine
      months ended September 30, 2010 and 2009, respectively, which includes a
      provision for U.S. federal income taxes and assumes the highest statutory
      rates apportioned to each state, local and/or foreign jurisdiction.
      Assumes full exchange of existing unitholders' partnership units and Class
      B common stock of the Company into Class A common stock of the
      Company.


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





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




38


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




Revenues





Revenues
excluding reimbursable expenses decreased $10,225 or 3.8% to $262,333 for the
nine months ended September 30, 2010, compared to $272,558 for the nine months
ended September 30, 2009. The decrease in revenues primarily resulted from a
decrease in revenues from our Financial Advisory and Corporate Finance
Consulting segments, partially offset by an increase in revenues from our
Investment Banking segment, as summarized in the following table:




Nine Months EndedSeptember
      30,
                      
                      
                      September
      30,
                      
                      
                      Dollar
                      
                      
                      Percent2010
                      
                      
                      2009
                      
                      
                      Change
                      
                      
                      ChangeFinancial
      AdvisoryValuation
      Advisory
                      
                      $
                      99,022
                      
                      
                      $
                      103,834
                      
                      
                      $
                      (4,812
                      )
                      
                      
                      (4.6
                      )%Tax
      Services
                      
                      
                      32,693
                      
                      
                      
                      37,895
                      
                      
                      
                      (5,202
                      )
                      
                      
                      (13.7
                      )%Dispute
      & Legal Management Consulting(1)
                      
                      
                      29,302
                      
                      
                      
                      34,702
                      
                      
                      
                      (5,400
                      )
                      
                      
                      (15.6
                      )%161,017
                      
                      
                      
                      176,431
                      
                      
                      
                      (15,414
                      )
                      
                      
                      (8.7
                      )%Corporate
      Finance ConsultingPortfolio
      Valuation
                      
                      
                      14,579
                      
                      
                      
                      16,491
                      
                      
                      
                      (1,912
                      )
                      
                      
                      (11.6
                      )%Financial
      Engineering
                      
                      
                      9,962
                      
                      
                      
                      14,508
                      
                      
                      
                      (4,546
                      )
                      
                      
                      (31.3
                      )%Strategic
      Value Advisory
                      
                      
                      8,881
                      
                      
                      
                      10,242
                      
                      
                      
                      (1,361
                      )
                      
                      
                      (13.3
                      )%Due
      Diligence
                      
                      
                      7,681
                      
                      
                      
                      5,798
                      
                      
                      
                      1,883
                      
                      
                      
                      32.5
                      %41,103
                      
                      
                      
                      47,039
                      
                      
                      
                      (5,936
                      )
                      
                      
                      (12.6
                      )%Investment
      BankingGlobal
      Restructuring Advisory
                      
                      
                      29,208
                      
                      
                      
                      25,230
                      
                      
                      
                      3,978
                      
                      
                      
                      15.8
                      %Transaction
      Opinions
                      
                      
                      19,575
                      
                      
                      
                      14,995
                      
                      
                      
                      4,580
                      
                      
                      
                      30.5
                      %M&A
      Advisory
                      
                      
                      11,430
                      
                      
                      
                      8,863
                      
                      
                      
                      2,567
                      
                      
                      
                      29.0
                      %60,213
                      
                      
                      
                      49,088
                      
                      
                      
                      11,125
                      
                      
                      
                      22.7
                      %Total
      Revenues (excluding reimbursables)
                      
                      $
                      262,333
                      
                      
                      $
                      272,558
                      
                      
                      $
                      (10,225
                      )
                      
                      
                      (3.8
                      )%








(1)
              Includes
      $3,454 of revenue from our acquisition of Cole Valuation Partners Limited
      effective June 15, 2010.





Our
Financial Advisory segment was impacted by lower revenues from each business
unit. Valuation Advisory was impacted by a reduction of goodwill impairment
testing due to the improvement in the overall economic environment, as the
corresponding prior year period benefited from a significant volume of goodwill
impairment testing as a result of the fallout from the financial crisis. This
decrease was partially offset by an increase in revenues from purchase price
allocations and a higher volume of real estate valuation work. The decrease in
revenues from Tax Services primarily resulted from the departure of staff during
the first half of 2010 associated with World Tax Service US, LLC (which we
acquired in July 2008) and lower revenues from property tax contingent
fees.




Dispute
& Legal Management Consulting (and to a lesser extent certain business units
in our Corporate Finance Consulting segment) was impacted by lower revenues from
an engagement to serve as a financial advisor to the court appointed examiner of
a large financial services company under bankruptcy protection. This engagement
wound down during the first half of 2010. Revenues from this engagement were
primarily recognized in our Dispute & Legal Management Consulting business
unit as well as our Corporate Finance Consulting segment. Our year-to-date
results include approximately $8,200 of revenue from this engagement, compared
to approximately $20,500 of revenue recognized in the corresponding prior year
period (of which approximately 70% was recognized in Dispute & Legal and
approximately 30% in Corporate Finance Consulting). The decrease from this
engagement was partially offset by $3,454 of revenue from our acquisition of
Cole Valuation Partners Limited.




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


39





Each of
our business units in the Investment Banking segment demonstrated continued
strength from recent economic volatility and improvement in overall M&A
transaction volume versus the corresponding prior year period.




Our
client service headcount decreased to 789 client service professionals at
September 30, 2010, compared to 878 client service professionals at December 31,
2009. This decrease resulted from targeted reductions and attrition, partially
offset by the addition of 20 client service professionals from our acquisition
of Cole Valuation Partners Limited (“Cole”) and targeted hiring of professionals
with specific expertise.




We had
158 client service managing directors at September 30, 2010, compared to 163 at
December 31, 2009. We added 18 managing directors from our acquisition of Cole,
internal promotions and limited hiring. These additions were principally offset
by targeted reductions.





Direct
Client Service Costs





Direct
client service costs decreased $9,760 or 5.8% to $159,276 for the nine months
ended September 30, 2010, compared to $169,036 for the nine months ended
September 30, 2009. Direct client service costs include compensation and
benefits for client service employees, fees payable to contractors and other
expenses related to the execution of engagements.




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




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





Direct
Client Service Costs





Nine Months EndedSeptember 30,
                      
                      
                      September 30,2010
                      
                      
                      2009Revenues
      (excluding reimbursables)
                      
                      $
                      262,333
                      
                      
                      $
                      272,558Total
      direct client service costs
                      
                      $
                      159,276
                      
                      
                      $
                      169,036Less:
      equity-based compensation associated with Legacy Units and IPO
      Options
                      
                      
                      (1,150
                      )
                      
                      
                      (8,004
                      )Less:
      reimbursable expenses
                      
                      
                      (7,223
                      )
                      
                      
                      (8,120
                      )Less:
      charge from realignment of senior management
                      
                      
                      (540
                      )
                      
                      
                      -Direct
      client service costs, as adjusted
                      
                      $
                      150,363
                      
                      
                      $
                      152,912Direct
      client service costs, as adjusted, as a percentage of
    revenues
                      
                      
                      57.3
                      %
                      
                      
                      56.1
                      %





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




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





40




Operating
Expenses





Operating
expenses increased $594 or 0.7% to $82,354 for the nine months ended September
30, 2010, compared to $81,760 for the nine months ended September 30,
2009.




Selling,
general and administrative expenses include a charge of approximately $3,010
from the departure of our former president, including approximately $510 related
to Legacy Units and IPO Options. In addition, operating expenses include a $674
onetime charge from the impairment of certain intangible assets that originated
from our acquisition of WTS in July 2008. The impairment resulted from the
departure of the two managing directors who ran this group and associated staff
in March 2010. WTS operated as part of our Financial Advisory segment. Also,
merger and acquisition costs resulted from our acquisition of Cole and include
professional fees, incremental marketing expenses and incremental travel and
entertainment.





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




Operating
Expenses





Nine Months EndedSeptember 30,
                    
                    
                    September 30,2010
                    
                    
                    2009Revenues
      (excluding reimbursables)
                    
                    $
                    262,333
                    
                    
                    $
                    272,558Total
      operating expenses
                    
                    $
                    82,354
                    
                    
                    $
                    81,760Less:
      equity-based compensation associated with Legacy Units and IPO
      Options
                    
                    
                    (1,818
                    )
                    
                    
                    (2,959
                    )Less:
      depreciation and amortization
                    
                    
                    (7,410
                    )
                    
                    
                    (7,712
                    )Less:
      charge to impair certain intangible assets
                    
                    
                    (674
                    )
                    
                    
                    -Less:
      charge from realignment of senior management (not included in equity-based
      compensation from Legacy Units and IPO Options above)
                    
                    
                    (2,500
                    )
                    
                    
                    -Less:
      merger and acquisition costs
                    
                    
                    (397
                    )
                    
                    
                    -Operating
      expenses, as adjusted
                    
                    $
                    69,555
                    
                    
                    $
                    71,089Operating
      expenses, as adjusted, as a percentage of revenues
                    
                    
                    26.5
                    %
                    
                    
                    26.1
                    %





Operating
expenses, as adjusted, decreased between periods primarily from lower accrued
compensation, professional fees, and bad debts, partially offset by higher
marketing costs.





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




Other
Income and Expenses





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




Provision
for Income Taxes





The
provision for income taxes was $8,166 or 29.6% of income before income taxes for
the nine months ended September 30, 2010, compared to $7,532 or 28.0% of income
before income taxes for the nine months ended September 30, 2009. The U.S.
statutory income tax rate of 35% plus state and local statutory rates were
decreased to the effective tax rate due to the fact that D&P Acquisitions,
LLC and many of its subsidiaries operate as limited liability companies or other
flow-through entities which are not subject to federal income tax.  This
operating structure results in a rate benefit because a portion of the Company’s
earnings are not subject to corporate level taxes.  This favorable impact
is partially offset by an increase due to state and local taxes, the effect of
permanent differences and foreign taxes. The increase in the provision for
income taxes as a percentage of income before income taxes resulted primarily
from a decrease in the rate benefit from operating as an LLC, due to an increase
in Duff & Phelps Corporation’s ownership of D&P Acquisitions, LLC.
During the quarter ended September 30, 2010, the Company recorded discrete items
that resulted in a benefit to income tax expense, including (i) an immaterial
adjustment to correct the purchase accounting of a prior acquisition and (ii)
provision to actual adjustments.


41





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 31.7% and 47.9% for the nine months ended September 30, 2010
and 2009, respectively.





42




Segment
Results – Nine months ended September 30, 2010 versus nine months ended
September 30, 2009





The
following table sets forth selected segment operating results:


43





Results
of Operations by Segment





NineMonthsEndedSeptember 30,
                  
                  
                  September 30,
                  
                  
                  Unit
                  
                  
                  Percent2010
                  
                  
                  2009
                  
                  
                  Change
                  
                  
                  ChangeFinancial
      AdvisoryRevenues
      (excluding reimbursables)
                  
                  $
                  161,017
                  
                  
                  $
                  176,431
                  
                  
                  $
                  (15,414
                  )
                  
                  
                  (8.7
                  )%Segment
      operating income
                  
                  $
                  21,730
                  
                  
                  $
                  29,543
                  
                  
                  $
                  (7,813
                  )
                  
                  
                  (26.4
                  )%Segment
      operating income margin
                  
                  
                  13.5
                  %
                  
                  
                  16.7
                  %
                  
                  
                  (3.2
                  )%
                  
                  
                  (19.2
                  )%Corporate
      Finance ConsultingRevenues
      (excluding reimbursables)
                  
                  $
                  41,103
                  
                  
                  $
                  47,039
                  
                  
                  $
                  (5,936
                  )
                  
                  
                  (12.6
                  )%Segment
      operating income
                  
                  $
                  6,913
                  
                  
                  $
                  11,819
                  
                  
                  $
                  (4,906
                  )
                  
                  
                  (41.5
                  )%Segment
      operating income margin
                  
                  
                  16.8
                  %
                  
                  
                  25.1
                  %
                  
                  
                  (8.3
                  )%
                  
                  
                  (33.1
                  )%Investment
      BankingRevenues
      (excluding reimbursables)
                  
                  $
                  60,213
                  
                  
                  $
                  49,088
                  
                  
                  $
                  11,125
                  
                  
                  
                  22.7
                  %Segment
      operating income
                  
                  $
                  13,772
                  
                  
                  $
                  7,195
                  
                  
                  $
                  6,577
                  
                  
                  
                  91.4
                  %Segment
      operating income margin
                  
                  
                  22.9
                  %
                  
                  
                  14.7
                  %
                  
                  
                  8.2
                  %
                  
                  
                  55.8
                  %TotalRevenues
      (excluding reimbursables)
                  
                  $
                  262,333
                  
                  
                  $
                  272,558Segment
      operating income
                  
                  $
                  42,415
                  
                  
                  $
                  48,557Net
      client reimbursable expenses
                  
                  
                  (60
                  )
                  
                  
                  (63
                  )Equity-based
      compensation from Legacy Units and IPO Options
                  
                  
                  (2,968
                  )
                  
                  
                  (10,963
                  )Depreciation
      and amortization
                  
                  
                  (7,410
                  )
                  
                  
                  (7,712
                  )Charge
      from impairment of certain intangible assets
                  
                  
                  (674
                  )Charge
      from realignment of senior management (not included in equity-based
      compensation from Legacy Units or IPO Options above)
                  
                  
                  (3,040
                  )
                  
                  
                  -Merger
      and acquisition costs
                  
                  
                  (397
                  )
                  
                  
                  -Operating
      income
                  
                  $
                  27,866
                  
                  
                  $
                  29,819







Average
      Client Service ProfessionalsFinancial
      Advisory
                      
                      
                      574
                      
                      
                      
                      668
                      
                      
                      
                      (94
                      )
                      
                      
                      (14.1
                      )%Corporate
      Finance Consulting
                      
                      
                      115
                      
                      
                      
                      133
                      
                      
                      
                      (18
                      )
                      
                      
                      (13.5
                      )%Investment
      Banking
                      
                      
                      128
                      
                      
                      
                      134
                      
                      
                      
                      (6
                      )
                      
                      
                      (4.5
                      )%Total
                      
                      
                      817
                      
                      
                      
                      935
                      
                      
                      
                      (118
                      )
                      
                      
                      (12.6
                      )%End
      of Period Client Service ProfessionalsFinancial
      Advisory
                      
                      
                      555
                      
                      
                      
                      641
                      
                      
                      
                      (86
                      )
                      
                      
                      (13.4
                      )%Corporate
      Finance Consulting
                      
                      
                      106
                      
                      
                      
                      131
                      
                      
                      
                      (25
                      )
                      
                      
                      (19.1
                      )%Investment
      Banking
                      
                      
                      128
                      
                      
                      
                      130
                      
                      
                      
                      (2
                      )
                      
                      
                      (1.5
                      )%Total
                      
                      
                      789
                      
                      
                      
                      902
                      
                      
                      
                      (113
                      )
                      
                      
                      (12.5
                      )%Revenue
      per Client Service ProfessionalFinancial
      Advisory
                      
                      $
                      281
                      
                      
                      $
                      264
                      
                      
                      $
                      17
                      
                      
                      
                      6.4
                      %Corporate
      Finance Consulting
                      
                      $
                      357
                      
                      
                      $
                      354
                      
                      
                      $
                      3
                      
                      
                      
                      0.8
                      %Investment
      Banking
                      
                      $
                      470
                      
                      
                      $
                      366
                      
                      
                      $
                      104
                      
                      
                      
                      28.4
                      %Total
                      
                      $
                      321
                      
                      
                      $
                      292
                      
                      
                      $
                      29
                      
                      
                      
                      9.9
                      %




44





Results
of Operations by Segment – Continued





Nine Months EndedSeptember 30,
                  
                  
                  September 30,
                  
                  
                  Unit
                  
                  
                  Percent2010
                  
                  
                  2009
                  
                  
                  Change
                  
                  
                  ChangeUtilization(1)Financial
      Advisory
                  
                  
                  65.1
                  %
                  
                  
                  64.0
                  %
                  
                  
                  1.1
                  %
                  
                  
                  1.7
                  %Corporate
      Finance Consulting
                  
                  
                  58.9
                  %
                  
                  
                  62.0
                  %
                  
                  
                  (3.1
                  )%
                  
                  
                  (5.0
                  )%Rate-Per-Hour(2)Financial
      Advisory
                  
                  $
                  343
                  
                  
                  $
                  322
                  
                  
                  $
                  21
                  
                  
                  
                  6.5
                  %Corporate
      Finance Consulting
                  
                  $
                  444
                  
                  
                  $
                  407
                  
                  
                  $
                  37
                  
                  
                  
                  9.1
                  %







Revenues
      (excluding reimbursables)Financial
      Advisory
                        
                        $
                        161,017
                        
                        
                        $
                        176,431
                        
                        
                        $
                        (15,414
                        )
                        
                        
                        (8.7
                        )%Corporate
      Finance Consulting
                        
                        
                        41,103
                        
                        
                        
                        47,039
                        
                        
                        
                        (5,936
                        )
                        
                        
                        (12.6
                        )%Investment
      Banking
                        
                        
                        60,213
                        
                        
                        
                        49,088
                        
                        
                        
                        11,125
                        
                        
                        
                        22.7
                        %Total
                        
                        $
                        262,333
                        
                        
                        $
                        272,558
                        
                        
                        $
                        (10,225
                        )
                        
                        
                        (3.8
                        )%Average
      Number of Managing DirectorsFinancial
      Advisory
                        
                        
                        92
                        
                        
                        
                        98
                        
                        
                        
                        (6
                        )
                        
                        
                        (6.1
                        )%Corporate
      Finance Consulting
                        
                        
                        30
                        
                        
                        
                        30
                        
                        
                        
                        -
                        
                        
                        
                        0.0
                        %Investment
      Banking
                        
                        
                        41
                        
                        
                        
                        38
                        
                        
                        
                        3
                        
                        
                        
                        7.9
                        %Total
                        
                        
                        163
                        
                        
                        
                        166
                        
                        
                        
                        (3
                        )
                        
                        
                        (1.8
                        )%End
      of Period Managing DirectorsFinancial
      Advisory
                        
                        
                        90
                        
                        
                        
                        93
                        
                        
                        
                        (3
                        )
                        
                        
                        (3.2
                        )%Corporate
      Finance Consulting
                        
                        
                        28
                        
                        
                        
                        29
                        
                        
                        
                        (1
                        )
                        
                        
                        (3.4
                        )%Investment
      Banking
                        
                        
                        40
                        
                        
                        
                        40
                        
                        
                        
                        -
                        
                        
                        
                        0.0
                        %Total
                        
                        
                        158
                        
                        
                        
                        162
                        
                        
                        
                        (4
                        )
                        
                        
                        (2.5
                        )%Revenue
      per Managing DirectorFinancial
      Advisory
                        
                        $
                        1,750
                        
                        
                        $
                        1,800
                        
                        
                        $
                        (50
                        )
                        
                        
                        (2.8
                        )%Corporate
      Finance Consulting
                        
                        $
                        1,370
                        
                        
                        $
                        1,568
                        
                        
                        $
                        (198
                        )
                        
                        
                        (12.6
                        )%Investment
      Banking
                        
                        $
                        1,469
                        
                        
                        $
                        1,292
                        
                        
                        $
                        177
                        
                        
                        
                        13.7
                        %Total
                        
                        $
                        1,609
                        
                        
                        $
                        1,642
                        
                        
                        $
                        (33
                        )
                        
                        
                        (2.0
                        )%










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


(2)
            Average
      billing rate-per-hour is calculated by dividing revenues (excluding
      revenues associated with Rash) for the period by the number of hours
      worked on client assignments (including internal projects for the Company)
      during the same period. The average billing rate excludes certain hours
      from our acquisition of Cole Valuation Partners Limited prior to their
      transition to the Company’s financial
system.





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 $7,142 and $9,539 from the cross
utilization of its client service professionals on engagements from the
Corporate Finance Consulting segment (primarily Portfolio Valuation services) in
the nine months ended September 30, 2010 and 2009, respectively.





45




Financial
Advisory





Revenues




Revenues
from the Financial Advisory segment decreased $15,414 or 8.7% to $161,017 for
the nine months ended September 30, 2010, compared to $176,431 for the nine
months ended September 30, 2009. The overall decline resulted from a decrease in
revenues from each business unit, as summarized in the following
table:





Nine Months EndedSeptember 30,
                      
                      
                      September 30,
                      
                      
                      Dollar
                      
                      
                      Percent2010
                      
                      
                      2009
                      
                      
                      Change
                      
                      
                      ChangeFinancial
      AdvisoryValuation
      Advisory
                      
                      $
                      99,022
                      
                      
                      $
                      103,834
                      
                      
                      $
                      (4,812
                      )
                      
                      
                      (4.6
                      )%Tax
      Services
                      
                      
                      32,693
                      
                      
                      
                      37,895
                      
                      
                      
                      (5,202
                      )
                      
                      
                      (13.7
                      )%Dispute
      & Legal Management Consulting(1)
                      
                      
                      29,302
                      
                      
                      
                      34,702
                      
                      
                      
                      (5,400
                      )
                      
                      
                      (15.6
                      )%$
                      161,017
                      
                      
                      $
                      176,431
                      
                      
                      $
                      (15,414
                      )
                      
                      
                      (8.7
                      )%










(1)
              Includes
      $3,454 of revenue from our acquisition of Cole Valuation Partners Limited
      effective June 15, 2010.





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




The
decrease in revenues from Tax Services primarily resulted from the departure of
staff during the first half of 2010 associated with World Tax Service US, LLC
(which we acquired in July 2008) and lower revenues from property tax contingent
fees.




Dispute
& Legal Management Consulting (and to a lesser extent certain business units
in our Corporate Finance Consulting segment) was impacted by lower revenues from
an engagement to serve as a financial advisor to the court appointed examiner of
a large financial services company under bankruptcy protection. This engagement
wound down during the first half of 2010. Revenues from this engagement were
primarily recognized in our Dispute & Legal Management Consulting business
unit as well as our Corporate Finance Consulting segment. Our year-to-date
results include approximately $8,200 of revenue from this engagement, compared
to approximately $20,500 of revenue recognized in the corresponding prior year
period (of which approximately 70% was recognized in Dispute & Legal and
approximately 30% in Corporate Finance Consulting). The decrease from this
engagement was partially offset by $3,454 of revenue from our acquisition of
Cole Valuation Partners Limited.




Segment
Operating Income




Financial
Advisory segment operating income decreased $7,813 or 26.4% to $21,730 for the
nine months ended September 30, 2010, compared to $29,543 for the nine months
ended September 30, 2009. Segment operating income margin, defined as segment
operating income expressed as a percentage of segment revenues, was 13.5% for
the nine months ended September 30, 2010, compared to 16.7% for the nine months
ended September 30, 2009. Segment operating income decreased primarily as a
result of lower revenues,
partially offset by a reduction in direct costs and allocated overhead
expenses.


46





Corporate
Finance Consulting





Revenues




Revenues
from the Corporate Finance Consulting segment decreased $5,936 or 12.6% to
$41,103 for the nine months ended September 30, 2010, compared to $47,039 for
the nine months ended September 30, 2009. Lower revenues from Portfolio
Valuation, Financial Engineering and Strategic Value Advisory were partially
offset by higher revenues from Due Diligence, as summarized in the following
table:





Nine Months EndedSeptember 30,
                  
                  
                  September 30,
                  
                  
                  Dollar
                  
                  
                  Percent2010
                  
                  
                  2009
                  
                  
                  Change
                  
                  
                  ChangeCorporate
      Finance ConsultingPortfolio
      Valuation
                  
                  $
                  14,579
                  
                  
                  $
                  16,491
                  
                  
                  $
                  (1,912
                  )
                  
                  
                  (11.6
                  )%Financial
      Engineering
                  
                  
                  9,962
                  
                  
                  
                  14,508
                  
                  
                  
                  (4,546
                  )
                  
                  
                  (31.3
                  )%Strategic
      Value Advisory
                  
                  
                  8,881
                  
                  
                  
                  10,242
                  
                  
                  
                  (1,361
                  )
                  
                  
                  (13.3
                  )%Due
      Diligence
                  
                  
                  7,681
                  
                  
                  
                  5,798
                  
                  
                  
                  1,883
                  
                  
                  
                  32.5
                  %$
                  41,103
                  
                  
                  $
                  47,039
                  
                  
                  $
                  (5,936
                  )
                  
                  
                  (12.6
                  )%





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





Segment
Operating Income




Operating
income from the Corporate Finance Consulting segment decreased $4,906 or 41.5%
to $6,913 for the nine months ended September 30, 2010, compared to $11,819 for
the nine months ended September 30, 2009. Segment operating income margin was
16.8% for the nine months ended September 30, 2010, compared to 25.1% for the
nine months ended September 30, 2009. Segment operating income decreased
primarily as a result of lower revenues, partially
offset by a reduction in direct costs and allocated overhead
expenses.




Investment
Banking





Revenues




Revenues
from the Investment Banking segment increased $11,125 or 22.7% to $60,213 for
the nine months ended September 30, 2010, compared to $49,088 for the nine
months ended September 30, 2009, as summarized in the following
table:





Nine Months EndedSeptember 30,
                  
                  
                  September 30,
                  
                  
                  Dollar
                  
                  
                  Percent2010
                  
                  
                  2009
                  
                  
                  Change
                  
                  
                  ChangeInvestment
      BankingGlobal
      Restructuring Advisory
                  
                  $
                  29,208
                  
                  
                  $
                  25,230
                  
                  
                  $
                  3,978
                  
                  
                  
                  15.8
                  %Transaction
      Opinions
                  
                  
                  19,575
                  
                  
                  
                  14,995
                  
                  
                  
                  4,580
                  
                  
                  
                  30.5
                  %M&A
      Advisory
                  
                  
                  11,430
                  
                  
                  
                  8,863
                  
                  
                  
                  2,567
                  
                  
                  
                  29.0
                  %$
                  60,213
                  
                  
                  $
                  49,088
                  
                  
                  $
                  11,125
                  
                  
                  
                  22.7
                  %





Each of
our business units in the Investment Banking segment demonstrated continued
strength from recent economic volatility and improvement in overall M&A
transaction volume versus the corresponding prior year period.





Segment
Operating Income




Operating
income from the Investment Banking segment increased $6,577 or 91.4% to $13,772
for the nine months ended September 30, 2010, compared to $7,195 for the nine
months ended September 30, 2009. Operating income margin was 22.9% for the nine
months ended September 30, 2010, compared to 14.7% for the nine months ended
September 30, 2009. The increase in segment operating income resulted from
higher revenues from an increase in transaction activity, partially offset by an
increase in compensation direct costs.


47





Liquidity
and Capital Resources





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




Cash and
cash equivalents decreased by $8,513 to $98,798 at September 30, 2010, compared
to $107,311 at December 31, 2009. The decrease in cash primarily resulted from
$19,980 used in investing activities and $18,837 used in financing activities,
partially offset by $30,465 provided by operating activities.





Operating
Activities




During
the nine months ended September 30, 2010, cash of $30,465 was provided by
operating activities, compared to $29,681 provided in the corresponding prior
year period. The increase of amounts used in operating activities primarily
resulted from an increase in amounts provided by accounts receivable and a
decrease in amounts used by unbilled services. These benefits were partially
offset primarily from an increase in amounts used by accounts payable and
accrued expenses, and an increase in amounts used by accrued compensation
(primarily from the realignment of senior management).




Investing
Activities




During
the nine months ended September 30, 2010, cash of $19,980 was used in investing
activities, compared to $11,214 used in the corresponding prior year period.
Investing activities during the current period included (i) purchases of
property and equipment to support our business, (ii) cash consideration for our
acquisition of Cole Valuation Partners Limited and payments of earn-outs for
acquisitions which primarily consisted of an earn-out payment to the sellers of
Financial and IP Analysis, Inc. (d/b/a The Lumin Expert Group), and (iii)
purchases of investments related to the Company’s deferred compensation
plan.




Financing
Activities




During
the nine months ended September 30, 2010, cash of $18,837 was used in financing
activities, compared to $17,088 used in the prior year period. Significant
financing activities are summarized as follows:





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




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





Nine Months EndedSeptember 30,
                  
                  
                  September 30,2010
                  
                  
                  2009Distributions
      for taxes
                  
                  $
                  3,359
                  
                  
                  $
                  14,197Other
      distributions
                  
                  
                  2,121
                  
                  
                  
                  1,313Payments
      pursuant to the Tax Receivable Agreement
                  
                  
                  -
                  
                  
                  
                  -$
                  5,480
                  
                  
                  $
                  15,510




Distributions for
taxes


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




48




Other
distributions


During
the nine months ended September 30, 2010, the Company distributed $2,121 to
holders of New Class A Units, other than Duff & Phelps Corporation.
Concurrent with the payment of the dividend to shareholders of record, holders
of New Class A Units received a $0.05 distribution per vested unit on March 16,
2010 and a $0.06 distribution per vested unit on May 28, 2010 and August 27,
2010. These amounts totaled $1,959 and will be treated as a reduction in basis
of each member’s ownership interests. Pursuant to the terms of the Third Amended
and Restated LLC Agreement of D&P Acquisitions, a corresponding amount per
unvested unit was deposited into a segregated account and will be distributed
once a year with respect to units that vested during that year.  During the
nine months ended September 30, 2010, the Company distributed $162 to members
whose units vested during 2009. Any amounts related to unvested units that
forfeit are returned to the Company.




Payments pursuant to the Tax
Receivable Agreement


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





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




As of
September 30, 2010, the Company recorded a liability of $106,802, 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.


49








·
            Dividends
      – Cash dividends of $4,828 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 and $0.06 per share of our Class A common
      stock to holders of record as of May 18 and August 17,
    2010.




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 September 30, 2010 or
through the filing date of this Quarterly Report on Form 10-Q. As of September
30, 2010, the Company had $4,115 of outstanding letters of credit of which
$3,685 were issued against the Credit Facility. There was $430 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 September 30, 2010, the Company
qualifies 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 September 30, 2010. The Credit Agreement permits dividend
payments or other distributions in the Company’s common stock or other equity
interests subject to certain limitations.





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





Future
Needs





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




50





Recent
Accounting Pronouncements





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





Item
3.   Quantitative and Qualitative Disclosures About Market
Risk.





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





Item
4.   Controls and Procedures.





Disclosure
Controls and Procedures




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





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





Changes
in Internal Controls





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




51





PART
II


OTHER
INFORMATION





Item 1.     
Legal Proceedings.





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





Item
1A.    Risk Factors.





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




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





Issuer
Purchases of Equity Securities




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




ApproximateTotal
                    
                    
                    DollarNumber of
                    
                    
                    Value ofShares
                    
                    
                    Shares thatTotal
                    
                    
                    
                    
                    
                    Purchased as
                    
                    
                    May Yet BeNumber of
                    
                    
                    Average
                    
                    
                    Part of Publicly
                    
                    
                    PurchasedShares
                    
                    
                    Price Paid
                    
                    
                    Announced
                    
                    
                    Under theClassACommonStock
                    
                    Purchased
                    
                    
                    PerShare
                    
                    
                    Program
                    
                    
                    ProgramJuly
      1 through July 31, 2010
                    
                    
                    30
                    
                    
                    $
                    12.56
                    
                    
                    
                    30
                    
                    
                    $
                    44,322August
      1 through August 31, 2010
                    
                    
                    30
                    
                    
                    
                    11.02
                    
                    
                    
                    23
                    
                    
                    
                    44,070September
      1 through September 30, 2010
                    
                    
                    9
                    
                    
                    
                    11.48
                    
                    
                    
                    7
                    
                    
                    
                    43,983Total
                    
                    
                    69
                    
                    
                    $
                    11.75
                    
                    
                    
                    60





On April
29, 2010, the Company announced that its Board of Directors had approved a stock
repurchase program, authorizing the Company to repurchase in the aggregate up to
$50,000 of its outstanding common stock. As part of this program, the Company
has repurchased 444 shares of Class A common stock to date at an average price
of $13.54 per share.





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




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




52





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 August
2010, 2 New Class A Units were exchanged for 2 shares of Class A common stock
and 2 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.




As of
September 30, 2010, we received notices principally from certain current and
former employee unitholders to exchange 1,743 New Class A Units of D&P
Acquisitions for a corresponding number of shares of our Class A common stock,
with respect to the exchange scheduled to occur on November 15, 2010.  At
such time, a corresponding number of shares of our Class B common stock will be
cancelled.  There were no notices to exchange received by any of our
current executive officers or entities affiliated with Lovell Minnick Partners
or Vestar Capital Partners with respect to the exchange scheduled to occur on
November 15, 2010.




Item 3.       Defaults
Upon Senior Securities.





None.





Item 4.       (Removed
and Reserved).





Item 5.       Other
Information.





None.





Item 6.        Exhibits.





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




53


SIGNATURES





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





DUFF
      & PHELPS CORPORATION(Registrant)Date:
      October 28, 2010
                /s/
      Jacob L. SilvermanJACOB
      L. SILVERMANChief
      Financial Officer




54