UNITED
STATES
 SECURITIES
AND EXCHANGE COMMISSION
 Washington,
D.C. 20549
 
 
 FORM
10-Q
 
 
 þ
              QUARTERLY REPORT PURSUANT TO
      SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
      1934.
 For
the quarterly period ended March 31, 2009
 
 OR
 
 o
              TRANSITION REPORT PURSUANT TO
      SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
      1934.
 
 
 Commission
File Number: 001-33693
 
 
 DUFF
& PHELPS CORPORATION
 (Exact
name of registrant as specified in its charter)
 
 
 DELAWARE
              20-8893559(State
      of other jurisdiction or
                incorporation
      or organization)
              (I.R.S.
      employer
                identification
      no.)
 
 55
East 52nd Street,
31st
Floor
 New
York, New York  10055
 (Address
of principal executive offices)
 (Zip
code)
 
 (212) 871-2000
 (Registrant’s
telephone number, including area code)
 
 Indicate
by check mark whether the registrant (1) has filed all reports required to
be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934
during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days.  Yes þ  No o
 
 Indicate
by check mark whether the registrant has submitted electronically and posted on
its corporate Web site, if any, every Interactive Data File required to be
submitted and posted pursuant to Rule 405 of Regulations S-T (§232.405 of this
chapter) during the preceding 12 months (or for such shorter period that the
registrant was required to submit and post such files).  Yes o  No o
 
 Indicate
by check mark whether the registrant is a large accelerated filer, an
accelerated filer, a non-accelerated filer, or a smaller reporting
company.  See the definitions of “large accelerated filer,”
“accelerated filer” and “smaller reporting company” in Rule 12b-2 of the
Exchange Act.
 Large
accelerated filer o
    Accelerated filer þ
    Non-accelerated filer oSmaller reporting
company o
 
 Indicated
by check mark whether the registrant is a shell company (as defined in
Rule 12b-2 of the Exchange Act.)  Yes o  No þ
 
 The
number of shares outstanding of the registrant’s Class A common stock, par value
$0.01 per share, was 15,934,718 as of April 30, 2009.  The number of
shares outstanding of the registrant’s Class B common stock, par value $0.0001
per share, was 20,828,310 as of April 30, 2009.
 
  DUFF
      & PHELPS CORPORATION
 AND
      SUBSIDIARIES
 
 TABLE
      OF CONTENTS
 
 Part
      I.
                                          Financial
      InformationItem
      1.  Financial Statements.
                                          
                                          1Item
      2.  Management’s Discussion and Analysis of Financial Condition
      and Results of Operations.
                                          
                                          21Item
      3.  Quantitative and Qualitative Disclosures About Market
      Risk.
                                          
                                          34Item
      4.  Controls and Procedures.
                                          
                                          34Part
      II.
                                          Other InformationItem
      1.  Legal Proceedings.
                                          
                                          34Item
      1A.  Risk Factors.
                                          
                                          34Item
      2.  Unregistered Sales of Equity Securities and Use of
      Proceeds.
                                          
                                          35Item
      3.  Defaults Upon Senior Securities.
                                          
                                          35Item
      4.  Submission of Matters to a Vote of Security
      Holders.
                                          
                                          35Item
      5.  Other Information.
                                          
                                          35Item
      6.  Exhibits.
                                          
                                          36Signatures
                                          
                                          37


PART
I – FINANCIAL INFORMATION
 
 Item
1.  Financial Statements.
 
 DUFF
& PHELPS CORPORATION AND SUBSIDIARIES
 CONDENSED
CONSOLIDATED STATEMENTS OF OPERATIONS
 (In
thousands, except per share amounts)
 (Unaudited)
  Three
      Months EndedMarch
      31,
                            
                            
                            March
      31,2009
                            
                            
                            2008Revenues
                            
                            $
                            89,265
                            
                            
                            $
                            93,153Reimbursable
      expenses
                            
                            
                            2,037
                            
                            
                            
                            2,328Total
      revenues
                            
                            
                            91,302
                            
                            
                            
                            95,481Direct
      client service costsCompensation
      and benefits (including $4,262 and $4,624 ofequity-based
      compensation for the three months endedMarch
      31, 2009 and 2008, respectively)
                            
                            
                            51,130
                            
                            
                            
                            53,044Other
      direct client service costs
                            
                            
                            1,304
                            
                            
                            
                            1,622Acquisition
      retention expenses
                            
                            
                            -
                            
                            
                            
                            310Reimbursable
      expenses
                            
                            
                            2,015
                            
                            
                            
                            2,269Subtotal
                            
                            
                            54,449
                            
                            
                            
                            57,245Operating
      expensesSelling,
      general and administrative expenses (including $1,892and
      $2,714 of equity-based compensation for the threemonths
      ended March 31, 2009 and 2008, respectively)
                            
                            
                            24,940
                            
                            
                            
                            26,023Depreciation
      and amortization
                            
                            
                            2,562
                            
                            
                            
                            2,176Subtotal
                            
                            
                            27,502
                            
                            
                            
                            28,199Operating
      income
                            
                            
                            9,351
                            
                            
                            
                            10,037Other
      expense/(income)Interest
      income
                            
                            
                            (14
                            )
                            
                            
                            (483
                            )Interest
      expense
                            
                            
                            655
                            
                            
                            
                            973Other
      expense
                            
                            
                            17
                            
                            
                            
                            591Subtotal
                            
                            
                            658
                            
                            
                            
                            1,081Income
      before income taxes
                            
                            
                            8,693
                            
                            
                            
                            8,956Provision
      for income taxes
                            
                            
                            2,112
                            
                            
                            
                            2,264Net
      income
                            
                            
                            6,581
                            
                            
                            
                            6,692Less:  Net
      income attributable to noncontrolling interest
                            
                            
                            4,816
                            
                            
                            
                            5,277Net
      income attributable to Duff & Phelps Corporation
                            
                            $
                            1,765
                            
                            
                            $
                            1,415Weighted
      average shares of Class A common stock outstandingBasic
                            
                            
                            13,479
                            
                            
                            
                            13,064Diluted
                            
                            
                            13,973
                            
                            
                            
                            13,064Net
      income per share attributable to stockholders of Class Acommon
      stock of Duff & Phelps CorporationBasic
                            
                            $
                            0.13
                            
                            
                            $
                            0.11Diluted
                            
                            $
                            0.13
                            
                            
                            $
                            0.11
 See
accompanying notes to the condensed consolidated financial
statements.
  1
 DUFF
& PHELPS CORPORATION AND SUBSIDIARIES
 CONDENSED
CONSOLIDATED BALANCE SHEETS
 (In
thousands, except per share amounts)
 
 March
      31,
                              
                              
                              December
      31,2009
                              
                              
                              2008(Unaudited)ASSETSCurrent
      assetsCash
      and cash equivalents
                              
                              $
                              49,376
                              
                              
                              $
                              81,381Accounts
      receivable, net
                              
                              
                              53,873
                              
                              
                              
                              55,876Unbilled
      services
                              
                              
                              30,515
                              
                              
                              
                              17,938Prepaid
      expenses and other current assets
                              
                              
                              6,394
                              
                              
                              
                              6,599Net
      deferred income taxes, current
                              
                              
                              2,115
                              
                              
                              
                              4,304Total
      current assets
                              
                              
                              142,273
                              
                              
                              
                              166,098Property
      and equipment, net
                              
                              
                              28,858
                              
                              
                              
                              28,350Goodwill
                              
                              
                              116,944
                              
                              
                              
                              116,456Intangible
      assets, net
                              
                              
                              30,735
                              
                              
                              
                              32,197Other
      assets
                              
                              
                              3,438
                              
                              
                              
                              3,541Investments
      related to deferred compensation plan (Note 10)
                              
                              
                              11,044
                              
                              
                              
                              7,946Net
      deferred income taxes, non-current
                              
                              
                              61,216
                              
                              
                              
                              61,609Total
      non-current assets
                              
                              
                              252,235
                              
                              
                              
                              250,099Total
      assets
                              
                              $
                              394,508
                              
                              
                              $
                              416,197LIABILITIES
      AND STOCKHOLDERS' EQUITYCurrent
      liabilitiesAccounts
      payable
                              
                              $
                              4,515
                              
                              
                              $
                              3,692Accrued
      expenses
                              
                              
                              2,949
                              
                              
                              
                              4,424Accrued
      compensation and benefits
                              
                              
                              11,393
                              
                              
                              
                              39,282Accrued
      benefits related to deferred compensation plan (Note 10)
                              
                              
                              13,422
                              
                              
                              
                              8,479Deferred
      revenue
                              
                              
                              3,214
                              
                              
                              
                              3,280Equity-based
      compensation liability
                              
                              
                              20
                              
                              
                              
                              1,115Current
      portion of long-term debt (Note 8)
                              
                              
                              794
                              
                              
                              
                              794Current
      portion due to non-controlling unitholders
                              
                              
                              3,148
                              
                              
                              
                              3,148Total
      current liabilities
                              
                              
                              39,455
                              
                              
                              
                              64,214Long-term
      debt, less current portion (Note 8)
                              
                              
                              41,869
                              
                              
                              
                              42,178Other
      long-term liabilities
                              
                              
                              16,595
                              
                              
                              
                              16,715Due
      to non-controlling unitholders, less current portion
                              
                              
                              55,331
                              
                              
                              
                              55,331Total
      non-current liabilities
                              
                              
                              113,795
                              
                              
                              
                              114,224Total
      liabilities
                              
                              
                              153,250
                              
                              
                              
                              178,438Commitments
      and contingencies (Note 11)Stockholders'
      equityPreferred
      stock (50,000 shares authorized; zero issued and
    outstanding)
                              
                              
                              -
                              
                              
                              
                              -Class
      A common stock, par value $0.01 per share (100,000 shares authorized;
      15,905 and14,719
      shares issued and outstanding at March 31, 2009 and December 31, 2008,
      respectively)
                              
                              
                              159
                              
                              
                              
                              147Class
      B common stock, par value $0.0001 per share (50,000 shares authorized;
      20,878 and20,889
      shares issued and outstanding at March 31, 2009 and December 31, 2008,
      respectively)
                              
                              
                              2
                              
                              
                              
                              2Additional
      paid-in capital
                              
                              
                              104,703
                              
                              
                              
                              100,985Accumulated
      other comprehensive income/(loss)
                              
                              
                              (348
                              )
                              
                              
                              122Retained
      earnings/(accumulated deficit)
                              
                              
                              638
                              
                              
                              
                              (1,127
                              )Total
      stockholders' equity of Duff & Phelps Corporation
                              
                              
                              105,154
                              
                              
                              
                              100,129Noncontrolling
      interest
                              
                              
                              136,104
                              
                              
                              
                              137,630Total
      stockholders' equity
                              
                              
                              241,258
                              
                              
                              
                              237,759Total
      liabilities and stockholders' equity
                              
                              $
                              394,508
                              
                              
                              $
                              416,197
 See
accompanying notes to the condensed consolidated financial
statements.
  2
 DUFF
& PHELPS CORPORATION AND SUBSIDIARIES
 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
 (In
thousands)
 (Unaudited)
 
 Three
      Months EndedMarch
      31,
                          
                          
                          March
      31,2009
                          
                          
                          2008Cash
      flows from operating activities:Net
      income
                          
                          $
                          6,581
                          
                          
                          $
                          6,692Adjustments
      to reconcile net incometo
      net cash provided by operating activities:Depreciation
      and amortization
                          
                          
                          2,562
                          
                          
                          
                          2,176Equity-based
      compensation
                          
                          
                          6,154
                          
                          
                          
                          7,338Bad
      debt expense
                          
                          
                          464
                          
                          
                          
                          466Net
      deferred income taxes
                          
                          
                          2,583
                          
                          
                          
                          1,709Other
                          
                          
                          (234
                          )
                          
                          
                          1,477Changes
      in assets and liabilities providing/(using) cash:Accounts
      receivable
                          
                          
                          1,539
                          
                          
                          
                          (10,374
                          )Unbilled
      services
                          
                          
                          (12,577
                          )
                          
                          
                          (2,411
                          )Prepaid
      expenses and other current assets
                          
                          
                          132
                          
                          
                          
                          (412
                          )Other
      assets
                          
                          
                          2,701
                          
                          
                          
                          (45
                          )Accounts
      payable and accrued expenses
                          
                          
                          (651
                          )
                          
                          
                          (2,891
                          )Accrued
      compensation and benefits
                          
                          
                          (22,642
                          )
                          
                          
                          (44,359
                          )Deferred
      revenues
                          
                          
                          (66
                          )
                          
                          
                          (2,438
                          )Net
      cash used in operating activities
                          
                          
                          (13,454
                          )
                          
                          
                          (43,072
                          )Cash
      flows from investing activities:Purchase
      of property and equipment
                          
                          
                          (2,108
                          )
                          
                          
                          (1,328
                          )Business
      acquisitions, net of cash acquired
                          
                          
                          -
                          
                          
                          
                          (3,463
                          )Purchase
      of investments for deferred compensation plan
                          
                          
                          (5,684
                          )
                          
                          
                          (9,145
                          )Proceeds
      from sale of investments in deferred compensation plan
                          
                          
                          -
                          
                          
                          
                          1,692Net
      cash used in investing activities
                          
                          
                          (7,792
                          )
                          
                          
                          (12,244
                          )Cash
      flows from financing activities:Distributions
      to non-controlling unitholders
                          
                          
                          (8,847
                          )
                          
                          
                          (7,766
                          )Repurchases
      of Class A common stock
                          
                          
                          (603
                          )
                          
                          
                          -Repayments
      of debt
                          
                          
                          (198
                          )
                          
                          
                          (198
                          )Proceeds
      from exercises of IPO Options
                          
                          
                          80
                          
                          
                          
                          -Excess
      tax shortfall from equity-based awards
                          
                          
                          (87
                          )
                          
                          
                          -Net
      cash used in financing activities
                          
                          
                          (9,655
                          )
                          
                          
                          (7,964
                          )Effect
      of exchange rate on cash and cash equivalents
                          
                          
                          (1,104
                          )
                          
                          
                          1,193Net
      increase/(decrease) in cash and cash equivalents
                          
                          
                          (32,005
                          )
                          
                          
                          (62,087
                          )Cash
      and cash equivalents at beginning of period
                          
                          
                          81,381
                          
                          
                          
                          90,243Cash
      and cash equivalents at end of period
                          
                          $
                          49,376
                          
                          
                          $
                          28,156
 See
accompanying notes to the condensed consolidated financial
statements.
  3
 DUFF
& PHELPS CORPORATION AND SUBSIDIARIES
 CONDENSED
CONSOLIDATED STATEMENT OF STOCKHOLDERS’ EQUITY
 AND
COMPREHENSIVE INCOME
 (In
thousands)
 (Unaudited)
 
 Stockholders of Duff & Phelps
    CorporationAccumulated
                                                              
                                                              
                                                              RetainedTotal
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              Additional
                                                              
                                                              
                                                              Other
                                                              
                                                              
                                                              Earnings/Stockholders'
                                                              
                                                              
                                                              Comprehensive
                                                              
                                                              
                                                              Common
      Stock - Class A
                                                              
                                                              
                                                              Common
      Stock - Class B
                                                              
                                                              
                                                              Paid-in-
                                                              
                                                              
                                                              Comprehensive
                                                              
                                                              
                                                              (Accumulated
                                                              
                                                              
                                                              NoncontrollingEquity
                                                              
                                                              
                                                              Income
                                                              
                                                              
                                                              Shares
                                                              
                                                              
                                                              Dollars
                                                              
                                                              
                                                              Shares
                                                              
                                                              
                                                              Dollars
                                                              
                                                              
                                                              Capital
                                                              
                                                              
                                                              Income/(Loss)
                                                              
                                                              
                                                              Deficit)
                                                              
                                                              
                                                              InterestBalance
      as of December 31, 2008
                                                              
                                                              $
                                                              237,759
                                                              
                                                              
                                                              $
                                                              -
                                                              
                                                              
                                                              
                                                              14,719
                                                              
                                                              
                                                              $
                                                              147
                                                              
                                                              
                                                              
                                                              20,889
                                                              
                                                              
                                                              $
                                                              2
                                                              
                                                              
                                                              $
                                                              100,985
                                                              
                                                              
                                                              $
                                                              122
                                                              
                                                              
                                                              $
                                                              (1,127
                                                              )
                                                              
                                                              $
                                                              137,630Comprehensive
      incomeNet
      income for the three months ended March 31, 2009
                                                              
                                                              
                                                              6,581
                                                              
                                                              
                                                              
                                                              6,581
                                                              
                                                              
                                                              
                                                              -
                                                              
                                                              
                                                              
                                                              -
                                                              
                                                              
                                                              
                                                              -
                                                              
                                                              
                                                              
                                                              -
                                                              
                                                              
                                                              
                                                              -
                                                              
                                                              
                                                              
                                                              -
                                                              
                                                              
                                                              
                                                              1,765
                                                              
                                                              
                                                              
                                                              4,816Currency translation
      adjustment
                                                              
                                                              
                                                              (1,104
                                                              )
                                                              
                                                              
                                                              (1,104
                                                              )
                                                              
                                                              
                                                              -
                                                              
                                                              
                                                              
                                                              -
                                                              
                                                              
                                                              
                                                              -
                                                              
                                                              
                                                              
                                                              -
                                                              
                                                              
                                                              
                                                              -
                                                              
                                                              
                                                              
                                                              (478
                                                              )
                                                              
                                                              
                                                              -
                                                              
                                                              
                                                              
                                                              (626
                                                              )Amortization of post-retirement
      benefits
                                                              
                                                              
                                                              4
                                                              
                                                              
                                                              
                                                              4
                                                              
                                                              
                                                              
                                                              -
                                                              
                                                              
                                                              
                                                              -
                                                              
                                                              
                                                              
                                                              -
                                                              
                                                              
                                                              
                                                              -
                                                              
                                                              
                                                              
                                                              -
                                                              
                                                              
                                                              
                                                              2
                                                              
                                                              
                                                              
                                                              -
                                                              
                                                              
                                                              
                                                              2Total
      comprehensive income/(loss)
                                                              
                                                              
                                                              5,481
                                                              
                                                              
                                                              $
                                                              5,481
                                                              
                                                              
                                                              
                                                              -
                                                              
                                                              
                                                              
                                                              -
                                                              
                                                              
                                                              
                                                              -
                                                              
                                                              
                                                              
                                                              -
                                                              
                                                              
                                                              
                                                              -
                                                              
                                                              
                                                              
                                                              (476
                                                              )
                                                              
                                                              
                                                              1,765
                                                              
                                                              
                                                              
                                                              4,192Net
      issuance of restricted stock awards
                                                              
                                                              
                                                              (590
                                                              )
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              1,197
                                                              
                                                              
                                                              
                                                              12
                                                              
                                                              
                                                              
                                                              -
                                                              
                                                              
                                                              
                                                              -
                                                              
                                                              
                                                              
                                                              (260
                                                              )
                                                              
                                                              
                                                              -
                                                              
                                                              
                                                              
                                                              -
                                                              
                                                              
                                                              
                                                              (342
                                                              )Exercise
      of stock options
                                                              
                                                              
                                                              8
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              -
                                                              
                                                              
                                                              
                                                              -
                                                              
                                                              
                                                              
                                                              -
                                                              
                                                              
                                                              
                                                              -
                                                              
                                                              
                                                              
                                                              3
                                                              
                                                              
                                                              
                                                              -
                                                              
                                                              
                                                              
                                                              -
                                                              
                                                              
                                                              
                                                              5Forfeitures
                                                              
                                                              
                                                              -
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              (11
                                                              )
                                                              
                                                              
                                                              -
                                                              
                                                              
                                                              
                                                              (11
                                                              )
                                                              
                                                              
                                                              -
                                                              
                                                              
                                                              
                                                              -
                                                              
                                                              
                                                              
                                                              -
                                                              
                                                              
                                                              
                                                              -
                                                              
                                                              
                                                              
                                                              -Equity-based
      compensation
                                                              
                                                              
                                                              7,240
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              -
                                                              
                                                              
                                                              
                                                              -
                                                              
                                                              
                                                              
                                                              -
                                                              
                                                              
                                                              
                                                              -
                                                              
                                                              
                                                              
                                                              3,132
                                                              
                                                              
                                                              
                                                              -
                                                              
                                                              
                                                              
                                                              -
                                                              
                                                              
                                                              
                                                              4,108Income
      tax benefit on equity-based compensation
                                                              
                                                              
                                                              (87
                                                              )
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              -
                                                              
                                                              
                                                              
                                                              -
                                                              
                                                              
                                                              
                                                              -
                                                              
                                                              
                                                              
                                                              -
                                                              
                                                              
                                                              
                                                              (87
                                                              )
                                                              
                                                              
                                                              -
                                                              
                                                              
                                                              
                                                              -
                                                              
                                                              
                                                              
                                                              -Distributions
      to non-controlling unitholders
                                                              
                                                              
                                                              (8,847
                                                              )
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              -
                                                              
                                                              
                                                              
                                                              -
                                                              
                                                              
                                                              
                                                              -
                                                              
                                                              
                                                              
                                                              -
                                                              
                                                              
                                                              
                                                              (3,826
                                                              )
                                                              
                                                              
                                                              -
                                                              
                                                              
                                                              
                                                              -
                                                              
                                                              
                                                              
                                                              (5,021
                                                              )Change
      in ownership interests between periods
                                                              
                                                              
                                                              -
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              -
                                                              
                                                              
                                                              
                                                              -
                                                              
                                                              
                                                              
                                                              -
                                                              
                                                              
                                                              
                                                              -
                                                              
                                                              
                                                              
                                                              4,462
                                                              
                                                              
                                                              
                                                              6
                                                              
                                                              
                                                              
                                                              -
                                                              
                                                              
                                                              
                                                              (4,468
                                                              )Deferred
      tax asset effective tax rate conversion
                                                              
                                                              
                                                              294
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              -
                                                              
                                                              
                                                              
                                                              -
                                                              
                                                              
                                                              
                                                              -
                                                              
                                                              
                                                              
                                                              -
                                                              
                                                              
                                                              
                                                              294
                                                              
                                                              
                                                              
                                                              -
                                                              
                                                              
                                                              
                                                              -
                                                              
                                                              
                                                              
                                                              -Balance
      as of March 31, 2009
                                                              
                                                              $
                                                              241,258
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              15,905
                                                              
                                                              
                                                              $
                                                              159
                                                              
                                                              
                                                              
                                                              20,878
                                                              
                                                              
                                                              $
                                                              2
                                                              
                                                              
                                                              $
                                                              104,703
                                                              
                                                              
                                                              $
                                                              (348
                                                              )
                                                              
                                                              $
                                                              638
                                                              
                                                              
                                                              $
                                                              136,104
 See
accompanying notes to the condensed consolidated financial
statements.
  4
 
 DUFF
& PHELPS CORPORATION AND SUBSIDIARIES
 CONDENSED
CONSOLIDATED STATEMENT OF STOCKHOLDERS’ EQUITY
 AND
COMPREHENSIVE INCOME
 (In
thousands)
 (Unaudited)
 
 Stockholders
      of Duff & Phelps CorporationAccumulated
                                                                                                          
                                                                                                          
                                                                                                          RetainedTotal
                                                                                                          
                                                                                                          
                                                                                                          
                                                                                                          
                                                                                                          
                                                                                                          
                                                                                                          
                                                                                                          
                                                                                                          
                                                                                                          
                                                                                                          
                                                                                                          
                                                                                                          
                                                                                                          
                                                                                                          
                                                                                                          
                                                                                                          
                                                                                                          Additional
                                                                                                          
                                                                                                          
                                                                                                          Other
                                                                                                          
                                                                                                          
                                                                                                          Earnings/Stockholders'
                                                                                                          
                                                                                                          
                                                                                                          Comprehensive
                                                                                                          
                                                                                                          
                                                                                                          Common
      Stock - Class A
                                                                                                          
                                                                                                          
                                                                                                          Common
      Stock - Class B
                                                                                                          
                                                                                                          
                                                                                                          Paid-in-
                                                                                                          
                                                                                                          
                                                                                                          Comprehensive
                                                                                                          
                                                                                                          
                                                                                                          (Accumulated
                                                                                                          
                                                                                                          
                                                                                                          NoncontrollingEquity
                                                                                                          
                                                                                                          
                                                                                                          Income
                                                                                                          
                                                                                                          
                                                                                                          Shares
                                                                                                          
                                                                                                          
                                                                                                          Dollars
                                                                                                          
                                                                                                          
                                                                                                          Shares
                                                                                                          
                                                                                                          
                                                                                                          Dollars
                                                                                                          
                                                                                                          
                                                                                                          Capital
                                                                                                          
                                                                                                          
                                                                                                          Income/(Loss)
                                                                                                          
                                                                                                          
                                                                                                          Deficit)
                                                                                                          
                                                                                                          
                                                                                                          InterestBalance
      as of December 31, 2007
                                                                                                          
                                                                                                          $
                                                                                                          181,483
                                                                                                          
                                                                                                          
                                                                                                          $
                                                                                                          -
                                                                                                          
                                                                                                          
                                                                                                          
                                                                                                          13,125
                                                                                                          
                                                                                                          
                                                                                                          $
                                                                                                          131
                                                                                                          
                                                                                                          
                                                                                                          
                                                                                                          21,090
                                                                                                          
                                                                                                          
                                                                                                          $
                                                                                                          2
                                                                                                          
                                                                                                          
                                                                                                          $
                                                                                                          75,589
                                                                                                          
                                                                                                          
                                                                                                          $
                                                                                                          134
                                                                                                          
                                                                                                          
                                                                                                          $
                                                                                                          (6,352
                                                                                                          )
                                                                                                          
                                                                                                          $
                                                                                                          111,979Comprehensive
      incomeNet
      income for the three months ended March 31, 2008
                                                                                                          
                                                                                                          
                                                                                                          6,692
                                                                                                          
                                                                                                          
                                                                                                          
                                                                                                          6,692
                                                                                                          
                                                                                                          
                                                                                                          
                                                                                                          -
                                                                                                          
                                                                                                          
                                                                                                          
                                                                                                          -
                                                                                                          
                                                                                                          
                                                                                                          
                                                                                                          -
                                                                                                          
                                                                                                          
                                                                                                          
                                                                                                          -
                                                                                                          
                                                                                                          
                                                                                                          
                                                                                                          -
                                                                                                          
                                                                                                          
                                                                                                          
                                                                                                          -
                                                                                                          
                                                                                                          
                                                                                                          
                                                                                                          1,415
                                                                                                          
                                                                                                          
                                                                                                          
                                                                                                          5,277Currency
      translation adjustment
                                                                                                          
                                                                                                          
                                                                                                          1,193
                                                                                                          
                                                                                                          
                                                                                                          
                                                                                                          1,193
                                                                                                          
                                                                                                          
                                                                                                          
                                                                                                          -
                                                                                                          
                                                                                                          
                                                                                                          
                                                                                                          -
                                                                                                          
                                                                                                          
                                                                                                          
                                                                                                          -
                                                                                                          
                                                                                                          
                                                                                                          
                                                                                                          -
                                                                                                          
                                                                                                          
                                                                                                          
                                                                                                          -
                                                                                                          
                                                                                                          
                                                                                                          
                                                                                                          481
                                                                                                          
                                                                                                          
                                                                                                          
                                                                                                          -
                                                                                                          
                                                                                                          
                                                                                                          
                                                                                                          712Amortization
      of post-retirement benefits
                                                                                                          
                                                                                                          
                                                                                                          12
                                                                                                          
                                                                                                          
                                                                                                          
                                                                                                          12
                                                                                                          
                                                                                                          
                                                                                                          
                                                                                                          -
                                                                                                          
                                                                                                          
                                                                                                          
                                                                                                          -
                                                                                                          
                                                                                                          
                                                                                                          
                                                                                                          -
                                                                                                          
                                                                                                          
                                                                                                          
                                                                                                          -
                                                                                                          
                                                                                                          
                                                                                                          
                                                                                                          -
                                                                                                          
                                                                                                          
                                                                                                          
                                                                                                          5
                                                                                                          
                                                                                                          
                                                                                                          
                                                                                                          -
                                                                                                          
                                                                                                          
                                                                                                          
                                                                                                          7Total
      comprehensive income/(loss)
                                                                                                          
                                                                                                          
                                                                                                          7,897
                                                                                                          
                                                                                                          
                                                                                                          $
                                                                                                          7,897
                                                                                                          
                                                                                                          
                                                                                                          
                                                                                                          -
                                                                                                          
                                                                                                          
                                                                                                          
                                                                                                          -
                                                                                                          
                                                                                                          
                                                                                                          
                                                                                                          -
                                                                                                          
                                                                                                          
                                                                                                          
                                                                                                          -
                                                                                                          
                                                                                                          
                                                                                                          
                                                                                                          -
                                                                                                          
                                                                                                          
                                                                                                          
                                                                                                          486
                                                                                                          
                                                                                                          
                                                                                                          
                                                                                                          1,415
                                                                                                          
                                                                                                          
                                                                                                          
                                                                                                          5,996Issuance
      of restricted stock awards
                                                                                                          
                                                                                                          
                                                                                                          11
                                                                                                          
                                                                                                          
                                                                                                          
                                                                                                          
                                                                                                          
                                                                                                          
                                                                                                          
                                                                                                          1,078
                                                                                                          
                                                                                                          
                                                                                                          
                                                                                                          11
                                                                                                          
                                                                                                          
                                                                                                          
                                                                                                          -
                                                                                                          
                                                                                                          
                                                                                                          
                                                                                                          -
                                                                                                          
                                                                                                          
                                                                                                          
                                                                                                          -
                                                                                                          
                                                                                                          
                                                                                                          
                                                                                                          -
                                                                                                          
                                                                                                          
                                                                                                          
                                                                                                          -
                                                                                                          
                                                                                                          
                                                                                                          
                                                                                                          -Forfeitures
                                                                                                          
                                                                                                          
                                                                                                          -
                                                                                                          
                                                                                                          
                                                                                                          
                                                                                                          
                                                                                                          
                                                                                                          
                                                                                                          
                                                                                                          -
                                                                                                          
                                                                                                          
                                                                                                          
                                                                                                          -
                                                                                                          
                                                                                                          
                                                                                                          
                                                                                                          (36
                                                                                                          )
                                                                                                          
                                                                                                          
                                                                                                          -
                                                                                                          
                                                                                                          
                                                                                                          
                                                                                                          -
                                                                                                          
                                                                                                          
                                                                                                          
                                                                                                          -
                                                                                                          
                                                                                                          
                                                                                                          
                                                                                                          -
                                                                                                          
                                                                                                          
                                                                                                          
                                                                                                          -Equity-based
      compensation
                                                                                                          
                                                                                                          
                                                                                                          7,596
                                                                                                          
                                                                                                          
                                                                                                          
                                                                                                          
                                                                                                          
                                                                                                          
                                                                                                          
                                                                                                          -
                                                                                                          
                                                                                                          
                                                                                                          
                                                                                                          -
                                                                                                          
                                                                                                          
                                                                                                          
                                                                                                          -
                                                                                                          
                                                                                                          
                                                                                                          
                                                                                                          -
                                                                                                          
                                                                                                          
                                                                                                          
                                                                                                          3,213
                                                                                                          
                                                                                                          
                                                                                                          
                                                                                                          -
                                                                                                          
                                                                                                          
                                                                                                          
                                                                                                          -
                                                                                                          
                                                                                                          
                                                                                                          
                                                                                                          4,383Distributions
      to non-controlling unitholders
                                                                                                          
                                                                                                          
                                                                                                          (7,766
                                                                                                          )
                                                                                                          
                                                                                                          
                                                                                                          
                                                                                                          
                                                                                                          
                                                                                                          
                                                                                                          -
                                                                                                          
                                                                                                          
                                                                                                          
                                                                                                          -
                                                                                                          
                                                                                                          
                                                                                                          
                                                                                                          -
                                                                                                          
                                                                                                          
                                                                                                          
                                                                                                          -
                                                                                                          
                                                                                                          
                                                                                                          
                                                                                                          (3,111
                                                                                                          )
                                                                                                          
                                                                                                          
                                                                                                          -
                                                                                                          
                                                                                                          
                                                                                                          
                                                                                                          -
                                                                                                          
                                                                                                          
                                                                                                          
                                                                                                          (4,655
                                                                                                          )Change
      in ownership interest between DPC and DPA
                                                                                                          
                                                                                                          
                                                                                                          -
                                                                                                          
                                                                                                          
                                                                                                          
                                                                                                          
                                                                                                          
                                                                                                          
                                                                                                          
                                                                                                          -
                                                                                                          
                                                                                                          
                                                                                                          
                                                                                                          -
                                                                                                          
                                                                                                          
                                                                                                          
                                                                                                          -
                                                                                                          
                                                                                                          
                                                                                                          
                                                                                                          -
                                                                                                          
                                                                                                          
                                                                                                          
                                                                                                          3,799
                                                                                                          
                                                                                                          
                                                                                                          
                                                                                                          6
                                                                                                          
                                                                                                          
                                                                                                          
                                                                                                          -
                                                                                                          
                                                                                                          
                                                                                                          
                                                                                                          (3,805
                                                                                                          )Deferred
      tax asset effective rate conversion
                                                                                                          
                                                                                                          
                                                                                                          338
                                                                                                          
                                                                                                          
                                                                                                          
                                                                                                          
                                                                                                          
                                                                                                          
                                                                                                          
                                                                                                          -
                                                                                                          
                                                                                                          
                                                                                                          
                                                                                                          -
                                                                                                          
                                                                                                          
                                                                                                          
                                                                                                          -
                                                                                                          
                                                                                                          
                                                                                                          
                                                                                                          -
                                                                                                          
                                                                                                          
                                                                                                          
                                                                                                          338
                                                                                                          
                                                                                                          
                                                                                                          
                                                                                                          -
                                                                                                          
                                                                                                          
                                                                                                          
                                                                                                          -
                                                                                                          
                                                                                                          
                                                                                                          
                                                                                                          -Other
                                                                                                          
                                                                                                          
                                                                                                          -
                                                                                                          
                                                                                                          
                                                                                                          
                                                                                                          
                                                                                                          
                                                                                                          
                                                                                                          
                                                                                                          -
                                                                                                          
                                                                                                          
                                                                                                          
                                                                                                          -
                                                                                                          
                                                                                                          
                                                                                                          
                                                                                                          -
                                                                                                          
                                                                                                          
                                                                                                          
                                                                                                          -
                                                                                                          
                                                                                                          
                                                                                                          
                                                                                                          (201
                                                                                                          )
                                                                                                          
                                                                                                          
                                                                                                          -
                                                                                                          
                                                                                                          
                                                                                                          
                                                                                                          -
                                                                                                          
                                                                                                          
                                                                                                          
                                                                                                          201Balance
      as of March 31, 2008
                                                                                                          
                                                                                                          $
                                                                                                          189,559
                                                                                                          
                                                                                                          
                                                                                                          
                                                                                                          
                                                                                                          
                                                                                                          
                                                                                                          
                                                                                                          14,203
                                                                                                          
                                                                                                          
                                                                                                          $
                                                                                                          142
                                                                                                          
                                                                                                          
                                                                                                          
                                                                                                          21,054
                                                                                                          
                                                                                                          
                                                                                                          $
                                                                                                          2
                                                                                                          
                                                                                                          
                                                                                                          $
                                                                                                          79,627
                                                                                                          
                                                                                                          
                                                                                                          $
                                                                                                          626
                                                                                                          
                                                                                                          
                                                                                                          $
                                                                                                          (4,937
                                                                                                          )
                                                                                                          
                                                                                                          $
                                                                                                          114,099
 See
accompanying notes to the condensed consolidated financial
statements.
  5
 
  DUFF
& PHELPS CORPORATION AND SUBSIDIARIES
 NOTES
TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
 (In
thousands, except per share amounts)
 (Unaudited)
 Note
1   -    DESCRIPTION OF BUSINESS
 
 Duff
& Phelps Corporation (the “Company”) is a leading provider of independent
financial advisory, corporate finance consulting and investment banking
services.  Its mission is to help its clients protect, maximize and
recover value.  The foundation of its services is its ability to
provide independent advice on issues involving highly technical and complex
assessments in the areas of valuation, taxation, dispute consulting, financial
restructuring and M&A advisory.  The Company believes the Duff
& Phelps brand is associated with a high level of professional service and
integrity, knowledge leadership and independent, trusted advice.  The
Company serves a global client base through offices in 24 cities, comprised of
offices in 18 U.S. cities, including New York, Chicago, Dallas and Los Angeles,
and six international offices located in Amsterdam, London, Munich, Paris,
Shanghai and Tokyo.
 
 Note
2   -    BASIS OF PRESENTATION
 
 The
Company was incorporated on April 23, 2007 as a Delaware corporation and formed
as a holding company for the purpose of facilitating an initial public offering
(“IPO”) of the Company’s common equity and to become the sole managing member of
Duff & Phelps Acquisitions, LLC and subsidiaries (“D&P
Acquisitions”).
 
 As a
result of the IPO and the Recapitalization Transactions (as defined and
described below), the Company became the sole managing member of and has a
controlling interest in D&P Acquisitions.  The Company’s only
business is to act as the sole managing member of D&P Acquisitions, and, as
such, the Company operates and controls all of the business and affairs of
D&P Acquisitions and consolidates the financial results of D&P
Acquisitions into the Company’s consolidated financial statements effective as
of the close of business October 3, 2007.
 
 Immediately
prior to the closing of the IPO of the Company on October 3, 2007, D&P
Acquisitions effectuated certain transactions intended to simplify the capital
structure of D&P Acquisitions (the “Recapitalization
Transactions”).  Prior to the Recapitalization Transactions, D&P
Acquisitions' capital structure consisted of seven different classes of
membership interests (Classes A through G, collectively “Legacy Units”), each of
which had different capital accounts and amounts of aggregate distributions
above which its holders share in future distributions.  The net effect
of the Recapitalization Transactions was to convert the multiple-class structure
into a single new class of units called “New Class A Units.”
 Pursuant
to the Recapitalization Transactions and IPO, the Company issued a number of
shares of Class B common stock to existing unitholders of D&P Acquisitions
in an aggregate amount equal to the number of New Class A Units held by existing
unitholders of D&P Acquisitions.  The IPO, Recapitalization
Transactions and the Company’s capital structure are further detailed in its
Annual Report on Form 10-K for the year ended December 31, 2008.
 
 The
accompanying unaudited condensed consolidated financial statements have been
prepared in accordance with accounting principles generally accepted in the
United States of America and with the rules and regulations of the SEC for
interim financial reporting, and include all adjustments which are, in the
opinion of management, necessary for a fair presentation.  The
financial statements require the use of management estimates and include the
accounts of the Company, its controlled subsidiaries and other entities
consolidated as required by GAAP.  References to the “Company,” “its” and
“itself,” refer to Duff & Phelps Corporation and its subsidiaries, unless
the context requires otherwise.
 
 The
balance sheet at December 31, 2008 was derived from audited financial
statements, but does not include all disclosures required by accounting
principles generally accepted in the United States of
America.  Accordingly, certain information and footnote disclosures
normally included in financial statements prepared in accordance with generally
accepted accounting principles have been condensed or omitted pursuant to such
rules and regulations.  In management’s opinion, all adjustments
necessary for a fair presentation are reflected in the interim periods
presented.  All significant intercompany accounts and transactions
have been eliminated in consolidation.
  6
  DUFF
& PHELPS CORPORATION AND SUBSIDIARIES
 NOTES
TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
 (In
thousands, except per share amounts)
 (Unaudited)
  Recently
Adopted Accounting Pronouncements
 
 Effective
January 1, 2009, the Company implemented Statement of Financial Accounting
Standards (“SFAS”) No. 160, Noncontrolling Interests in
Consolidated Financial Statements (“SFAS 160”), an amendment to ARB No.
51, Consolidated Financial
Statements.  The implementation of this standard primarily
effected the presentation of the Company’s consolidated financial statements
whereby noncontrolling interest is presented as a component of stockholders’
equity.  The presentation and disclosure requirements were applied
retrospectively for all periods presented.
 
 Effective
January 1, 2009, the Company adopted SFAS No. 141 (Revised 2007), Business Combinations (“SFAS
141(R)”).  SFAS 141(R) requires the acquiring entity in a business
combination to recognize the full fair value of assets acquired and liabilities
assumed in the transaction, establishes the acquisition-date fair value as the
measurement objective for all assets acquired and liabilities assumed, requires
expensing of most transaction costs, and requires the acquirer to disclose to
investors and other users all of the information needed to evaluate and
understand the nature and financial effect of the business
combination.  The effect this pronouncement will have on the Company
is dependent upon each specific acquisition which may or may not occur in the
current or future periods.
 
 Effective
January 1, 2009, the Company adopted the remaining provisions of SFAS No. 157,
Fair Value Measurements
(“SFAS 157”), related to fair-value measurements of certain nonfinancial assets
and liabilities.  The adoption of the remaining provisions of SFAS 157
did not have a material impact on the Company’s consolidated financial position
or results of operations.
 
 There
have been no other significant changes in new accounting pronouncements or in
our critical accounting policies and estimates from those that were disclosed in
our Annual Report on Form 10-K for the year ended December 31,
2008.  The Company believes that the disclosures herein are adequate
so that the information presented is not misleading; however, it is suggested
that these financial statements be read in conjunction with the financial
statements and the notes thereto in our Annual Report on Form 10-K for the year
ended December 31, 2008.  The financial data for the interim periods
may not necessarily be indicative of results to be expected for the
year.
  7
 DUFF
& PHELPS CORPORATION AND SUBSIDIARIES
 NOTES
TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
 (In
thousands, except per share amounts)
 (Unaudited)
  Note
      3   -
              NONCONTROLLING
      INTEREST
 
 Although
the Company has sole voting power in and controls the management of D&P
Acquisitions, it owns a minority economic interest in D&P Acquisitions
(43.2% at March 31, 2009).  As a result, the Company consolidates the
financial results of D&P Acquisitions and records noncontrolling interest
for the economic interest in D&P Acquisitions held by the existing
unitholders to the extent the book value of their interest in D&P
Acquisitions is greater than zero.  Noncontrolling interest on the
statement of operations represents the portion of earnings or loss attributable
to the economic interest in D&P Acquisitions held by the noncontrolling
unitholders.  Noncontrolling interest on the balance sheet represents
the portion of net assets of D&P Acquisitions attributable to the
noncontrolling unitholders based on the portion of total New Class A Units owned
by such unitholders.  The ownership of the New Class A Units is
summarized as follows:
 
 Duff
      &
                                      
                                      
                                      Non-Phelps
                                      
                                      
                                      ControllingCorporation
                                      
                                      
                                      Unitholders
                                      
                                      
                                      TotalDecember
      31, 2008
                                      
                                      
                                      14,719
                                      
                                      
                                      
                                      20,889
                                      
                                      
                                      
                                      35,608Issuance
      of restricted stock awards
                                      
                                      
                                      1,237
                                      
                                      
                                      
                                      -
                                      
                                      
                                      
                                      1,237Ongoing
      RSAs(1)
      withheld for payroll taxes
                                      
                                      
                                      (40
                                      )
                                      
                                      
                                      -
                                      
                                      
                                      
                                      (40
                                      )Forfeitures
                                      
                                      
                                      (11
                                      )
                                      
                                      
                                      (11
                                      )
                                      
                                      
                                      (22
                                      )March
      31, 2009
                                      
                                      
                                      15,905
                                      
                                      
                                      
                                      20,878
                                      
                                      
                                      
                                      36,783Percent
      of total New Class A UnitsDecember
      31, 2008
                                      
                                      
                                      41.3
                                      %
                                      
                                      
                                      58.7
                                      %
                                      
                                      
                                      100
                                      %March
      31, 2009
                                      
                                      
                                      43.2
                                      %
                                      
                                      
                                      56.8
                                      %
                                      
                                      
                                      100
                                      %
 (1)
              Ongoing
      RSAs represent restricted stock awards and units issued in conjunction
      with the Company’s ongoing long-term compensation program.  See
      Note 6 for further detail.
 
 Tax
Receivable Agreement and Tax Distributions
 
 As a
result of the Company’s acquisition of New Class A Units of D&P
Acquisitions, the Company expects to benefit from depreciation and other tax
deductions reflecting D&P Acquisitions' tax basis for its
assets.   Those deductions will be allocated to the Company and
will be taken into account in reporting the Company’s taxable
income.  Further, as a result of a federal income tax election made by
D&P Acquisitions applicable to a portion of the Company’s acquisition of New
Class A Units of D&P Acquisitions, the income tax basis of the assets of
D&P Acquisitions underlying a portion of the units the Company has and will
acquire (pursuant to the exchange agreement) will be adjusted based upon the
amount that the Company has paid for that portion of its New Class A Units of
D&P Acquisitions.
 
 The
Company has entered into a tax receivable agreement (“TRA”) with the existing
unitholders of D&P Acquisitions (for the benefit of the existing unitholders
of D&P Acquisitions) that provides for the payment by the Company to the
unitholders of D&P Acquisitions of 85% of the amount of cash savings, if
any, in U.S. federal, state and local income tax that the Company realizes (i)
from the tax basis in its proportionate share of D&P Acquisitions' goodwill
and similar intangible assets that the Company receives as a result of the
exchanges and (ii) from the federal income tax election referred to
above.  There were no payments under the TRA in the three months ended
March 31, 2009 as these payments are typically made in the fourth quarter of
each year.  In 2008, the Company made payments of $791 with respect to
the period from October 4 through December 31, 2007.  D&P
Acquisitions expects to make future payments under the TRA to the extent cash is
available for such purposes.  At March 31, 2009, the Company recorded
a liability of $58,479, including a current portion of $3,148, representing the
payments due to D&P Acquisitions’ unitholders under the TRA.
  8
 
  DUFF
& PHELPS CORPORATION AND SUBSIDIARIES
 NOTES
TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
 (In
thousands, except per share amounts)
 (Unaudited)
 As a
member of D&P Acquisitions, the Company will incur U.S. federal, state and
local income taxes on its allocable share of any net taxable income of D&P
Acquisitions.  As authorized by the 3rd Amended and Restated LLC
Agreement of D&P Acquisitions, the Company intends to cause D&P
Acquisitions to continue to distribute cash, generally, on a pro rata basis, to
its members at least to the extent necessary to provide funds to pay the
members' tax liabilities, if any, with respect to the earnings of D&P
Acquisitions.  D&P Acquisitions made aggregate distributions to
members, not including the Company, of $8,847 and $7,766 during the three months
ended March 31, 2009 and 2008, respectively, with respect to estimated taxable
income for 2008 and 2007, respectively.  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 to the extent it is higher
than the original estimate.
 
 9
  DUFF
& PHELPS CORPORATION AND SUBSIDIARIES
 NOTES
TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
 (In
thousands, except per share amounts)
 (Unaudited)
 
 Note
      4   -
              ACQUISITIONS
 
 The
following table summarizes the Company’s recent acquisitions:
 
 EffectiveDate
                              
                              Acquisition
                              
                              Description4/11/08
                              
                              Dubinsky
      & Company, P.C.
                              
                              Washington,
      D.C. metro based specialty consulting primarilyfocused
      on litigation support and forensic services.7/15/08
                              
                              World
      Tax Service US, LLC
                              
                              Tax
      advisory firm focused on the delivery of sophisticatedinternational
      and domestic tax services.7/31/08
                              
                              Kane
      Reece Associates, Inc.
                              
                              Valuation,
      management and technical consulting firm with afocus
      on the communications, entertainment and media
  industries.8/8/08
                              
                              Financial
      and IP Analysis, Inc.
                              
                              Financial
      consulting firm that specializes in intellectual(d/b/a
      The Lumin Expert Group)
                              
                              property
      dispute support and expert
testimony.
  The
purchase price of each of these acquisitions is immaterial to the Company’s
consolidated financial statements, both individually and in the
aggregate.  Each of these acquisitions operates as part of the
Financial Advisory segment.
  10
  DUFF
& PHELPS CORPORATION AND SUBSIDIARIES
 NOTES
TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
 (In
thousands, except per share amounts)
 (Unaudited)
  Note
5   -    EARNINGS PER SHARE
 
 Basic
earnings per share (“EPS”) measures the performance of an entity over the
reporting period.  Diluted earnings per share measures the performance
of an entity over the reporting period while giving effect to all potentially
dilutive common shares that were outstanding during the period.  The
treasury stock method is used to determine the dilutive potential of stock
options, restricted stock awards, restricted stock units, and D&P
Acquisitions’ units and Class B common stock that are exchangeable into D&P
Class A common stock.  The following is a reconciliation of the
numerator and denominator used in the basic and diluted EPS
calculations:
 
 Three
      Months EndedMarch
      31,
                                                                                          
                                                                                          
                                                                                          March
      31,2009
                                                                                          
                                                                                          
                                                                                          2008Basic
      and diluted net income per share attributable to holders of Class A common
      stock:NumeratorNet
      income attributable to holders of Class A common stock
                                                                                          
                                                                                          $
                                                                                          1,765
                                                                                          
                                                                                          
                                                                                          $
                                                                                          1,415Denominator
      for basic net income per share attributable to holders of Class A common
      stockWeighted
      average shares of Class A common stock
                                                                                          
                                                                                          
                                                                                          13,479
                                                                                          
                                                                                          
                                                                                          
                                                                                          13,064Denominator
      for diluted net income per share attributable to holders of Class A common
      stockWeighted
      average shares of Class A common stock
                                                                                          
                                                                                          
                                                                                          13,479
                                                                                          
                                                                                          
                                                                                          
                                                                                          13,064Add
      dilutive effect of the following:Restricted
      stock awards and units
                                                                                          
                                                                                          
                                                                                          494
                                                                                          
                                                                                          
                                                                                          
                                                                                          -Assumed
      conversion of New Class A Units for Class A common stock(a)
                                                                                          
                                                                                          
                                                                                          -
                                                                                          
                                                                                          
                                                                                          
                                                                                          -Dilutive
      weighted average shares of Class A common stock
                                                                                          
                                                                                          
                                                                                          13,973
                                                                                          
                                                                                          
                                                                                          
                                                                                          13,064Net
      income per share attributable to holders of Class A common
      stockBasic
                                                                                          
                                                                                          $
                                                                                          0.13
                                                                                          
                                                                                          
                                                                                          $
                                                                                          0.11Diluted
                                                                                          
                                                                                          $
                                                                                          0.13
                                                                                          
                                                                                          
                                                                                          $
                                                                                          0.11______________________________(a)
                                                                                          The
      following shares were anti-dilutive and excluded from this
      calculation:Weighted
      average New Class A Units outstanding
                                                                                          
                                                                                          
                                                                                          20,889
                                                                                          
                                                                                          
                                                                                          
                                                                                          20,705Weighted
      average IPO Options outstanding
                                                                                          
                                                                                          
                                                                                          1,993
                                                                                          
                                                                                          
                                                                                          
                                                                                          2,064Weighted
      average Ongoing RSAs outstanding
                                                                                          
                                                                                          
                                                                                          -
                                                                                          
                                                                                          
                                                                                          
                                                                                          344
 Anti-dilution
is the result of (i) the allocation of income or loss associated with the
exchange of New Class A Units for Class A common stock and (ii) IPO Options
and/or Ongoing RSAs listed above exceeding those outstanding under the treasury
stock method.  The shares of Class B common stock do not share in the
earnings of the Company and are therefore not participating
securities.  Accordingly, basic and diluted earnings per share of
Class B common stock have not been presented.
  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,
2008.  There have been no significant changes in the Company’s
equity-based compensation accounting policies and assumptions from those that
were disclosed in the Company’s Annual Report on Form 10-K for the year
ended December 31, 2008.
 
 Equity-based
compensation with respect to (a) grants of Legacy Units, (b) options to purchase
shares of the Company’s Class A common stock granted in connection with the IPO
(“IPO Options”) and (c) restricted stock awards and units issued in connection
with the Company’s ongoing long-term compensation program (“Ongoing RSAs”) is
detailed in the table below:
 
 Three
      Months Ended
                                                  
                                                  
                                                  Three
      Months EndedMarch
      31, 2009
                                                  
                                                  
                                                  March
      31, 2008Client
                                                  
                                                  
                                                  
                                                  
                                                  
                                                  
                                                  
                                                  
                                                  ClientService
                                                  
                                                  
                                                  SG&A
                                                  
                                                  
                                                  Total
                                                  
                                                  
                                                  Service
                                                  
                                                  
                                                  SG&A
                                                  
                                                  
                                                  TotalLegacy
      Units
                                                  
                                                  $
                                                  1,698
                                                  
                                                  
                                                  $
                                                  640
                                                  
                                                  
                                                  $
                                                  2,338
                                                  
                                                  
                                                  $
                                                  3,137
                                                  
                                                  
                                                  $
                                                  1,396
                                                  
                                                  
                                                  $
                                                  4,533IPO
      Options
                                                  
                                                  
                                                  633
                                                  
                                                  
                                                  
                                                  282
                                                  
                                                  
                                                  
                                                  915
                                                  
                                                  
                                                  
                                                  1,194
                                                  
                                                  
                                                  
                                                  542
                                                  
                                                  
                                                  
                                                  1,736Ongoing
      RSAs
                                                  
                                                  
                                                  1,931
                                                  
                                                  
                                                  
                                                  970
                                                  
                                                  
                                                  
                                                  2,901
                                                  
                                                  
                                                  
                                                  293
                                                  
                                                  
                                                  
                                                  776
                                                  
                                                  
                                                  
                                                  1,069Total
                                                  
                                                  $
                                                  4,262
                                                  
                                                  
                                                  $
                                                  1,892
                                                  
                                                  
                                                  $
                                                  6,154
                                                  
                                                  
                                                  $
                                                  4,624
                                                  
                                                  
                                                  $
                                                  2,714
                                                  
                                                  
                                                  $
                                                  7,338
 Restricted
stock awards and restricted stock units were granted as a form of incentive
compensation and are accounted for similarly.  Corresponding expense is
recognized based on the fair market value on the date of grant.  Restricted
stock units are granted to certain of our international employees, are generally
contingent on continued employment and are typically converted to Class A common
stock when restrictions on transfer lapse after three years.
 
 During
the three months ended March 31, 2009, the Company issued 1,318 Ongoing RSAs
related to annual bonus incentive compensation, performance incentive
initiatives, promotions and recruiting efforts.  Expense is recognized
based on the fair market value on the date of grant over the service
period.  The restrictions on transfer and forfeiture provisions are
generally eliminated after three years for all awards granted to non-executives
with certain exceptions related to retiree eligible employees and termination of
employees without cause.
 
 Of the
1,318 Ongoing RSAs granted, 221 awards were granted to executives on February
26, 2009.  The restrictions on transfer and forfeiture provisions are
eliminated annually over three years based on ratable vesting for grants made to
executives and four years for non-employee members of our Board of
Directors.
 
 12
 
  DUFF
& PHELPS CORPORATION AND SUBSIDIARIES
 NOTES
TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
 (In
thousands, except per share amounts)
 (Unaudited)
 The
following table summarizes activity for IPO Options and Ongoing RSAs during the
three months ended March 31, 2009:
 
 Restricted
                        
                        
                        RestrictedIPO
                        
                        
                        Stock
                        
                        
                        StockOptions
                        
                        
                        Awards
                        
                        
                        UnitsBalance
      as of December 31, 2008
                        
                        
                        1,997
                        
                        
                        
                        1,248
                        
                        
                        
                        92Granted
                        
                        
                        -
                        
                        
                        
                        1,237
                        
                        
                        
                        81Converted
      to Class A common stock upon lapse of restrictions
                        
                        
                        -
                        
                        
                        
                        (56
                        )
                        
                        
                        -Withheld
      for payroll taxes
                        
                        
                        -
                        
                        
                        
                        (40
                        )
                        
                        
                        -Exercised
                        
                        
                        -
                        
                        
                        
                        -
                        
                        
                        
                        -Forfeited
                        
                        
                        (20
                        )
                        
                        
                        (11
                        )
                        
                        
                        -Balance
      as of March 31, 2009
                        
                        
                        1,977
                        
                        
                        
                        2,378
                        
                        
                        
                        173Vested
                        
                        
                        485
                        
                        
                        
                        -
                        
                        
                        
                        -Unvested
                        
                        
                        1,492
                        
                        
                        
                        2,378
                        
                        
                        
                        173Weighted
      average fair value on grant date
                        
                        $
                        7.33
                        
                        
                        $
                        13.94
                        
                        
                        $
                        13.88Weighted
      average exercise price
                        
                        $
                        16.00Weighted
      average remaining contractual term
                        
                        
                        8.50Total
      intrinsic value of exercised options
                        
                        $
                        60Total
      fair value of options vested
                        
                        $
                        3,559Aggregate
      intrinsic value
                        
                        $
                        -Options
      expected to vest
                        
                        
                        1,336Aggregate
      intrinsic value of options expected to vest
                        
                        $
                        -
 The
following table summarizes activity for New Class A Units attributable to
equity-based compensation during the three months ended March 31,
2009:
 
 NewClass
      A UnitsAttributable
      toEquity-BasedCompensationBalance
      as of December 31, 2008
                          
                          
                          6,615Forfeited
                          
                          
                          (11
                          )Balance
      as of March 31, 2009
                          
                          
                          6,604Vested
                          
                          
                          3,720Unvested
                          
                          
                          2,884
 The total
unamortized compensation cost related to all non-vested awards was $36,462 at
March 31, 2009.  The weighted-average period over which this is
expected to be recognized is approximately one year.  A tax benefit of
$439 and $639 was recognized for Legacy Units, IPO Options and Ongoing RSAs for
the three months ended March 31, 2009 and 2008, respectively.
  13
  DUFF
& PHELPS CORPORATION AND SUBSIDIARIES
 NOTES
TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
 (In
thousands, except per share amounts)
 (Unaudited)
 Note
7   -    FAIR VALUE MEASUREMENTS
 
 The
following table presents assets and liabilities measured at fair value on a
recurring basis at March 31, 2009:
 
 Quoted
      Pricesin
      Active
                                    
                                    
                                    SignificantMarkets
      for
                                    
                                    
                                    Other
                                    
                                    
                                    SignificantIdentical
                                    
                                    
                                    Observable
                                    
                                    
                                    UnobservableAssets
                                    
                                    
                                    Inputs
                                    
                                    
                                    InputsDescription
                                    
                                    (Level
      1)
                                    
                                    
                                    (Level
      2)
                                    
                                    
                                    (Level
      3)
                                    
                                    
                                    TotalInvestments
      held in conjunction withdeferred
      compensation plan(1)(2)
                                    
                                    $
                                    -
                                    
                                    
                                    $
                                    11,044
                                    
                                    
                                    $
                                    -
                                    
                                    
                                    $
                                    11,044Total
      assets
                                    
                                    $
                                    -
                                    
                                    
                                    $
                                    11,044
                                    
                                    
                                    $
                                    -
                                    
                                    
                                    $
                                    11,044Benefits
      payable in conjunction withdeferred
      compensation plan(1)
                                    
                                    $
                                    -
                                    
                                    
                                    $
                                    13,422
                                    
                                    
                                    $
                                    -
                                    
                                    
                                    $
                                    13,422Interest
      rate swap(3)
                                    
                                    
                                    -
                                    
                                    
                                    
                                    739
                                    
                                    
                                    
                                    -
                                    
                                    
                                    
                                    739Total
      liabilities
                                    
                                    $
                                    -
                                    
                                    
                                    $
                                    14,161
                                    
                                    
                                    $
                                    -
                                    
                                    
                                    $
                                    14,161
 ____________________________
 (1)
              The
      investments held and benefits payable to participants in conjunction with
      the deferred compensation plan were primarily based on quoted prices for
      similar assets in active markets.  Changes in the fair value of
      the investments are recognized as compensation expense (or
      credit).  Changes in the fair value of the benefits payables to
      participants are recognized as a corresponding offset to compensation
      expense (or credit).  The net impact of changes in fair value is
      not material.  The deferred compensation plan is further
      discussed in Note 10.
  (2)
              Investments
      held in conjunction with the deferred compensation plan exclude
      approximately $2,345 which is included in cash and cash equivalents at
      March 31, 2009.
  (3)
              The
      fair value of the interest rate swap was based on quoted prices for
      similar assets or liabilities in active markets.  The Company’s
      interest rate swap is further discussed in Note
  8.
 
 The
Company does not have any material financial assets in a market that is not
active.
 
 14
  DUFF
& PHELPS CORPORATION AND SUBSIDIARIES
 NOTES
TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
 (In
thousands, except per share amounts)
 (Unaudited)
 Note
8   -    LONG-TERM DEBT
 
 The
Company’s long-term obligations are summarized in the following
table:
 
 March
      31,
                            
                            
                            December
      31,2009
                            
                            
                            2008Outstanding
      balance of credit facility
                            
                            $
                            42,565
                            
                            
                            $
                            42,763Less:  current
      amounts due in following year
                            
                            
                            (794
                            )
                            
                            
                            (794
                            )Long-term
      portion
                            
                            
                            41,771
                            
                            
                            
                            41,969Debt
      discount and interest rate swap
                            
                            
                            98
                            
                            
                            
                            209Long-term
      debt, less current portion
                            
                            $
                            41,869
                            
                            
                            $
                            42,178
 The
Company has a seven-year credit facility, which expires on October 1,
2012.  The facility consists of a (i) $65,000 seven-year term loan,
(ii) $15,000 delayed draw term loan, (iii) $20,000 six-year revolver loan, and
(iv) $75,000 incremental term loan facility, which is currently uncommitted by
the lenders and would require additional approval at the time of
request.  No additional amounts are available under the term loan
facilities at December 31, 2008.  The amount available for future
borrowings under the revolver loan was $15,787 at March 31, 2009.
 
 At March
31, 2009, $42,565 was outstanding under the term loan facility (before debt
discount and interest rate swap) and no amount was outstanding under the
revolving credit facility.  The Company is required to make annual
principal payments of $794 with the remaining balance due upon
maturity.  Borrowings under the credit facility bear interest at a
rate based on LIBOR plus a margin of 2.75%.  The Company incurs an
annual commitment fee of 1% on the unused portion of the term loan facility and
0.5% of the unused portion of the revolving credit facility.  All
obligations under the credit facility are unconditionally guaranteed by each of
our existing and future subsidiaries, other than certain foreign and regulated
subsidiaries.  The credit facility and the related guarantees are
secured by substantially all of Duff & Phelps, LLC’s present and future
assets and all present and future assets of each guarantor on a first lien
basis.
 
 Pursuant
to the terms of the credit facility, letters of credit in the amount of $4,213
have been issued on the account of the Company as of March 31, 2009, primarily
in connection with real estate leases.  This amount reduces
availability under the revolver.
 
 The
credit facility includes customary events of default and covenants for maximum
net debt to EBITDA and a fixed charge coverage ratio.  Management
believes that the Company was in compliance with all of its covenants as of
March 31, 2009.
 
 The
credit facility requires a mandatory prepayment in an amount equal to half of
the Excess Cash Flow (as defined in the credit agreement) for each
year.  In the event that the consolidated senior leverage ratio on the
last day of such fiscal year is less than 1.50 to 1.00, there will be no
mandatory prepayment.  Excess Cash Flow (as defined in the credit
agreement) was negative in 2008 and 2007 and there was no mandatory
prepayment.
 
 The
Company has a $19,500 notional amount interest rate swap that effectively
converted floating rate LIBOR payments to fixed payments at
4.94%.  The swap agreement terminates September 30,
2010.  The Company elected not to apply hedge accounting to this
instrument.  The estimated fair value of the interest rate swap is
based on quoted market prices.  The gain or loss is recorded in “Other
expense” and has a non-cash impact on the Company’s Condensed Consolidated
Statement of Operations.
 
 15
  DUFF
& PHELPS CORPORATION AND SUBSIDIARIES
 NOTES
TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
 (In
thousands, except per share amounts)
 (Unaudited)
 The
following table summarizes the estimated fair value and the gain or loss
recorded for the change in fair value of the interest rate swap.
 
 Three
      Months EndedMarch
      31,
                            
                            
                            March
      31,2009
                            
                            
                            2008Gain/(loss)
      resulting from changein
      fair value of interest rate swap
                            
                            $
                            191
                            
                            
                            $
                            (632
                            )Estimated
      fair value - asset/(liability)
                            
                            $
                            (739
                            )
                            
                            $
                            (1,194
                            )
  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 EndedMarch
      31,
                      
                      
                      March
      31,2009
                      
                      
                      2008Income
      tax provision
                      
                      $
                      2,112
                      
                      
                      $
                      2,264Effective
      income tax rate
                      
                      
                      24.3
                      %
                      
                      
                      25.3
                      %
 The tax
provision for the current year period is based on our estimate of the Company’s
annualized income tax rate.  The effective tax rate is calculated by
dividing the provision for income taxes by income before income
taxes.
 
 The
Company's effective tax rate includes a rate benefit attributable to the fact
that the Company’s subsidiaries operate as a series of limited liability
companies and other flow-through entities which are not subject to federal
income tax.  Accordingly, a portion of the Company's earnings are not
subject to corporate level taxes.  This favorable impact is partially
offset by the impact of certain permanent items, primarily attributable to
certain compensation related expenses that are not deductible for tax
purposes.
 
 The
Company accounts for uncertainties in income tax positions in accordance with
FIN 48.  A reconciliation of the beginning and ending amount of
unrecognized tax benefit is summarized as follows:
 
 Balance
      as of December 31, 2008
                                
                                $
                                502Additional
      based on tax positions related to the current year
                                
                                
                                47Balance
      as of March 31, 2009
                                
                                $
                                549
 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 2005 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,
2008.
 
 Under the
terms of the plan, the Company established a “rabbi trust” as a vehicle for
accumulating assets to pay benefits under the plan.  Payments under
the plan may be paid from the general assets of the Company or from the assets
of any such rabbi trust.  Payment from any such source reduces the
obligation owed to the participant or beneficiary.  The rabbi trust
invests in an investment vehicle structured as a corporate-owned life insurance
(“COLI”) policy with a cash surrender value that mirrors the payable to the
participants of the plan and tracks the value of the plan
assets.  Participants can earn a return on their deferred compensation
that is based on hypothetical investment funds.  The policy is
redeemable on demand in an amount equal to the cash surrender
value.  The cash surrender value totaled $11,044 at March 31,
2009.
 
 The
following table summarizes the fair market value of the rabbi trust and the
corresponding liability owed to participants:
 
 March
      31,
                      
                      
                      March
      31,2009
                      
                      
                      2008Fair
      market value of investments in rabbi trust(1)
                      
                      $
                      11,044
                      
                      
                      $
                      9,121Payable
      to participants of the plan
                      
                      
                      13,422
                      
                      
                      
                      9,298
 ________________________
 (1)
                The
      fair market value of investments in rabbi trust excludes approximately
      $2,345 which is included in cash and cash equivalents at March 31,
      2009.
  The fair
market value of the investments in the rabbi trust is included in “Other assets”
with the corresponding deferred compensation obligation included in “Accrued
compensation and benefits” on the Consolidated Balance Sheet.  Changes
in the fair value of the investments are recognized as compensation expense (or
credit).  Changes in the fair value of the benefits payables to
participants are recognized as a corresponding offset to compensation expense
(or credit).  The net impact of changes in fair value is not
material.
 
 Note
11  -  COMMITMENTS AND CONTINGENCIES
 
 The
Company is involved in various claims or disputes arising in the normal course
of business.  Management does not believe that these matters would
have a material adverse effect on the Company's financial position, results of
operations or liquidity.
 
 18
 
  DUFF
& PHELPS CORPORATION AND SUBSIDIARIES
 NOTES
TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
 (In
thousands, except per share amounts)
 (Unaudited)
 
 Note
12  -  SEGMENT INFORMATION
 
 Prior to
January 1, 2009, the Company provided services through two
segments:  Financial Advisory and Investment
Banking.  Effective January 1, 2009, the Company changed the structure
of its internal organization in a manner that caused the composition of its
reportable segments to change.  As a result, the Corporate Finance
Consulting business, previously part of Financial Advisory, became a third
segment.  Segment results for the three months ended March 31, 2008 have
been recast to reflect current year presentation.  In addition,
segment operating income in the three months ended March 31, 2008 has been
adjusted to reflect the current allocation methodology among
segments.
 
 The
Financial Advisory segment provides valuation advisory services, tax services,
and dispute and legal management consulting.  The Corporate Finance
Consulting segment provides services related to portfolio valuation, financial
engineering, strategic value advisory and due diligence.  The
Investment Banking segment provides transaction opinions, merger and acquisition
advisory services, and restructuring advisory services.
 
 Three
      Months EndedMarch
      31,
                            
                            
                            March
      31,2009
                            
                            
                            2008Financial
      AdvisoryRevenues
      (excluding reimbursables)
                            
                            $
                            60,891
                            
                            
                            $
                            61,437Segment
      operating income
                            
                            
                            10,349
                            
                            
                            
                            9,455Segment
      operating income margin
                            
                            
                            17.0
                            %
                            
                            
                            15.4
                            %Corporate
      Finance ConsultingRevenues
      (excluding reimbursables)
                            
                            $
                            14,616
                            
                            
                            $
                            12,422Segment
      operating income
                            
                            
                            3,252
                            
                            
                            
                            2,901Segment
      operating income margin
                            
                            
                            22.2
                            %
                            
                            
                            23.4
                            %Investment
      BankingRevenues
      (excluding reimbursables)
                            
                            $
                            13,758
                            
                            
                            $
                            19,294Segment
      operating income
                            
                            
                            1,543
                            
                            
                            
                            6,377Segment
      operating income margin
                            
                            
                            11.2
                            %
                            
                            
                            33.1
                            %TotalRevenues
      (excluding reimbursables)
                            
                            $
                            89,265
                            
                            
                            $
                            93,153Segment
      operating income
                            
                            $
                            15,144
                            
                            
                            $
                            18,733Net
      client reimbursable expenses
                            
                            
                            22
                            
                            
                            
                            59Equity-based
      compensationfrom
      Legacy Units and IPO Options
                            
                            
                            (3,253
                            )
                            
                            
                            (6,269
                            )Depreciation
      and amortization
                            
                            
                            (2,562
                            )
                            
                            
                            (2,176
                            )Acquisition
      retention expenses
                            
                            
                            -
                            
                            
                            
                            (310
                            )Operating
      income
                            
                            $
                            9,351
                            
                            
                            $
                            10,037
 19
 
  DUFF
& PHELPS CORPORATION AND SUBSIDIARIES
 NOTES
TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
 (In
thousands, except per share amounts)
 (Unaudited)
 Revenues
and expenses attributable to reportable segments are generally based on which
segment and product line a client service professional is a dedicated
member.  As a result, revenues recognized that relate to the
cross-utilization of client service professionals across reportable segments
occur each period. In the three months ended March 31, 2009 and 2008, the
Financial Advisory segment (primarily Valuation Advisory services) recognized
revenues of $4,322 and $5,223 from the cross-utilization of its client service
professionals on engagements from the Corporate Finance Consulting segment
(primarily Portfolio Valuation services), respectively.
  Revenues
excluding reimbursable expenses attributable to geographic area are summarized
as follows:
 
 Three
      Months EndedMarch
      31,
                      
                      
                      March
      31,2009
                      
                      
                      2008United
      States
                      
                      $
                      81,367
                      
                      
                      
                      85,231Europe
                      
                      
                      6,823
                      
                      
                      
                      7,107Asia
                      
                      
                      1,075
                      
                      
                      
                      815Total
      revenues (excluding reimbursables)
                      
                      $
                      89,265
                      
                      
                      $
                      93,153
  There
were no intersegment revenues during the periods presented.  The
Company does not maintain separate balance sheet information by
segment.
 
 Note
13  -  RELATED PARTY TRANSACTIONS
 
 D&P
Acquisitions, a consolidated subsidiary of the Company, paid affiliates of
Lovell Minnick Partners, a holder of Class B common stock and an equivalent
amount of New Class A Units of D&P Acquisitions, $2,361 and $1,974 during
the three months ended March 31, 2009 and 2008, respectively, with respect to
estimated taxable income for 2008 and 2007, respectively.  These
payments were made in conjunction with the Tax Receivable Agreement and Tax
Distributions as discussed in Note 3.  Two managing directors of
Lovell Minnick serve on the Company’s Board of Directors.
 
 D&P
Acquisitions, a consolidated subsidiary of the Company, paid affiliates of
Vestar Capital Partners, a holder of Class B common stock and an equivalent
amount of New Class A Units of D&P Acquisitions, $2,846 and $2,371 during
the three months ended March 31, 2009 and 2008, respectively, with respect to
estimated taxable income for 2008 and 2007, respectively.  These
payments were made in conjunction with the Tax Receivable Agreement and Tax
Distributions as discussed in Note 3.  A managing director of Vestar
Capital Partners serves on the Company’s Board of Directors.
 
 20
  Item
      2.
              Management’s
      Discussion and Analysis of Financial Condition and Results of
      Operations.
 
 Disclosure
Regarding Forward-Looking Statements
 
 This
report contains forward-looking statements within the meaning of Section 27A of
the Securities Act of 1933 and Section 21E of the Securities Exchange Act of
1934 (the “Exchange Act”), which reflect the Company’s current views with
respect to, among other things, future events and financial
performance.  The Company generally identifies forward looking
statements by terminology such as “outlook,” “believes,” “expects,” “potential,”
“continues,” “may,” “will,” “could,” “should,” “seeks,” “approximately,”
“predicts,” “intends,” “plans,” “estimates,” “anticipates” or the negative
version of those words or other comparable words.  Any forward-looking
statements contained in this discussion are based upon our historical
performance and on our current plans, estimates and expectations.  The
inclusion of this forward-looking information should not be regarded as a
representation by us, or any other person that the future plans, estimates or
expectations contemplated by us will be achieved.  Such
forward-looking statements are subject to various risks and uncertainties and
assumptions relating to our operations, financial results, financial condition,
business prospects, growth strategy and liquidity.  If one or more of
these or other risks or uncertainties materialize, or if our underlying
assumptions prove to be incorrect, our actual results may vary materially from
those indicated in these statements.  These factors should not be
construed as exhaustive and should be read in conjunction with the other
cautionary statements and the risk factors section that are included in our
Annual Report on Form 10-K for the year ended December 31, 2008, as filed with
the Securities and Exchange Commission (“SEC”) on February 26, 2009, and in any
subsequent filings of our Form 10-Qs.  The forward-looking statements
included in this Quarterly Report on Form 10-Q are made only as of the date of
this filing with the SEC.  The Company does not undertake any
obligation to publicly update or review any forward-looking statement, whether
as a result of new information, future developments or otherwise.
 
 Critical
Accounting Policies and Estimates
 
 Management’s
discussion and analysis of the Company’s financial condition and results of
operations is based upon the Company’s consolidated financial statements, which
have been prepared in accordance with accounting principles generally accepted
in the United States (“GAAP”).  The preparation of financial
statements in conformity with GAAP requires management to make estimates and
assumptions that affect amounts of assets and liabilities and disclosures of
contingent assets and liabilities as of the date of the financial statements and
reported amounts of revenues and expenses during the periods
presented.  Actual results could differ from these estimates. 
Estimates and assumptions are reviewed periodically and the effects of revisions
are reflected in the consolidated financial statements in the period they are
deemed to be necessary.  Significant estimates made in the
accompanying consolidated financial statements include, but are not limited to
the following:
 
 ·
              proportional
      performance under client engagements for the purpose of determining
      revenue recognition,
  ·
              accounts
      receivable and unbilled services
valuation,
  ·
              incentive
      compensation,
  ·
              useful
      lives of intangible assets,
  ·
              the
      carrying value of goodwill and intangible
  assets,
  ·
              allowances
      for doubtful accounts,
  ·
              gains
      and losses on engagements,
  ·
              amounts
      due to noncontrolling unitholders,
  ·
              reserves
      for estimated tax liabilities, 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, 2008, as filed with
the SEC on February 26, 2009.  During the three months ended March 31,
2009, there were no significant changes in our critical accounting policies and
estimates, except for a change in our segment reporting.  Prior to
January 1, 2009, the Company provided services through two
segments:  Financial Advisory and Investment
Banking.  Effective January 1, 2009, the Company changed the structure
of its internal organization in a manner that caused the composition of its
reportable segments to change.  As a result, the Corporate Finance
Consulting business, previously part of Financial Advisory, became a third
segment.  Segment results for prior periods have been recast to reflect
current year presentation.
  21
  Results
of Operations
 
 Duff
& Phelps Corporation (the “Company”) is a leading provider of independent
financial advisory, corporate finance consulting and investment banking
services.  Our mission is to help its clients protect, maximize and
recover value.  The foundation of our services is our ability to
provide independent advice on issues involving highly technical and complex
assessments in the areas of valuation, taxation, dispute consulting, financial
restructuring and M&A advisory.  We believe the Duff & Phelps
brand is associated with a high level of professional service and integrity,
knowledge leadership and independent, trusted advice.  The Company
serves a global client base through offices in 24 cities, comprised of offices
in 18 U.S. cities, including New York, Chicago, Dallas and Los Angeles, and six
international offices located in Amsterdam, London, Munich, Paris, Shanghai and
Tokyo.
 
 Prior to
January 1, 2009, we provided services through two segments:  Financial
Advisory and Investment Banking.  Effective January 1, 2009, we
changed the structure of our internal organization in a manner that caused the
composition of our reportable segments to change.  In order to align
our segment reporting with the focus of our business in 2009 and beyond, the
Corporate Finance Consulting business, previously part of Financial Advisory,
became a third segment.
 
 
 
 Equity-based
compensation discussed herein includes (a) grants of units of D&P
Acquisitions prior to the recapitalization transaction that were effectuated in
conjunction with the IPO (“Legacy Units”), (b) options to purchase shares of the
Company’s Class A common stock granted in connection with the IPO (“IPO
Options”) and (c) restricted stock awards and units issued in connection with
the Company’s ongoing long-term compensation program (“Ongoing
RSAs”).  The IPO, Recapitalization Transactions and the Company’s
capital structure are further detailed in our Annual Report on Form 10-K for the
year ended December 31, 2008.
 
 Amounts
are reported in thousands, except for per share amounts, headcount or where the
context requires otherwise.
 
 22
 
 Three
months ended March 31, 2009 versus three months ended March 31,
2008
 
 The
results of operations are summarized as follows:
 
 Results
of Operations
 (Dollars
in thousands)
 
 Three
      Months EndedMarch
      31,
                            
                            
                            March
      31,
                            
                            
                            Unit
                            
                            
                            Percent2009
                            
                            
                            2008
                            
                            
                            Change
                            
                            
                            ChangeRevenues
                            
                            $
                            89,265
                            
                            
                            $
                            93,153
                            
                            
                            $
                            (3,888
                            )
                            
                            
                            (4.2
                            )%Reimbursable
      expenses
                            
                            
                            2,037
                            
                            
                            
                            2,328
                            
                            
                            
                            (291
                            )
                            
                            
                            (12.5
                            )%Total
      revenues
                            
                            
                            91,302
                            
                            
                            
                            95,481
                            
                            
                            
                            (4,179
                            )
                            
                            
                            (4.4
                            )%Direct
      client service costsCompensation
      and benefits(1)
                            
                            
                            51,130
                            
                            
                            
                            53,044
                            
                            
                            
                            (1,914
                            )
                            
                            
                            (3.6
                            )%Other
      direct client service costs
                            
                            
                            1,304
                            
                            
                            
                            1,622
                            
                            
                            
                            (318
                            )
                            
                            
                            (19.6
                            )%Acquisition
      retention expenses
                            
                            
                            -
                            
                            
                            
                            310
                            
                            
                            
                            (310
                            )
                            
                            
                            (100.0
                            )%Reimbursable
      expenses
                            
                            
                            2,015
                            
                            
                            
                            2,269
                            
                            
                            
                            (254
                            )
                            
                            
                            (11.2
                            )%54,449
                            
                            
                            
                            57,245
                            
                            
                            
                            (2,796
                            )
                            
                            
                            (4.9
                            )%Operating
      expensesSelling,
      general and administrative(2)
                            
                            
                            24,940
                            
                            
                            
                            26,023
                            
                            
                            
                            (1,083
                            )
                            
                            
                            (4.2
                            )%Depreciation
      and amortization
                            
                            
                            2,562
                            
                            
                            
                            2,176
                            
                            
                            
                            386
                            
                            
                            
                            17.7
                            %27,502
                            
                            
                            
                            28,199
                            
                            
                            
                            (697
                            )
                            
                            
                            (2.5
                            )%Operating
      income
                            
                            
                            9,351
                            
                            
                            
                            10,037
                            
                            
                            
                            (686
                            )
                            
                            
                            (6.8
                            )%Other
      expense/(income)Interest
      income
                            
                            
                            (14
                            )
                            
                            
                            (483
                            )
                            
                            
                            469
                            
                            
                            
                            (97.1
                            )%Interest
      expense
                            
                            
                            655
                            
                            
                            
                            973
                            
                            
                            
                            (318
                            )
                            
                            
                            (32.7
                            )%Other
      expense
                            
                            
                            17
                            
                            
                            
                            591
                            
                            
                            
                            (574
                            )
                            
                            
                            (97.1
                            )%658
                            
                            
                            
                            1,081
                            
                            
                            
                            (423
                            )
                            
                            
                            (39.1
                            )%Income
      before income taxes
                            
                            
                            8,693
                            
                            
                            
                            8,956
                            
                            
                            
                            (263
                            )
                            
                            
                            (2.9
                            )%Provision
      for income taxes
                            
                            
                            2,112
                            
                            
                            
                            2,264
                            
                            
                            
                            (152
                            )
                            
                            
                            (6.7
                            )%Net
      income
                            
                            
                            6,581
                            
                            
                            
                            6,692
                            
                            
                            
                            (111
                            )
                            
                            
                            (1.7
                            )%Less:  Net
      income attributable to the noncontrolling interest
                            
                            
                            4,816
                            
                            
                            
                            5,277
                            
                            
                            
                            (461
                            )
                            
                            
                            (8.7
                            )%Net
      income attributable to Duff & Phelps Corporation
                            
                            $
                            1,765
                            
                            
                            $
                            1,415
                            
                            
                            $
                            350
                            
                            
                            
                            24.7
                            %Other
      financial and operating dataAdjusted
      EBITDA(3)
                            
                            $
                            15,166
                            
                            
                            $
                            18,792
                            
                            
                            $
                            (3,626
                            )
                            
                            
                            (19.3
                            )%End
      of period managing directors
                            
                            
                            169
                            
                            
                            
                            135
                            
                            
                            
                            34
                            
                            
                            
                            25.2
                            %End
      of period client service professionals
                            
                            
                            948
                            
                            
                            
                            914
                            
                            
                            
                            34
                            
                            
                            
                            3.7
                            %
  _________________________
  (1)
                Compensation
      and benefits include $4,262 and $4,624 of equity-based compensation
      expense for the three months ended March 31, 2009 and 2008,
      respectively.
  (2)
                Selling,
      general and administrative expenses include $1,892 and $2,714 of
      equity-based compensation expense for the three months ended March 31,
      2009 and 2008, respectively.
  (3)
                Adjusted
      EBITDA is a non-GAAP financial measure and is calculated as
      follows:
  23
 ____________
 (3)
              Continued
      . . .
  Reconciliation
      of Adjusted EBITDA(Dollars
      in
thousands)
  Three
      Months EndedMarch
      31,
                          
                          
                          March
      31,2009
                          
                          
                          2008Revenues
      (excluding client reimbursables)
                          
                          $
                          89,265
                          
                          
                          $
                          93,153Net
      income attributable to Duff & Phelps Corporation
                          
                          $
                          1,765
                          
                          
                          $
                          1,415Net
      income attributable to the noncontrolling interest
                          
                          
                          4,816
                          
                          
                          
                          5,277Provision
      for income taxes
                          
                          
                          2,112
                          
                          
                          
                          2,264Other
      expense, net
                          
                          
                          658
                          
                          
                          
                          1,081Depreciation
      and amortization
                          
                          
                          2,562
                          
                          
                          
                          2,176Acquisition
      retention expenses
                          
                          
                          -
                          
                          
                          
                          310Equity-based
      compensation associated with Legacy Units and IPO Options
                          
                          
                          3,253
                          
                          
                          
                          6,269Adjusted
      EBITDA
                          
                          $
                          15,166
                          
                          
                          $
                          18,792Adjusted
      EBITDA as a percentage of revenues
                          
                          
                          17.0
                          %
                          
                          
                          20.2
                          %
 Adjusted
EBITDA is a non-GAAP financial measure.  We believe that Adjusted
EBITDA provides a relevant and useful alternative measure of our ongoing
profitability and performance, when viewed in conjunction with GAAP measures, as
it adjusts net income attributable to Duff & Phelps Corporation for (a)
interest expense and depreciation and amortization (a significant portion of
which relates to debt and capital investments that have been incurred as the
result of acquisitions and investments in stand-alone infrastructure which we do
not expect to incur at the same levels in the future), (b) equity-based
compensation associated with the Legacy Units, a significant portion of which is
due to certain one-time grants associated with predecessor acquisitions and IPO
Options, (c) acquisition retention expenses which are related to deferred
payments associated with prior acquisitions, and (d) net income attributable to
the noncontrolling interest.
 
 Given the
level of acquisition activity during the period prior to the Company’s initial
public offering (“Predecessor”), and related capital investments and one time
equity grants associated with acquisitions during the Predecessor period (which
we do not expect to incur at the same levels in periods subsequent to the
Company’s initial public offering) and the IPO, and our belief that, as a
professional services organization, our operations are not capital intensive on
an ongoing basis, we believe the Adjusted EBITDA measure, in addition to GAAP
financial measures, provides a relevant and useful benchmark for investors, in
order to assess our financial performance and comparability to other companies
in our industry.  The Adjusted EBITDA measure is utilized by our
senior management to evaluate our overall performance and operating expense
characteristics and to compare our performance to that of certain of our
competitors.  A measure similar to Adjusted EBITDA is the principal
measure that determines the compensation of our senior management
team.  In addition, a measure similar to Adjusted EBITDA is a key
measure that determines compliance with certain financial covenants under our
senior secured credit facility.  Management compensates for the
inherent limitations associated with using the Adjusted EBITDA measure through
disclosure of such limitations, presentation of our financial statements in
accordance with GAAP and reconciliation of Adjusted EBITDA to the most directly
comparable GAAP measure, net income or loss.  Furthermore, management
also reviews GAAP measures, and evaluates individual measures that are not
included in Adjusted EBITDA such as our level of capital expenditures, equity
issuance and interest expense, among other measures.
 
 Adjusted
EBITDA, as defined by the Company, consists of net income attributable to Duff
& Phelps Corporation before (a) net income attributable to the
noncontrolling interest, (b) provision for income taxes, (c) other expense, net,
(d) depreciation and amortization, (e) acquisition retention expenses, and (f)
equity-based compensation associated with Legacy Units and IPO Options included
in (i) compensation and benefits and (ii) selling, general and administrative
expenses.
 
 This
non-GAAP financial measure is not prepared in accordance with, and should not be
considered an alternative to, measurements required by GAAP, such as operating
income, net income or loss, net income or loss per share, cash flow from
continuing operating activities or any other measure of performance or liquidity
derived in accordance with GAAP.  The presentation of this additional
information is not meant to be considered in isolation or as a substitute for
the most directly comparable GAAP measures.  In addition, it should be
noted that companies calculate Adjusted EBITDA differently and, therefore,
Adjusted EBITDA as presented for us may not be comparable to Adjusted EBITDA
reported by other companies.
  24
  Overview
 
 The
current global recession, especially the dislocation of the credit markets and
the financial services industry, continues to present us with opportunities and
challenges.  While our service offerings that are generally correlated
to the volume of M&A transactions continue to experience reduced demand,
growth in other business units partially offset this reduction with
opportunities arising from counter-cyclical and non-cyclical services. 
Services we believe to be generally counter-cyclical include our global
restructuring services, dispute and legal management consulting, and goodwill
impairment testing in conjunction with SFAS 142.  Services we believe
to be generally non-cyclical include portfolio valuation, financial engineering
and tax services.
 
 Revenues
 
 Revenues
excluding reimbursable expenses were $89,265 for the three months ended March
31, 2009, compared to $93,153 for the three months ended March 31, 2008, as
summarized in the following table:
 
 Three
      Months EndedMarch
      31,
                        
                        
                        March
      31,
                        
                        
                        Dollar
                        
                        
                        Percent2009
                        
                        
                        2008
                        
                        
                        Change
                        
                        
                        ChangeFinancial
      AdvisoryValuation
      Advisory
                        
                        $
                        40,370
                        
                        
                        $
                        46,861
                        
                        
                        $
                        (6,491
                        )
                        
                        
                        -13.9
                        %Tax
      Services
                        
                        
                        10,878
                        
                        
                        
                        8,889
                        
                        
                        
                        1,989
                        
                        
                        
                        22.4
                        %Dispute
      & Legal Management Consulting
                        
                        
                        9,643
                        
                        
                        
                        5,687
                        
                        
                        
                        3,956
                        
                        
                        
                        69.6
                        %60,891
                        
                        
                        
                        61,437
                        
                        
                        
                        (546
                        )
                        
                        
                        -0.9
                        %Corporate
      Finance ConsultingPortfolio
      Valuation
                        
                        
                        6,295
                        
                        
                        
                        2,382
                        
                        
                        
                        3,913
                        
                        
                        
                        164.3
                        %Financial
      Engineering
                        
                        
                        4,148
                        
                        
                        
                        3,318
                        
                        
                        
                        830
                        
                        
                        
                        25.0
                        %Strategic
      Value Advisory
                        
                        
                        2,620
                        
                        
                        
                        2,262
                        
                        
                        
                        358
                        
                        
                        
                        15.8
                        %Due
      Diligence
                        
                        
                        1,553
                        
                        
                        
                        4,460
                        
                        
                        
                        (2,907
                        )
                        
                        
                        -65.2
                        %14,616
                        
                        
                        
                        12,422
                        
                        
                        
                        2,194
                        
                        
                        
                        17.7
                        %Investment
      BankingTransaction
      Opinions
                        
                        
                        6,101
                        
                        
                        
                        10,928
                        
                        
                        
                        (4,827
                        )
                        
                        
                        -44.2
                        %Global
      Restructuring Advisory
                        
                        
                        5,578
                        
                        
                        
                        2,834
                        
                        
                        
                        2,744
                        
                        
                        
                        96.8
                        %M&A
      Advisory
                        
                        
                        2,079
                        
                        
                        
                        5,532
                        
                        
                        
                        (3,453
                        )
                        
                        
                        -62.4
                        %13,758
                        
                        
                        
                        19,294
                        
                        
                        
                        (5,536
                        )
                        
                        
                        -28.7
                        %Total
      revenues (excluding reimbursables)
                        
                        $
                        89,265
                        
                        
                        $
                        93,153
                        
                        
                        $
                        (3,888
                        )
                        
                        
                        -4.2
                        %
 The
decrease in revenues primarily resulted from a 28.7% decrease in revenues
attributable to our Investment Banking segment and a 0.9% decrease in revenues
from our Financial Advisory segment.  These decreases were offset by a
17.7% increase in revenues provided by our Corporate Finance Consulting
segment.
 
 Our
Investment Banking segment and the Valuation Advisory business of our Financial
Advisory segment were impacted by the general economic environment and
dislocation in the credit markets which led to a substantially lower volume of
M&A and real estate transactions and a corresponding decline in
revenues.  Revenue growth attributable to our Corporate Finance
Consulting segment was driven by demand for our Portfolio Valuation services and
to a lesser extent our Financial Engineering and Strategic Value Advisory
services.  This growth was partially offset by a decrease in revenues
from our Due Diligence business as a result of a lower volume of M&A
transactions.
 
 Our
client service headcount decreased to 948 client service professionals at March
31, 2009 from 975 client service professionals at December 31, 2008.  This
decrease resulted from targeted reductions and attrition, partially offset by
limited hiring of professionals in areas which we have targeted for
investment.  Our client service headcount increased to 948 client service
professionals at March 31, 2009 from 914 client service professionals at March
31, 2008.  This increase resulted from the net addition of 18
professionals from acquisitions and 16 professionals from targeted
hiring.
 
 25
 
 Direct
Client Service Costs
 
 Direct
client service costs decreased $2,796, or 4.9%, to $54,449 for the three months
ended March 31, 2009 from $57,245 for the three months ended March 31,
2008.  The following table adjusts direct client service costs for
equity-based compensation associated with Legacy Units and IPO Options,
acquisition retention expenses and reimbursable expenses.  Adjusted
direct client service costs as a percentage of revenues increased between
periods as a result of the decrease in revenues between periods.
 
 Direct
      Client Service Costs(Dollars
      in thousands)Three
      Months EndedMarch
      31,
                                                      
                                                      
                                                      March
      31,2009
                                                      
                                                      
                                                      2008Revenues
      (excluding reimbursables)
                                                      
                                                      $
                                                      89,265
                                                      
                                                      
                                                      $
                                                      93,153Total
      direct client service costs
                                                      
                                                      $
                                                      54,449
                                                      
                                                      
                                                      $
                                                      57,245Less:  equity-based
      compensation associatedwith
      Legacy Units and IPO Options
                                                      
                                                      
                                                      (2,331
                                                      )
                                                      
                                                      
                                                      (4,331
                                                      )Less:  acquisition
      retention expenses
                                                      
                                                      
                                                      -
                                                      
                                                      
                                                      
                                                      (310
                                                      )Less:  reimbursable
      expenses
                                                      
                                                      
                                                      (2,015
                                                      )
                                                      
                                                      
                                                      (2,269
                                                      )Direct
      client service costs, as adjusted
                                                      
                                                      $
                                                      50,103
                                                      
                                                      
                                                      $
                                                      50,335Direct
      client service costs, as adjusted,as
      a percentage of revenues
                                                      
                                                      
                                                      56.1
                                                      %
                                                      
                                                      
                                                      54.0
                                                      %
 The
decrease in direct client service costs, as adjusted, resulted from lower
accrued compensation primarily as a result of the decline in revenues between
periods.
 
 Equity-based
compensation decreased between periods primarily as a result of the accelerated
attribution of expense on awards with graded-tranche vesting in prior periods
for Legacy Units and IPO Options, partially offset by an increase in expense for
grants of Ongoing RSAs.  Expenses related to retention payments
associated with the acquisition of the CVC business in 2005 decreased as a
result of the completion of the payments in 2008.  CVC represents the
Corporate Value Consulting business (“CVC”) which we acquired in 2005 from the
Standard & Poor’s division of The McGraw-Hill Companies, Inc.
 
 Operating
Expenses
 
 Operating
expenses decreased $697, or 2.5%, to $27,502 for the three months ended March
31, 2009 from $28,199 for the three months ended March 31, 2008.  The
following table adjusts operating expenses for depreciation and amortization and
equity-based compensation associated with Legacy Units and IPO
Options.  Adjusted operating expenses as a percentage of revenues
increased between periods as a result of the decrease in revenues between
periods.
 
 Operating
      Expenses(Dollars
      in thousands)Three
      Months EndedMarch
      31,
                                                        
                                                        
                                                        March
      31,2009
                                                        
                                                        
                                                        2008Revenues
      (excluding reimbursables)
                                                        
                                                        $
                                                        89,265
                                                        
                                                        
                                                        $
                                                        93,153Total
      operating expenses
                                                        
                                                        $
                                                        27,502
                                                        
                                                        
                                                        $
                                                        28,199Less:  equity-based
      compensation associatedwith
      Legacy Units and IPO Options
                                                        
                                                        
                                                        (922
                                                        )
                                                        
                                                        
                                                        (1,938
                                                        )Less:  depreciation
      and amortization
                                                        
                                                        
                                                        (2,562
                                                        )
                                                        
                                                        
                                                        (2,176
                                                        )Operating
      expenses, as adjusted
                                                        
                                                        $
                                                        24,018
                                                        
                                                        
                                                        $
                                                        24,085Operating
      expenses, as adjusted,as
      a percentage of revenues
                                                        
                                                        
                                                        26.9
                                                        %
                                                        
                                                        
                                                        25.9
                                                        %
 26
 The
decrease in operating expenses, as adjusted, resulted from (i) lower accrued
compensation primarily as a result of the decline in revenues between periods,
(ii) lower recruiting costs from a decline in hiring activity and (iii) lower
practice development expenses, partially offset by higher accounting and legal
fees, salary expense and occupancy costs.
 
 Equity-based
compensation decreased between periods primarily as a result of the accelerated
attribution of expense on awards with graded-tranche vesting in prior periods
for Legacy Units and IPO Options, partially offset by an increase in expense for
grants of Ongoing RSAs.
 
 Other
Income and Expenses
 
 Other
income and expenses include interest income, interest expense and other
expense.  Interest income decreased as a result of transferring
certain cash balances to non-interest bearing accounts in the fourth quarter of
2008 to obtain FDIC protection pursuant to the FDIC’s Transaction Account
Guarantee Program.  Interest expense decreased primarily as a result
of lower LIBOR rates in effect during the three months ended March 31, 2009 when
compared to the three months ended March 31, 2008.  Other expense
decreased primarily from non-cash benefit from the change in fair market value
of the interest rate swap and the related quarterly payment.
 
 Net
Income Attributable to the Noncontrolling Interest
 
 Net
income attributable to the noncontrolling interest represents the portion of net
income or loss before income taxes attributable to the majority ownership
interest in D&P Acquisitions held by the existing unitholders to the extent
the book value of their interest in D&P Acquisitions is greater than
zero.  This interest totaled 56.8% and 59.7% at March 31, 2009 and
2008, respectively.
 
 Provision
for Income Taxes
 
 The
provision for income taxes was $2,112 or 24.3% of income before income taxes for
the three months ended March 31, 2009, compared to $2,264 or 25.3% of
income before income taxes for the three months ended March 31,
2008.  The U.S. statutory income tax rate of 35% was decreased to the
effective tax rate due to the fact that D&P Acquisitions, LLC and many of
its subsidiaries operate as limited liability companies or other flow-through
entities which are not subject to federal income tax.  This operating
structure results in a rate benefit because a portion of the Company’s earnings
are not subject to corporate level taxes.  This favorable impact is
partially offset by an increase due to state and local taxes, the effect of
permanent differences and foreign taxes.
  27
  Segment
Results – Three Months Ended March 31, 2009 versus Three Months Ended March
31, 2008
 
 The
following table sets forth selected segment operating results:
  Results
of Operations by Segment
 (In
thousands, except headcount and rate-per-hour)
 Three
      Months EndedMarch
      31,
                                      
                                      
                                      March
      31,
                                      
                                      
                                      Unit
                                      
                                      
                                      Percent2009
                                      
                                      
                                      2008
                                      
                                      
                                      Change
                                      
                                      
                                      ChangeFinancial
      AdvisoryRevenues (excluding
      reimbursables)
                                      
                                      $
                                      60,891
                                      
                                      
                                      $
                                      61,437
                                      
                                      
                                      $
                                      (546
                                      )
                                      
                                      
                                      -0.9
                                      %Segment operating
      income
                                      
                                      $
                                      10,349
                                      
                                      
                                      $
                                      9,455
                                      
                                      
                                      $
                                      894
                                      
                                      
                                      
                                      9.5
                                      %Segment operating income
      margin
                                      
                                      
                                      17.0
                                      %
                                      
                                      
                                      15.4
                                      %
                                      
                                      
                                      1.6
                                      %
                                      
                                      
                                      10.4
                                      %Corporate
      Finance ConsultingRevenues (excluding
      reimbursables)
                                      
                                      $
                                      14,616
                                      
                                      
                                      $
                                      12,422
                                      
                                      
                                      $
                                      2,194
                                      
                                      
                                      
                                      17.7
                                      %Segment operating
      income
                                      
                                      $
                                      3,252
                                      
                                      
                                      $
                                      2,901
                                      
                                      
                                      $
                                      351
                                      
                                      
                                      
                                      12.1
                                      %Segment operating income
      margin
                                      
                                      
                                      22.2
                                      %
                                      
                                      
                                      23.4
                                      %
                                      
                                      
                                      -1.1
                                      %
                                      
                                      
                                      -4.7
                                      %Investment
      BankingRevenues (excluding
      reimbursables)
                                      
                                      $
                                      13,758
                                      
                                      
                                      $
                                      19,294
                                      
                                      
                                      $
                                      (5,536
                                      )
                                      
                                      
                                      -28.7
                                      %Segment operating
      income
                                      
                                      $
                                      1,543
                                      
                                      
                                      $
                                      6,377
                                      
                                      
                                      $
                                      (4,834
                                      )
                                      
                                      
                                      -75.8
                                      %Segment operating income
      margin
                                      
                                      
                                      11.2
                                      %
                                      
                                      
                                      33.1
                                      %
                                      
                                      
                                      -21.8
                                      %
                                      
                                      
                                      -66.1
                                      %TotalRevenues (excluding
      reimbursables)
                                      
                                      $
                                      89,265
                                      
                                      
                                      $
                                      93,153Segment operating
      income
                                      
                                      $
                                      15,144
                                      
                                      
                                      $
                                      18,733Net client reimbursable
      expenses
                                      
                                      
                                      22
                                      
                                      
                                      
                                      59Equity-based compensation
      fromLegacy Units and IPO
      Options
                                      
                                      
                                      (3,253
                                      )
                                      
                                      
                                      (6,269
                                      )Depreciation and
      amortization
                                      
                                      
                                      (2,562
                                      )
                                      
                                      
                                      (2,176
                                      )Acquisition retention
      expenses
                                      
                                      
                                      -
                                      
                                      
                                      
                                      (310
                                      )Operating
      income
                                      
                                      $
                                      9,351
                                      
                                      
                                      $
                                      10,037
 
  Average
      Client Service ProfessionalsFinancial
      Advisory
                                    
                                    
                                    700
                                    
                                    
                                    
                                    665
                                    
                                    
                                    
                                    35
                                    
                                    
                                    
                                    5.3
                                    %Corporate Finance
      Consulting
                                    
                                    
                                    131
                                    
                                    
                                    
                                    112
                                    
                                    
                                    
                                    19
                                    
                                    
                                    
                                    17.0
                                    %Investment
      Banking
                                    
                                    
                                    136
                                    
                                    
                                    
                                    102
                                    
                                    
                                    
                                    34
                                    
                                    
                                    
                                    33.3
                                    %Total
                                    
                                    
                                    967
                                    
                                    
                                    
                                    879
                                    
                                    
                                    
                                    88
                                    
                                    
                                    
                                    10.0
                                    %End
      of Period Client Service ProfessionalsFinancial
      Advisory
                                    
                                    
                                    681
                                    
                                    
                                    
                                    681
                                    
                                    
                                    
                                    -
                                    
                                    
                                    
                                    0.0
                                    %Corporate Finance
      Consulting
                                    
                                    
                                    130
                                    
                                    
                                    
                                    124
                                    
                                    
                                    
                                    6
                                    
                                    
                                    
                                    4.8
                                    %Investment
      Banking
                                    
                                    
                                    137
                                    
                                    
                                    
                                    109
                                    
                                    
                                    
                                    28
                                    
                                    
                                    
                                    25.7
                                    %Total
                                    
                                    
                                    948
                                    
                                    
                                    
                                    914
                                    
                                    
                                    
                                    34
                                    
                                    
                                    
                                    3.7
                                    %Revenue
      per Client Service ProfessionalFinancial
      Advisory
                                    
                                    $
                                    87
                                    
                                    
                                    $
                                    92
                                    
                                    
                                    $
                                    (5
                                    )
                                    
                                    
                                    -5.4
                                    %Corporate Finance
      Consulting
                                    
                                    $
                                    112
                                    
                                    
                                    $
                                    111
                                    
                                    
                                    $
                                    1
                                    
                                    
                                    
                                    0.9
                                    %Investment
      Banking
                                    
                                    $
                                    101
                                    
                                    
                                    $
                                    189
                                    
                                    
                                    $
                                    (88
                                    )
                                    
                                    
                                    -46.6
                                    %Total
                                    
                                    $
                                    92
                                    
                                    
                                    $
                                    106
                                    
                                    
                                    $
                                    (14
                                    )
                                    
                                    
                                    -13.2
                                    %
  28
 
  Results
of Operations by Segment – Continued
 (In
thousands, except headcount and rate-per-hour)
  Three
      Months EndedMarch
      31,
                                        
                                        
                                        March
      31,
                                        
                                        
                                        Unit
                                        
                                        
                                        Percent2009
                                        
                                        
                                        2008
                                        
                                        
                                        Change
                                        
                                        
                                        ChangeUtilization(1)Financial
      Advisory
                                        
                                        
                                        67.1
                                        %
                                        
                                        
                                        67.1
                                        %
                                        
                                        
                                        0.0
                                        %
                                        
                                        
                                        0.0
                                        %Corporate Finance
      Consulting
                                        
                                        
                                        55.6
                                        %
                                        
                                        
                                        61.5
                                        %
                                        
                                        
                                        -5.9
                                        %
                                        
                                        
                                        -9.6
                                        %Rate-Per-Hour(2)Financial
      Advisory
                                        
                                        $
                                        306
                                        
                                        
                                        $
                                        321
                                        
                                        
                                        $
                                        (15
                                        )
                                        
                                        
                                        -4.7
                                        %Corporate Finance
      Consulting
                                        
                                        $
                                        428
                                        
                                        
                                        $
                                        344
                                        
                                        
                                        $
                                        84
                                        
                                        
                                        
                                        24.4
                                        %
 
 Revenues
      (excluding reimbursables)Financial
      Advisory
                                      
                                      $
                                      60,891
                                      
                                      
                                      $
                                      61,437
                                      
                                      
                                      $
                                      (546
                                      )
                                      
                                      
                                      -0.9
                                      %Corporate Finance
      Consulting
                                      
                                      
                                      14,616
                                      
                                      
                                      
                                      12,422
                                      
                                      
                                      
                                      2,194
                                      
                                      
                                      
                                      17.7
                                      %Investment
      Banking
                                      
                                      
                                      13,758
                                      
                                      
                                      
                                      19,294
                                      
                                      
                                      
                                      (5,536
                                      )
                                      
                                      
                                      -28.7
                                      %Total
                                      
                                      $
                                      89,265
                                      
                                      
                                      $
                                      93,153
                                      
                                      
                                      $
                                      (3,888
                                      )
                                      
                                      
                                      -4.2
                                      %
 Average
      Number of Managing DirectorsFinancial
      Advisory
                                        
                                        
                                        101
                                        
                                        
                                        
                                        84
                                        
                                        
                                        
                                        17
                                        
                                        
                                        
                                        20.2
                                        %Corporate Finance
      Consulting
                                        
                                        
                                        30
                                        
                                        
                                        
                                        19
                                        
                                        
                                        
                                        11
                                        
                                        
                                        
                                        57.9
                                        %Investment
      Banking
                                        
                                        
                                        36
                                        
                                        
                                        
                                        30
                                        
                                        
                                        
                                        6
                                        
                                        
                                        
                                        20.0
                                        %Total
                                        
                                        
                                        167
                                        
                                        
                                        
                                        133
                                        
                                        
                                        
                                        34
                                        
                                        
                                        
                                        25.6
                                        %End
      of Period Managing DirectorsFinancial
      Advisory
                                        
                                        
                                        101
                                        
                                        
                                        
                                        84
                                        
                                        
                                        
                                        17
                                        
                                        
                                        
                                        20.2
                                        %Corporate Finance
      Consulting
                                        
                                        
                                        30
                                        
                                        
                                        
                                        21
                                        
                                        
                                        
                                        9
                                        
                                        
                                        
                                        42.9
                                        %Investment
      Banking
                                        
                                        
                                        38
                                        
                                        
                                        
                                        30
                                        
                                        
                                        
                                        8
                                        
                                        
                                        
                                        26.7
                                        %Total
                                        
                                        
                                        169
                                        
                                        
                                        
                                        135
                                        
                                        
                                        
                                        34
                                        
                                        
                                        
                                        25.2
                                        %Revenue
      per Managing DirectorFinancial
      Advisory
                                        
                                        $
                                        603
                                        
                                        
                                        $
                                        731
                                        
                                        
                                        $
                                        (128
                                        )
                                        
                                        
                                        -17.5
                                        %Corporate Finance
      Consulting
                                        
                                        $
                                        487
                                        
                                        
                                        $
                                        654
                                        
                                        
                                        $
                                        (167
                                        )
                                        
                                        
                                        -25.5
                                        %Investment
      Banking
                                        
                                        $
                                        382
                                        
                                        
                                        $
                                        643
                                        
                                        
                                        $
                                        (261
                                        )
                                        
                                        
                                        -40.6
                                        %Total
                                        
                                        $
                                        535
                                        
                                        
                                        $
                                        700
                                        
                                        
                                        $
                                        (165
                                        )
                                        
                                        
                                        -23.6
                                        %
  
  (1)
                The
      utilization rate for any given period is calculated by dividing the number
      of hours incurred by client service professionals who worked on client
      assignments (including internal projects for the Company) during the
      period by the total available working hours for all of such client service
      professionals during the same period, assuming a 40 hour work week, less
      paid holidays and vacation days.  Financial Advisory utilization
      excludes approximately 60 client service professionals associated with
      Rash.
  (2)
                Average
      billing rate-per-hour is calculated by dividing applicable revenues for
      the period by the number of hours worked on client assignments (including
      internal projects for the Company) during the same
      period.  Financial Advisory revenues used to calculate
      rate-per-hour exclude approximately $1,892 and $2,024 of revenues
      associated with Rash in the three months ended March 31, 2009 and 2008,
      respectively.
 
 29
  Revenues
and expenses attributable to reportable segments are generally based on which
segment and product line a client service professional is a dedicated
member.  As a result, revenues recognized that relate to the
cross-utilization of client service professionals across reportable segments
occur each period. In the three months ended March 31, 2009 and 2008, the
Financial Advisory segment (primarily Valuation Advisory services) recognized
revenues of $4,322 and $5,223 from the cross-utilization of its client service
professionals on engagements from the Corporate Finance Consulting segment
(primarily Portfolio Valuation services), respectively.
  Financial
Advisory
 
 Revenues
  Revenues
from the Financial Advisory segment were $60,891 for the three months ended
March 31, 2009, compared to $61,437 for the three months ended March 31,
2008.  The decrease in revenues resulted from our Valuation Advisory
business, partially offset by continued growth in revenues from our Tax Services
and Dispute & Legal Management Consulting businesses, as summarized in the
following table:
 
 Three
      Months EndedMarch
      31,
                      
                      
                      March
      31,
                      
                      
                      Dollar
                      
                      
                      Percent2009
                      
                      
                      2008
                      
                      
                      Change
                      
                      
                      ChangeFinancial
      AdvisoryValuation
      Advisory
                      
                      $
                      40,370
                      
                      
                      $
                      46,861
                      
                      
                      $
                      (6,491
                      )
                      
                      
                      -13.9
                      %Tax
      Services
                      
                      
                      10,878
                      
                      
                      
                      8,889
                      
                      
                      
                      1,989
                      
                      
                      
                      22.4
                      %Dispute
      & Legal Management Consulting
                      
                      
                      9,643
                      
                      
                      
                      5,687
                      
                      
                      
                      3,956
                      
                      
                      
                      69.6
                      %$
                      60,891
                      
                      
                      $
                      61,437
                      
                      
                      $
                      (546
                      )
                      
                      
                      -0.9
                      %
  The
current economic environment continues to provide our Financial Advisory segment
with opportunities and challenges.  The decrease in revenues from our
Valuation Advisory business primarily resulted from reduced demand in services
correlated to the volume of M&A transactions, which impacted services for
real estate valuations and SFAS 141 purchase price allocations.  These
decreases were partially offset by increases in revenue from goodwill impairment
testing in conjunction with SFAS 142.  The increase in revenues from
Tax Services primarily resulted from continued growth in property tax services
as well as the addition of professionals in our transactional tax advisory
practice during the latter half of 2008.  The increase in revenues
from our Dispute & Legal Management Consulting business primarily resulted
from an engagement to serve as a financial advisor to the court appointed
examiner of a large financial services company under bankruptcy
protection.
 
 Segment
Operating Income
  Financial
Advisory segment operating income increased $894, or 9.5%, to $10,349 for the
three months ended March 31, 2009, compared to $9,455 for the three months ended
March 31, 2008.  Segment operating income margin, defined as segment
operating income expressed as a percentage of segment revenues, was 17.0% for
the three months ended March 31, 2009, compared to 15.4% for the three months
ended March 31, 2008.
 
 30
 
 Corporate
Finance Consulting
 
 Revenues
  Revenues
from the Corporate Finance Consulting segment increased $2,194, or 17.7%, to
$14,616 for the three months ended March 31, 2009, compared to $12,422 for the
three months ended March 31, 2008.  Growth was primarily driven by
demand for Portfolio Valuation services and to a lesser extent services from
Financial Engineering and Strategic Value Advisory, partially offset by a
decrease in revenues from Due Diligence, as summarized in the following
table:
 
 Three
      Months EndedMarch
      31,
                      
                      
                      March
      31,
                      
                      
                      Dollar
                      
                      
                      Percent2009
                      
                      
                      2008
                      
                      
                      Change
                      
                      
                      ChangeCorporate
      Finance ConsultingPortfolio
      Valuation
                      
                      $
                      6,295
                      
                      
                      $
                      2,382
                      
                      
                      $
                      3,913
                      
                      
                      
                      164.3
                      %Financial
      Engineering
                      
                      
                      4,148
                      
                      
                      
                      3,318
                      
                      
                      
                      830
                      
                      
                      
                      25.0
                      %Strategic
      Value Advisory
                      
                      
                      2,620
                      
                      
                      
                      2,262
                      
                      
                      
                      358
                      
                      
                      
                      15.8
                      %Due
      Diligence
                      
                      
                      1,553
                      
                      
                      
                      4,460
                      
                      
                      
                      (2,907
                      )
                      
                      
                      -65.2
                      %$
                      14,616
                      
                      
                      $
                      12,422
                      
                      
                      $
                      2,194
                      
                      
                      
                      17.7
                      %
  Portfolio
Valuation and Financial Engineering benefited from increased demand from
existing clients as well as the addition of new clients.  The decrease
in revenues from Due Diligence resulted from a lower volume of M&A
transactions during the quarter and also led to lower utilization.
 
 Segment
Operating Income
  Operating
income from the Corporate Finance Consulting segment increased $351, or 12.1%,
to $3,252 for the three months ended March 31, 2009, compared to $2,901 for the
three months ended March 31, 2008.  Segment operating income margin
was 22.2% for the three months ended March 31, 2009, compared to 23.4% for the
three months ended March 31, 2008.
 
 Investment
Banking
 
 Revenues
  Revenues
from the Investment Banking segment were $13,758 for the three months ended
March 31, 2009, compared to $19,294 for the three months ended March 31, 2008,
as summarized in the following table.
 
 Three
      Months EndedMarch
      31,
                      
                      
                      March
      31,
                      
                      
                      Dollar
                      
                      
                      Percent2009
                      
                      
                      2008
                      
                      
                      Change
                      
                      
                      ChangeInvestment
      BankingTransaction
      Opinions
                      
                      $
                      6,101
                      
                      
                      $
                      10,928
                      
                      
                      $
                      (4,827
                      )
                      
                      
                      -44.2
                      %Global
      Restructuring Advisory
                      
                      
                      5,578
                      
                      
                      
                      2,834
                      
                      
                      
                      2,744
                      
                      
                      
                      96.8
                      %M&A
      Advisory
                      
                      
                      2,079
                      
                      
                      
                      5,532
                      
                      
                      
                      (3,453
                      )
                      
                      
                      -62.4
                      %$
                      13,758
                      
                      
                      $
                      19,294
                      
                      
                      $
                      (5,536
                      )
                      
                      
                      -28.7
                      %
  The
results were primarily impacted by the general economic environment and
dislocation in the credit markets which led to a lower volume of M&A
transactions.  Global Restructuring Advisory benefited from our
international restructuring practice, which we launched in the second quarter of
2008, and an increase in demand for our domestic restructuring
services.
 
 End of
period client service professional headcount increased by 28 to 137 client
service professionals at March 31, 2009, compared to 109 client service
professionals at March 31, 2008.  The increase primarily resulted from
the addition of professionals in our international restructuring practice at the
beginning of our second quarter in 2008.
 
 Segment
Operating Income
  Operating
income from the Investment Banking segment was $1,543 for the three months ended
March 31, 2009, compared to $6,377 for the three months ended March 31,
2008.  Operating income margin was 11.2% for the three months ended
March 31, 2009, compared to 33.1% for the three months ended March 31,
2008.
 
 31
 
 Liquidity
and Capital Resources
 
 Our
primary sources of liquidity are our existing cash balances and the remaining
debt capacity available under our credit facility.  Of our total cash
balance of $49,376 at March 31, 2009, $42,786 was held in U.S. non-interest
bearing transaction accounts which participate in the FDIC’s Transaction Account
Guarantee Program.  This program provides unlimited deposit insurance
coverage for U.S. non-interest bearing transaction accounts until the end of
2009.  The remaining $6,590 of cash balances was held in other U.S. or
international bank accounts which do not participate in the
program.  The amount available for future borrowings under our credit
facility was $15,787 at March 31, 2009.
 
 Our
historical cash flows are primarily related to the timing of (i) cash receipt of
revenues, (ii) payment of base compensation, benefits and operating expenses,
(iii) the timing of payment of bonuses to professionals, (iv) tax distributions
and TRA (as defined and described below) payments to members of D&P
Acquisitions, and (v) corporate tax payments by the
Company.  Typically, we accrue performance bonuses during the course
of the calendar year, therefore generating cash, which is used to fund bonus
payments to our personnel early in the following year.
 
 As a
limited liability company, D&P Acquisitions does not incur significant
federal or state and local taxes, which taxes are primarily the obligations of
our members of D&P Acquisitions.  Therefore, D&P Acquisitions
makes periodic distributions to its members based on estimates of taxable income
and assumptions about marginal tax rates.  The marginal tax
distribution rate that has initially been set is 45%.  D&P
Acquisitions made aggregate distributions to members, not including the Company,
of $8,847 and $7,766 during the three months ended March 31, 2009 and 2008,
respectively, with respect to estimated taxable income for 2008 and 2007,
respectively.  D&P Acquisitions is only required to make such
distributions if cash is available for such purposes for at least the next 12
month period.  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 to the extent it is higher than the original
estimate.
 
 The
Company has entered into a tax receivable agreement (“TRA”) with the existing
unitholders of D&P Acquisitions (for the benefit of the existing unitholders
of D&P Acquisitions) that provides for the payment by the Company to the
unitholders of D&P Acquisitions of 85% of the amount of cash savings, if
any, in U.S. federal, state and local income tax that the Company realizes (i)
from the tax basis in its proportionate share of D&P Acquisitions' goodwill
and similar intangible assets that the Company receives as a result of the
exchanges and (ii) from the federal income tax election referred to
above.  There were no payments under the TRA in the three months ended
March 31, 2009 as these payments are typically made in the fourth quarter of
each year.  In 2008, the Company made payments of $791 with respect to
the period from October 4 through December 31, 2007.  D&P
Acquisitions expects to make future payments under the TRA to the extent cash is
available for such purposes.  At March 31, 2009, the Company recorded
a liability of $58,479, including a current portion of $3,148, representing the
payments due to D&P Acquisitions’ unitholders under the TRA.
 
 Cash and
cash equivalents decreased by $32,005 to $49,376 at March 31, 2009, compared to
$81,381 at December 31, 2008.  The decrease was primarily due to cash
bonus payments with respect to 2008, distributions to noncontrolling
unitholders; purchases of investments related to the deferred compensation plan;
and purchases of property, plant and equipment; offset by cash from income
generated during the quarter.
 
 Operating
Activities
  During
the three months ended March 31, 2009, cash of $13,454 was used in operating
activities, compared to $43,072 in the prior year period.  The
decrease of amounts used in operating activities primarily resulted from (i)
lower cash bonus payments made in 2009 with respect to the 2008 bonus year, as
compared to cash bonus payments made in 2008 with respect to the 2007 bonus year
and (ii) lower bonus accruals in the current year, as compared to the prior
year, and from lower unbilled services.
 
 Investing
Activities
  During
the three months ended March 31, 2009, cash of $7,792 was used in investing
activities, compared to $12,244 used in the prior year period.  Investing
activities during the current period included (i) purchases of property and
equipment to support our continued growth and (ii) purchases of and proceeds
from the sale of investments related to the Company’s deferred compensation
plan.  Management believes these investments pose limited liquidity
risk.
 
 Financing
Activities
  During
the three months ended March 31, 2009, cash of $9,655 was used in financing
activities, compared to $7,964 used in the prior year period.  Financing
activities in the current period primarily resulted from tax distributions to
members of D&P Acquisitions as previously discussed.  Repurchases of
Class A common stock represents shares of Class A common stock withheld to cover
payroll tax withholdings related to the lapse of restrictions on Ongoing
RSAs.  These shares were not part of a publicly announced repurchase
program.
 
 32
 Credit
Facility
  Our
credit facility consists of a (i) $65,000 seven-year term loan, (ii) $15,000
delayed draw term loan, (iii) $20,000 six-year revolver loan, and (iv) $75,000
incremental term loan facility, which is currently uncommitted by the lenders
and would require additional approval at the time of request.  No
additional amounts are available under our term loan facilities at March 31,
2009.  As a result of $4,213 of outstanding letters of credit for
certain real estate leases, the amount available for future borrowings under our
revolver loan was $15,787 at March 31, 2009.
 
 The
facility expires on October 1, 2012.  All obligations under the credit
facility are unconditionally guaranteed by each of our existing and future
subsidiaries, other than certain foreign and regulated
subsidiaries.  The credit facility and the related guarantees are
secured by substantially all of Duff & Phelps, LLC’s present and future
assets and all present and future assets of each guarantor on a first lien
basis.
 
 At March
31, 2009, $42,565 was outstanding under the term loan facility (before debt
discount and interest rate swap) and no amount was outstanding under the
revolving credit facility.  Borrowings under the credit facility bear
interest at a rate based on LIBOR plus a margin of 2.75%.  The Company
incurs an annual commitment fee of 1% on the unused portion of the term loan
facility and 0.5% of the unused portion of the revolving credit
facility.
 
 The
credit facility includes customary events of default and covenants for maximum
net debt to EBITDA and a fixed charge coverage ratio.  Management believes
that the Company was in compliance with all of its covenants as of March 31,
2009.  The credit facility also imposes limits on our ability to make
investments outside the United States or in joint ventures.  These
limitations could impact our ability to further expand our
business.
 
 The
credit facility requires a mandatory prepayment in an amount equal to half of
the Excess Cash Flow (as defined in the credit agreement) for each year. 
In the event that the consolidated senior leverage ratio on the last day of such
fiscal year is less than 1.50 to 1.00, there will be no mandatory
prepayment.  Excess Cash Flow (as defined in the credit agreement) was
negative in 2008 and 2007 and there was no mandatory prepayment.
  We
regularly monitor our liquidity position, including cash, other significant
working capital assets and liabilities, debt, and other matters relating to
liquidity and compliance with regulatory net capital requirements.
 
 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
credit agreement.  We believe these funds will be adequate to fund
future growth.
 
 Our
liquidity and our ability to obtain financing may be negatively impacted if one
of our lenders under our revolving credit facility, or another financial
institution, suffers liquidity issues.  In such an event, we may not
be able to draw on all, or a substantial portion, of our revolving credit
facility.  Also, if we attempt to obtain future financing in addition
to our existing credit facility to finance our continued growth through
acquisitions or otherwise, the credit market turmoil could negatively impact our
ability to obtain such financing or the terms on which it is
available.  Our ability to secure short-term and long-term financing
in the future will depend on several factors, including our future
profitability, the quality of our accounts receivable and unbilled services, our
relative levels of debt and equity and the overall condition of the credit
markets.
  33
  Item
3.       Quantitative and Qualitative
Disclosures About Market Risk.
 
 Market
risks at March 31, 2009 have not changed significantly from those discussed in
Item 7A of our Annual Report on Form 10-K for the year ended December 31, 2008,
as filed with the SEC on February 26, 2009.
 
 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.
 
 
 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, 2008, as filed with the SEC on February 26, 2009.
 
 34
 
 Item 2.       Unregistered
Sales of Equity Securities and Use of Proceeds.
 
 Unregistered Sales of Equity
Securities
 
 On May 4,
2009, the Company issued an aggregate of 2,882 shares of Class A common
stock to the former stockholder of Dubinsky & Company, P.C. (“Dubinsky”) as
additional merger consideration in connection with the merger of Dubinsky with
and into a subsidiary of the Company.  The merger was consummated on
April 11, 2008.  The shares issued were additional merger
consideration paid to the stockholder of Dubinsky in connection with the
merger.  The issuance of these shares of Class A common stock was
made without a registration statement under the Securities Act of 1933, as
amended (the “Securities Act”) because the shares of Class A common stock
were offered and sold in a transaction exempt from registration under
Section 4(2) of the Securities Act.
 
 Issuer Purchases of Equity
Securities
 
 During
the first quarter of 2009, we withheld shares of our Class A common stock from
holders of Ongoing RSAs to satisfy the holders’ tax liabilities in connection
with the lapse of restrictions on such shares, as summarized in the following
table:
 TotalNumber
      of
                        
                        
                        AverageShares
                        
                        
                        Price
      PaidPeriod
                        
                        Purchased(1)
                        
                        
                        Per
      Share(In
      thousands)January
      1 through January 31, 2009
                        
                        
                        -
                        
                        
                        $
                        -February
      1 through February 28, 2009
                        
                        
                        10
                        
                        
                        
                        14.99March
      1 through March 31, 2009
                        
                        
                        30
                        
                        
                        
                        14.81Total
                        
                        
                        40
                        
                        
                        $
                        14.86
  (1)
              Represents
      shares of Class A common stock withheld to cover payroll tax withholdings
      related to the lapse of restrictions on Ongoing RSAs.  These
      shares were not part of a publicly announced repurchase program and were
      retired upon purchase.
 
 Item 3.       Defaults
Upon Senior Securities.
 
 None.
 
 Item 4.       Submission
of Matters to a Vote of Security Holders.
 
 None.
 
 Item 5.       Other
Information.
 
 None.
 
 35
 
 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.
 36
  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:  May
      5, 2009
                
                /s/ Jacob
      L. SilvermanJACOB
      L. SILVERMANChief
      Financial Officer
  37