Highlights NEW YORK, Feb. 5 /PRNewswire-FirstCall/ -- Evercore
Partners Inc. (NYSE: EVR) today announced that its Adjusted Pro
Forma Net Revenues were $197.2 million for the twelve months ended
December 31, 2008, compared to Adjusted Pro Forma Net Revenues of
$321.6 million for twelve months ended December 31, 2007. Adjusted
Pro Forma Net Income was $4.0 million or $0.12 per share for the
twelve months ended December 31, 2008, compared to Adjusted Pro
Forma Net Income of $51.4 million or $1.56 per share for the twelve
months ended December 31, 2007. U.S. GAAP Net Revenues were $194.7
million for the twelve months ended December 31, 2008, compared to
U.S. GAAP Net Revenues of $321.6 million for the twelve months
ended December 31, 2007. U.S. GAAP Net Loss was $(4.7) million or
$(0.36) per share for the twelve months ended December 31, 2008,
compared to a U.S. GAAP Net Loss of $(34.5) million or $(3.38) per
share for the twelve months ended December 31, 2007. Evercore's
fourth quarter 2008 Adjusted Pro Forma Net Revenues were $35.1
million compared to $93.8 million for the fourth quarter of 2007,
the Firm's highest revenue quarter ever. The Adjusted Pro Forma Net
Loss in the fourth quarter of 2008 was $(8.5) million or $(0.25)
per share compared to Adjusted Pro Forma Net Income of $9.3 million
or $0.28 per share for the fourth quarter of 2007. U.S. GAAP Net
Revenues for the fourth quarter of 2008 were $33.2 million compared
to U.S. GAAP Net Revenues of $93.8 million for the fourth quarter
of 2007. The fourth quarter 2008 U.S. GAAP Net Loss was $(5.3)
million or $(0.39) per share, compared to Net Income of $3.1
million or $0.25 per share for the fourth quarter of 2007.
Evercore's quarterly results may fluctuate significantly due to the
timing and amount of advisory fees earned, as well as gains or
losses relating to the Firm's Investment Management business and
other factors. Accordingly, financial results in any particular
quarter may not be representative of future results over a longer
period of time. "This is the most challenging financial market
environment in my lifetime," said Roger Altman, Chairman and Chief
Executive Officer of Evercore Partners. "Nevertheless, we are not
pleased with these results and will continue to reduce costs and to
increase the revenue capacity of the Firm. In a sense, these
results are ironic. The global merger and acquisitions environment
deteriorated sharply and our earnings fell sharply. But, from a
long-term perspective, the Firm accomplished more in 2008 than in
any recent year." In the discussion below of Evercore and the
business segments, information is presented on an adjusted pro
forma basis which is a non-generally accepted accounting principles
("non-GAAP") measure and is unaudited. Adjusted pro forma results
begin with information prepared in accordance with accounting
principles generally accepted in the United States of America
("U.S. GAAP") adjusted to exclude certain items. For more
information about the adjusted pro forma basis of reporting used by
management to evaluate the performance of Evercore and each line of
business, including reconciliations of U.S. GAAP results to an
adjusted pro forma basis, see pages A-1 through A-10 included in
Annex I. These adjusted pro forma amounts are allocated to the
Company's two business segments: Advisory and Investment
Management. Consolidated Adjusted Pro Forma Results Three Months
Twelve Months Ended Ended December 31, December 31, ------------
------------- 2008 2007 % Change 2008 2007 % Change ---- ----
-------- ---- ---- -------- (dollars in thousands) Net Revenues
$35,120 $93,792 (63%) $197,209 $321,599 (39%) ------- -------
-------- -------- Expenses: Employee Compensation and Benefits
34,585 59,940 (42%) 139,211 173,333 (20%) Non-compensation Costs
12,971 18,309 (29%) 49,628 62,169 (20%) ------ ------ ------ ------
Total Expenses 47,556 78,249 (39%) 188,839 235,502 (20%) ------
------ ------- ------- Adjusted Pro Forma Operating Income (Loss)
(12,436) 15,543 NM 8,370 86,097 (90%) Interest Expense on Long-term
Debt (1) 1,884 - NM 2,554 - NM ----- ----- ----- ----- Adjusted Pro
Forma Pre-Tax Income (Loss) (14,320) 15,543 NM 5,816 86,097 (93%)
Provision (Benefit) for Income Taxes (5,831) 6,256 NM 1,768 34,654
(95%) ------ ----- ----- ------ Adjusted Pro Forma Net Income
(Loss) $(8,489) $9,287 NM $4,048 $51,443 (92%) ======= ======
====== ======= Adjusted Pro Forma EPS $(0.25) $0.28 NM $0.12 $1.56
(92%) (1) Interest Expense on Long-term Debt represents interest
expense on the Senior Notes. A discussion of Net Revenues and
Employee Compensation and Benefits expense is presented below for
the Advisory and Investment Management segments. Non-compensation
expenses were reduced by more than $12 million in 2008 when
compared to 2007, as the Company achieved objectives in improving
the efficiency and effectiveness of its operations. We continue to
evaluate and implement additional cost control measures. Business
Line Reporting Three Months Twelve Months Ended Ended December 31,
December 31, ------------ -------------- 2008 2007 % Change 2008
2007 % Change ---- ---- -------- ---- ---- -------- (dollars in
thousands) Net Revenues: Advisory $31,738 $87,824 (64%) $181,608
$295,751 (39%) Other Revenue, net 2,440 728 235% 5,020 3,959 27%
----- --- ----- ----- Net Revenues 34,178 88,552 (61%) 186,628
299,710 (38%) ------ ------ ------- ------- Expenses: Employee
Compensation and Benefits 26,030 48,446 (46%) 116,433 147,077 (21%)
Non- compensation Costs 10,698 13,513 (21%) 40,664 46,127 (12%)
------ ------ ------ ------ Total Expenses 36,728 61,959 (41%)
157,097 193,204 (19%) ------ ------ ------- ------- Adjusted Pro
Forma Pre-Tax Income (Loss) $(2,550) $26,593 NM $29,531 $106,506
(72%) ======= ======= ======= ======== Advisory Revenues Advisory
revenue was $181.6 million for the twelve months ended December 31,
2008, compared to $295.8 million for the twelve months ended
December 31, 2007, a decline of 39%. This compares to a decline of
31% in the dollar value of global completed M&A transactions
and a decline of 46% in the dollar value of U.S. completed M&A
transactions in 2008. The corresponding dollar value of declines in
transactions greater than $1 billion was 33% and 50%, respectively.
Advisory revenue was $31.7 million for the quarter ended December
31, 2008, compared to $87.8 million for the fourth quarter of 2007,
which was the highest revenue quarter in Evercore's history.
Revenues from restructuring assignments continue to increase.
Evercore has been retained as the advisor to LyondellBasell, Sirius
XM Radio, and GM, including Delphi and a variety of other issues.
Evercore has also been retained on other notable assignments, some
of which are not publicly disclosed. The growth in restructuring
advisory engagements has partially offset a decline in M&A
activity. In addition to the recently announced transaction where
we advised Wyeth on its $68 billion transaction with Pfizer,
Evercore advised on a number of significant transactions in 2008,
including, among others: -- The Special Committee of Time Warner
Cable on its separation from Time Warner -- Electronic Data Systems
on its sale to Hewlett-Packard -- Centennial Communications on its
sale to AT&T -- Bright Horizons Family Solutions on its sale to
an affiliate of Bain Capital -- Performance Food Group on its sale
to an affiliate of The Blackstone Group and Wellspring Capital
Management -- De Ruiter Seeds Group BV on its sale to Monsanto
Company -- Creditex Group on its sale to IntercontinentalExchange
-- Silver Lake on the sale of a minority interest to CalPERS -- ISE
on its merger of the ISE Stock Exchange with, and acquisition of a
minority stake in, DirectEdge -- EADS and Airbus on the disposal of
their Laupheim based aircraft interiors business to the
Diehl/Thales joint venture The $68 billion Pfizer/Wyeth transaction
is the largest U.S. transaction since Evercore advised AT&T on
its $89 billion acquisition of BellSouth. The $42 billion
separation of Time Warner Cable from Time Warner was the 4th
largest transaction of 2008 and the $14 billion sale of EDS to
Hewlett-Packard was the largest technology transaction of 2008.
Evercore earned advisory revenues from a record number of clients
in 2008 compared to 2007. Of these clients, 50 paid Evercore fees
of $1 million or more in 2008 compared to 55 clients in 2007.
Advisory revenues derived from clients located in the U.S.
represented approximately 73% and 75% of Advisory revenues for the
fourth quarter and twelve months ended December 31, 2008,
respectively, compared to 82% and 78% for the fourth quarter and
twelve months ended December 31, 2007, respectively. Evercore is
pleased to have announced the addition of Robert Gillespie, former
Vice Chairman of Investment Banking and Joint Global Head of
Investment Banking at UBS, to the Firm's M&A team in the U.K.
increasing the number of Senior Managing Directors globally to 45.
We hired five additional advisory partners in 2008. Two of these
partner hires were part of the build-out of our restructuring
business, which is experiencing significant growth. Expenses
Compensation costs for the Advisory segment for the fourth quarter
and twelve months ended December 31, 2008, declined by $22.4
million and $30.6 million, respectively, despite banker headcount
increasing by 26 people from December 31, 2007. This increase in
banker headcount reflects Evercore's decision to strategically grow
its Advisory business during this downturn, particularly its
efforts to globalize and to continue to build its restructuring
group. For the twelve months ended December 31, 2008, Evercore's
Advisory compensation ratio was 62%. Excluding the stock
compensation costs related to Advisory senior managing directors
hired in 2007 and 2008, the ratio would have been 53%.
Non-compensation costs for the fourth quarter and twelve months
ended December 31, 2008, declined in the aggregate by $2.8 million
and $5.5 million, respectively, achieving Evercore's planned cost
reduction objectives for 2008. Investment Management Three Months
Twelve Months Ended Ended December 31, December 31, -------------
-------------- 2008 2007 % Change 2008 2007 % Change ---- ----
-------- ---- ---- -------- (dollars in thousands) Net Revenues:
Private Equity $1,960 $5,146 (62%) $11,202 $20,188 (45%)
Institutional Asset Management (998) (799) (25%) (1,412) (30) NM
Wealth Management (187) - NM (350) - NM Other Revenue, net (1) 167
893 (81%) 1,141 1,731 (34%) --- --- ----- ----- Net Revenues 942
5,240 (82%) 10,581 21,889 (52%) --- ----- ------ ------ Expenses:
Employee Compensation and Benefits 8,555 11,494 (26%) 22,778 26,256
(13%) Non- compensation Costs 2,273 4,796 (53%) 8,964 16,042 (44%)
----- ----- ----- ------ Total Expenses 10,828 16,290 (34%) 31,742
42,298 (25%) ------ ------ ------ ------ Adjusted Pro Forma
Operating Income (Loss) (9,886) (11,050) 11% (21,161) (20,409) (4%)
Interest Expense on Long-term Debt (1) 1,884 - NM 2,554 - NM -----
----- ----- ----- Adjusted Pro Forma Pre-Tax Income (Loss)
$(11,770) $(11,050) (7%) $(23,715) $(20,409) (16%) ========
======== ======== ======== (1) Other Revenue, net includes interest
income and expense on short-term reverse repurchase and repurchase
agreements. Interest expense related to the Senior Notes is
presented in Interest Expense on Long-term Debt in order to clearly
reflect the operating results of the business. Revenues Investment
Management revenue declined to $0.9 million and $10.6 million for
the fourth quarter and twelve months ended December 31, 2008,
respectively, compared to Investment Management revenue of $5.2
million and $21.9 million for the fourth quarter and twelve months
ended December 31, 2007, respectively. The decline in revenues
versus the prior periods reflects the rebuilding of the Private
Equity team and the adverse impact that the current market
environment has had on the valuations of investments in the private
equity funds. Revenues also reflect Evercore's share of losses
incurred during the start-up phases of Evercore Pan Asset
Management and HighView Investment Group ("HighView"). Private
Equity Three Months Twelve Months Ended Ended December 31, December
31, ------------- ------------- 2008 2007 % Change 2008 2007 %
Change ---- ---- -------- ---- ---- -------- (dollars in thousands)
Net Revenues: Management Fees Including Portfolio Company Fees
$2,753 $3,856 (29%) $9,538 $14,608 (35%) Realized and Unrealized
Gains (Losses) Including Carried Interest (793) 1,290 NM 1,664
5,580 (70%) ---- ----- ----- ----- Net Revenues $1,960 $5,146 (62%)
$11,202 $20,188 (45%) ====== ====== ======= ======= Private equity
revenues for the fourth quarter of 2008 declined primarily as a
result of unrealized losses relating to investments in Evercore's
private equity funds in both Mexico and the United States partially
offset by gains in Evercore Capital Partners II ("ECP II")
resulting from two successful secondary sale transactions executed
in the quarter. These secondary sales provided important liquidity
to ECP's limited partners and were noteworthy transactions in a
difficult market. In addition, management fees declined in
comparison with the fourth quarter of 2007 as a result of the
previously disclosed step-down in fees from ECP II. This decline
was offset by increased management fees for Evercore Mexico Capital
Partners II, which closed during the fourth quarter of 2008 with
$126 million of capital commitments. Institutional Asset Management
Three Months Twelve Months Ended Ended December 31, December 31,
------------- ------------- 2008 2007 % Change 2008 2007 % Change
---- ---- -------- ---- ---- -------- (dollars in thousands) Net
Revenues: Management Fees $265 $559 (53%) $1,367 $1,166 17%
Realized and Unrealized Gains (Losses) Including Performance Fees
(1,263) (1,358) 7% (2,779) (1,196) (132%) ------ ------ ------
------ Net Revenues $(998) $(799) (25%) $(1,412) $(30) NM =====
===== ======= ==== Reported management fees declined at Evercore
Mexico's Protego Casa de Bolsa ("PCB") due to the depreciation of
the Mexican peso. As of December 31, 2008, assets under management
at PCB were 8.8 billion Mexican pesos compared to 7.2 billion
Mexican pesos as of December 31, 2007. In the United States,
difficult equity markets continued to be a challenge for Evercore
Asset Management ("EAM"), resulting in realized and unrealized net
losses for the fourth quarter and twelve months ended December 31,
2008 on Evercore's seed capital investments in EAM products. As of
December 31, 2008, EAM's assets under management declined to $165.7
million from $491.4 million as of December 31, 2007 due to client
re-balancing and poor performance. EAM has made progress in
building a more diversified product portfolio, and on February 3,
2009, announced the addition of an investment team with a strong
investment track record in two core equity products and more than
$120 million of assets under management to the EAM platform.
Realized and Unrealized Gains (Losses) Including Performance Fees
include Evercore's share of the losses of HighView. Wealth
Management On November 18, 2008, the Company launched Evercore
Wealth Management, LLC ("EWM") with the former CEO of U.S. Trust,
Jeffrey Maurer, and a team of seasoned portfolio managers and
wealth planners. Wealth Management includes revenues related to EWM
and Evercore's share of the losses of Evercore Pan Asset
Management. Expenses Investment Management compensation and
non-compensation costs of $10.8 million for the fourth quarter of
2008 includes $3.9 million of costs incurred in connection with the
continued rebuilding of the Investment Management business, as well
as the launch of new businesses. Other costs remain substantially
unchanged from the prior quarter. Costs reduced substantially when
compared to the fourth quarter of 2007. Corporate Reporting Other
U.S. GAAP Expenses Included in the 2008 and 2007 U.S. GAAP results
are the following expenses that have been excluded from the
adjusted pro forma results: -- The Company has reflected $4.1
million of charges for the twelve months ended December 31, 2008,
as Special Charges in connection with employee severance,
accelerated share-based vesting, facilities costs associated with
the closing of the Los Angeles office and the write-off of certain
capitalized costs associated with fundraising initiatives for ECP
III. No additional charges were recognized in the fourth quarter of
2008. -- The Company has reflected $1.6 million of charges for the
fourth quarter and twelve months ended December 31, 2008, as
Acquisition and Transition Related Costs for costs incurred in
connection with acquisitions currently in process. This charge
reflects the change in accounting for deal-related costs required
by SFAS No. 141(R) Business Combinations ("SFAS 141(R)"), which was
effective January 1, 2009. Evercore has recognized all of the costs
in the fourth quarter of 2008 as contemplated by the transition
provision of the new accounting standard. -- The amortization of
intangibles associated with the acquisitions of Protego and
Braveheart. -- A $7.5 million expense included in Employee
Compensation and Benefits for the twelve months ended December 31,
2008, relating to the first quarter 2008 charge resulting from the
issuance of shares as additional deferred consideration pursuant to
the Sale and Purchase Agreement associated with the Braveheart
acquisition. This was the final payment relating to this
acquisition. -- A $126.0 million expense included in Employee
Compensation and Benefits for the twelve months ended December 31,
2007, relating to the vesting of contingently vested Evercore LP
partnership units and stock-based awards, as well as a severance
agreement recognized in the third quarter of 2007. Income Taxes For
the twelve months ended December 31, 2008, Evercore's adjusted pro
forma effective tax rate was approximately 30% compared to an
effective tax rate of approximately 40% for the twelve months ended
December 31, 2007. The adjusted pro forma effective tax rate
assumes that the Company has adopted a conventional corporate tax
structure and is taxed as a C Corporation in the U.S. at the
prevailing corporate rate, that all deferred tax assets relating to
foreign operations are fully realizable within that structure on a
consolidated basis and that adjustments for deferred tax assets
related to tax deductions for equity-based compensation awards are
made directly to stockholders' equity. Dividend On February 3, 2009
the Board of Directors of Evercore declared a quarterly dividend of
$0.12 per share to be paid on March 13, 2009 to common stockholders
of record on February 27, 2009. Conference Call Evercore will host
a conference call to discuss its results for the fourth quarter and
twelve months ended December 31, 2008 on Thursday, February 5,
2009, at 8:00 a.m. Eastern Standard Time with access available via
the Internet and telephone. Investors and analysts may participate
in the live conference call by dialing (800) 762-8779 (toll-free
domestic) or (480) 248-5081 (international); passcode: 3967116.
Please register at least 10 minutes before the conference call
begins. A replay of the call will be available for one week via
telephone starting approximately one hour after the call ends. The
replay can be accessed at (800) 406-7325 (toll-free domestic) or
(303) 590-3030 (international); passcode: 3967116. A live webcast
of the conference call will be available on the Investor Relations
section of Evercore's Web site at http://www.evercore.com/. The
webcast will be archived on the Web site after the call. About
Evercore Partners Evercore Partners is a leading investment banking
boutique and investment management firm. Evercore's Advisory
business counsels its clients on mergers, acquisitions,
divestitures, restructurings and other strategic transactions.
Evercore's Investment Management business comprises private equity
investing, institutional asset management and wealth management.
Evercore serves a diverse set of clients around the world from its
offices in New York, San Francisco, London, Mexico City and
Monterrey, Mexico. More information about Evercore can be found on
the Company's Web site at http://www.evercore.com/. Basis of
Alternative Financial Statement Presentation Adjusted pro forma
results are a non-GAAP measure. Evercore believes that the
disclosed adjusted pro forma measures and any adjustments thereto,
when presented in conjunction with comparable U.S. GAAP measures,
are useful to investors to compare Evercore's results across
several periods and better reflect what management views as ongoing
operations. These measures should not be considered a substitute
for, or superior to, measures of financial performance prepared in
accordance with U.S. GAAP. A reconciliation of U.S. GAAP results to
adjusted pro forma results is presented in the tables included in
Annex I. Evercore's revenues and net income can fluctuate
materially depending on the number, size and timing of the
completed transactions on which it advises, the number and size of
Investment Management gains or losses and other factors.
Accordingly, the revenues and net income in any particular quarter
may not be indicative of future results. Evercore believes that
annual results are the most meaningful. Forward-Looking Statements
This discussion 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, which reflect our
current views with respect to, among other things, Evercore's
operations and financial performance. In some cases, you can
identify these forward-looking statements by the use of words such
as "outlook", "believes", "expects", "potential", "continues",
"may", "will", "should", "seeks", "approximately", "predicts",
"intends", "plans", "estimates", "anticipates" or the negative
version of these words or other comparable words. All statements
other than statements of historical fact included in this
presentation are forward-looking statements and are based on
various underlying assumptions and expectations and are subject to
known and unknown risks, uncertainties and assumptions, and may
include projections of our future financial performance based on
our growth strategies and anticipated trends in Evercore's
business. Accordingly, there are or will be important factors that
could cause actual outcomes or results to differ materially from
those indicated in these statements. Evercore believes these
factors include, but are not limited to, those described under
"Risk Factors" discussed in Evercore's Annual Report on Form 10-K
for the year ended December 31, 2007. These factors should not be
construed as exhaustive and should be read in conjunction with the
other cautionary statements that are included in this discussion.
In addition, new risks and uncertainties emerge from time to time,
and it is not possible for Evercore to predict all risks and
uncertainties, nor can Evercore assess the impact of all factors on
our business or the extent to which any factor, or combination of
factors, may cause actual results to differ materially from those
contained in any forward-looking statements. Accordingly, you
should not rely upon forward-looking statements as a prediction of
actual results and Evercore does not assume any responsibility for
the accuracy or completeness of any of these forward-looking
statements. Evercore undertakes no obligation to publicly update or
review any forward-looking statement, whether as a result of new
information, future developments or otherwise. With respect to any
securities offered by any private equity fund referenced herein,
such securities have not been and will not be registered under the
Securities Act of 1933, as amended, and may not be offered or sold
in the United States absent registration or an applicable exemption
from registration requirements. ANNEX I Schedule Page Number
Unaudited Condensed Consolidated Statements of A-1 Operations for
the Three and Twelve Months Ended December 31, 2008 and 2007
Adjusted Pro Forma: Adjusted Pro Forma Results and Adjusted Pro
Forma Net A-2 Income (Loss) per Common Share Unaudited Condensed
Consolidated Adjusted Pro Forma A-4 Statement of Operations for the
Three Months Ended December 31, 2008 Unaudited Condensed
Consolidated Adjusted Pro Forma A-5 Statement of Operations for the
Three Months Ended December 31, 2007 Unaudited Condensed
Consolidated Adjusted Pro Forma A-6 Statement of Operations for the
Twelve Months Ended December 31, 2008 Unaudited Condensed
Consolidated Adjusted Pro Forma A-7 Statement of Operations for the
Twelve Months Ended December 31, 2007 Adjusted Pro Forma Segment
Reconciliation to U.S. A-8 GAAP for the Three Months ended December
31, 2008 and 2007 Adjusted Pro Forma Segment Reconciliation to U.S.
A-9 GAAP for the Twelve Months ended December 31, 2008 and 2007
Notes to Unaudited Condensed Consolidated Adjusted Pro A-10 Forma
Statements of Operations EVERCORE PARTNERS INC. CONDENSED
CONSOLIDATED STATEMENTS OF OPERATIONS THREE AND TWELVE MONTHS ENDED
DECEMBER 31, 2008 AND 2007 (dollars in thousands, except per share
data) (UNAUDITED) Three Months Twelve Months Ended Ended December
31, December 31, ------------ ------------- 2008 2007 2008 2007
---- ---- ---- ---- REVENUES Advisory Revenue $31,738 $87,824
$181,608 $295,751 Investment Management Revenue 775 4,347 9,440
20,158 Other Revenue 8,992 8,429 33,885 24,141 ----- ----- ------
------ TOTAL REVENUES 41,505 100,600 224,933 340,050 Interest
Expense (1) 8,269 6,808 30,278 18,451 ----- ----- ------ ------ NET
REVENUES 33,236 93,792 194,655 321,599 ------ ------ -------
------- EXPENSES Employee Compensation and Benefits 34,585 57,751
146,663 299,327 Occupancy and Equipment Rental (2) 3,132 4,011
12,671 13,486 Professional Fees 4,427 9,309 16,173 28,691 Travel
and Related Expenses (2) 2,840 2,176 10,139 8,803 Communications
and Information Services 675 685 2,984 2,321 Depreciation and
Amortization 1,025 4,126 4,189 17,421 Special Charges - - 4,132 -
Acquisition and Transition Related Costs 1,596 - 1,596 - Other
Operating Expenses (2) 1,477 1,483 5,492 6,485 ----- ----- -----
----- TOTAL EXPENSES 49,757 79,541 204,039 376,534 ------ ------
------- ------- INCOME (LOSS) BEFORE INCOME TAXES AND MINORITY
INTEREST (16,521) 14,251 (9,384) (54,935) Provision (Benefit) for
Income Taxes (3,463) 3,606 179 12,401 Minority Interest (7,722)
7,507 (4,850) (32,841) ------ ----- ------ ------- NET INCOME
(LOSS) $(5,336) $3,138 $(4,713) $(34,495) ======= ====== =======
======== Net Income (Loss) Available to Holders of Shares of Class
A Common Stock $(5,336) $3,138 $(4,713) $(34,495) Weighted Average
Shares of Class A Common Stock Outstanding: Basic 13,547 12,414
13,072 10,219 Diluted 13,547 12,669 13,072 10,219 Net Income (Loss)
Per Share Available to Holders of Shares of Class A Common Stock:
Basic $(0.39) $0.25 $(0.36) $(3.38) Diluted $(0.39) $0.25 $(0.36)
$(3.38) 1. Includes interest expense on long-term debt and interest
expense on short-term repurchase agreements. 2. The above reflects
a reclassification of certain balances for prior periods to conform
to the current presentation. These reclassifications include $297
and $811 for the three and twelve months ended December 31, 2007,
respectively, of certain expenses from Other Operating Expenses to
Occupancy and Equipment Rental and Travel and Related Expenses. A-1
Adjusted Pro Forma Results and Adjusted Pro Forma Net Income (Loss)
per Common Share Evercore prepares its Condensed Consolidated
Financial Statements using U.S. GAAP. In addition to analyzing the
Company's results on a U.S. GAAP basis, Management reviews the
Company's and Business Segments' results on an adjusted pro forma
basis, which is a non-GAAP financial measure. These measures should
not be considered a substitute for, or superior to, measures of
financial performance prepared in accordance with U.S. GAAP. The
adjusted pro forma results reflect the following adjustments, which
management believes are not reflective of ongoing operations, and
therefore exclusion of these charges enhances understanding of the
Company's operating performance. Exclusion of deferred
consideration related to Braveheart acquisition. The former
shareholders of Braveheart were issued $7.5 million of restricted
stock in the first quarter of 2008 as additional deferred
consideration pursuant to the Sale and Purchase Agreement
associated with the Braveheart acquisition. Special Charges. The
Company has reflected $4.1 million of charges in 2008 as Special
Charges in connection with employee severance, accelerated
share-based vesting, facilities costs associated with the closing
of the Los Angeles office and the write-off of certain capitalized
costs associated with fundraising initiatives for ECP III. Evercore
expects to realize cost savings in the future due to these changes.
Acquisition and Transition Related Costs. The Company has reflected
$1.6 million of charges for the fourth quarter and twelve months
ended December 31, 2008, as Acquisition and Transition Related
Costs in relation to costs incurred in connection with acquisitions
currently in process. This charge reflects the change in accounting
for deal-related costs required by SFAS 141(R), which is effective
January 1, 2009. Evercore has recognized all of the costs in the
fourth quarter as contemplated by the transition provision of the
new accounting standard. Exclusion of compensation charges
associated with the vesting of contingently vested Evercore LP
partnership units and Stock-Based Awards. Evercore issued
partnership units and stock-based awards which vest upon the
occurrence of specified vesting events rather than merely the
passage of time and continued service. In periods prior to the
completion of the May 2007 follow-on offering we concluded that it
was not probable that the vesting conditions would be achieved.
Accordingly, we had not been accruing compensation expense relating
to these unvested partnership units or stock-based awards. The
completion of our May 2007 follow-on offering resulted in Messrs.
Altman, Beutner and Aspe, and trusts benefiting their families and
permitted transferees, collectively, ceasing to beneficially own at
least 90% of the aggregate Evercore LP partnership units owned by
them on the date of the internal reorganization, resulting in the
vesting of certain partnership units and stock-based awards. The
vesting of these awards resulted in a non-cash compensation expense
that was the result of the successful completion of Evercore's
equity offering in May 2007, as well as an adjustment that was
recognized in the fourth quarter of 2007 and a severance agreement
recognized in the third quarter of 2007. Exclusion of amortization
of intangible assets acquired with Protego and Braveheart. The
Protego acquisition was undertaken in contemplation of the IPO. The
Braveheart acquisition occurred on December 19, 2006. A-2 Vesting
of unvested equity. Management believes that it is useful to
provide the per-share effect associated with the vesting of
previously granted but unvested equity, and thus the adjusted pro
forma results reflect the vesting of all unvested event-based
Evercore LP partnership units and stock-based awards. However,
management has concluded that at the current time it is not
probable that the conditions relating to the vesting of the
remaining event-based unvested partnership units or stock-based
awards will be achieved or satisfied. The unaudited condensed
consolidated adjusted pro forma financial information is included
for informational purposes only and should not be relied upon as
being indicative of Evercore's results of operations or financial
condition had the transactions contemplated in connection with the
internal reorganization been completed on the dates assumed. The
unaudited condensed consolidated adjusted pro forma financial
information also does not project the results of operations or
financial position for any future period or date. A-3 EVERCORE
PARTNERS INC. CONDENSED CONSOLIDATED ADJUSTED PRO FORMA STATEMENT
OF OPERATIONS THREE MONTHS ENDED DECEMBER 31, 2008 (dollars in
thousands, except per share data) (UNAUDITED) Evercore Evercore
Partners Partners Inc. Inc. Adjusted U.S. Pro Forma Pro GAAP
Adjustments Forma ---------- ------------ --------- REVENUES
Advisory Revenue $31,738 $- $31,738 Investment Management Revenue
775 - 775 Other Revenue 8,992 (6,385) (a) 2,607 ----- ------ -----
TOTAL REVENUES 41,505 (6,385) 35,120 Interest Expense 8,269 (8,269)
(a) - ----- ------ ------ NET REVENUES 33,236 1,884 35,120 ------
----- ------ EXPENSES Employee Compensation and Benefits 34,585 -
34,585 Occupancy and Equipment Rental 3,132 - 3,132 Professional
Fees 4,427 - 4,427 Travel and Related Expenses 2,840 - 2,840
Communications and Information Services 675 - 675 Depreciation and
Amortization 1,025 (469) (b) 556 Special Charges - - - Acquisition
and Transition Related Costs 1,596 (1,596) (c) - Other Operating
Expenses 1,477 (136) (d) 1,341 ----- ---- ----- TOTAL EXPENSES
49,757 (2,201) 47,556 ------ ------ ------ INCOME (LOSS) BEFORE
INCOME TAXES, MINORITY INTEREST AND INTEREST EXPENSE ON LONG-TERM
DEBT (16,521) 4,085 (12,436) Interest Expense on Long-term Debt -
1,884 (a) 1,884 ----- ----- ----- INCOME (LOSS) BEFORE INCOME TAXES
AND MINORITY INTEREST (16,521) 2,201 (14,320) Provision (Benefit)
for Income Taxes (3,463) (2,368) (e) (5,831) Minority Interest
(7,722) 7,722 (d) - ------ ----- ----- NET INCOME (LOSS) $(5,336)
$(3,153) $(8,489) ======= ======= ======= Adjusted Class A Common
Stock Outstanding Basic and Diluted Weighted Average Shares of
Class A Common Stock Outstanding 11,940 - 11,940 Vested Partnership
Units - 15,146 (f) 15,146 Unvested Partnership Units - 4,853 (f)
4,853 Vested Restricted Stock Units - Event Based 1,209 - 1,209
Unvested Restricted Stock Units - Event Based - 800 (f) 800 Vested
Restricted Stock Units - Service Based 398 - 398 Unvested
Restricted Stock Units - Service Based - - - Unvested Restricted
Stock - Service Based - - - ------ ------ ------ Total Shares
13,547 20,799 34,346 ====== ====== ====== Net Income (Loss) per
Share: Basic $(0.39) $(0.25) Diluted $(0.39) $(0.25) A-4 EVERCORE
PARTNERS INC. CONDENSED CONSOLIDATED ADJUSTED PRO FORMA STATEMENT
OF OPERATIONS THREE MONTHS ENDED DECEMBER 31, 2007 (dollars in
thousands, except per share data) (UNAUDITED) Evercore Evercore
Partners Partners Inc. Inc. Pro Adjusted U.S. Forma Pro GAAP
Adjustments Forma --------- ------------ --------- REVENUES
Advisory Revenue $87,824 $- $87,824 Investment Management Revenue
4,347 - 4,347 Other Revenue 8,429 (6,808) (a) 1,621 ----- ------
----- TOTAL REVENUES 100,600 (6,808) 93,792 Interest Expense 6,808
(6,808) (a) - ----- ------ ------ NET REVENUES 93,792 - 93,792
------ - ------ EXPENSES Employee Compensation and Benefits 57,751
2,189 (g) 59,940 Occupancy and Equipment Rental 4,011 - 4,011
Professional Fees 9,309 - 9,309 Travel and Related Expenses 2,176 -
2,176 Communications and Information Services 685 - 685
Depreciation and Amortization 4,126 (3,481) (b) 645 Special Charges
- - - Acquisition and Transition Related Costs - - - Other
Operating Expenses 1,483 - 1,483 ----- - ----- TOTAL EXPENSES
79,541 (1,292) 78,249 ------ ------ ------ INCOME BEFORE INCOME
TAXES, MINORITY INTEREST AND INTEREST EXPENSE ON LONG-TERM DEBT
14,251 1,292 15,543 Interest Expense on Long-term Debt - - - ------
------ ------ INCOME BEFORE INCOME TAXES AND MINORITY INTEREST
14,251 1,292 15,543 Provision for Income Taxes 3,606 2,650 (e)
6,256 Minority Interest 7,507 (7,507) (d) - ----- ------ ------ NET
INCOME $3,138 $6,149 $9,287 ====== ====== ====== Adjusted Class A
Common Stock Outstanding Basic and Diluted Weighted Average Shares
of Class A Common Stock Outstanding 11,170 - 11,170 Vested
Partnership Units - 15,273 (f) 15,273 Unvested Partnership Units 77
4,776 (f) 4,853 Vested Restricted Stock Units - Event Based 1,244 -
1,244 Unvested Restricted Stock Units - Event Based - 881 (f) 881
Vested Restricted Stock Units - Service Based - - - Unvested
Restricted Stock Units - Service Based 69 - 69 Unvested Restricted
Stock - Service Based 109 - 109 --- --- --- Total Shares 12,669
20,930 33,599 ====== ====== ====== Net Income per Share: Basic
$0.25 $0.28 Diluted $0.25 $0.28 A-5 EVERCORE PARTNERS INC.
CONDENSED CONSOLIDATED ADJUSTED PRO FORMA STATEMENT OF OPERATIONS
TWELVE MONTHS ENDED DECEMBER 31, 2008 (dollars in thousands, except
per share data) (UNAUDITED) Evercore Partners Evercore Inc.
Partners Pro Adjusted Inc. Forma Pro U.S. GAAP Adjustments Forma
---------- ------------ --------- REVENUES Advisory Revenue
$181,608 $- $181,608 Investment Management Revenue 9,440 - 9,440
Other Revenue 33,885 (27,724) (a) 6,161 ------ ------- ----- TOTAL
REVENUES 224,933 (27,724) 197,209 Interest Expense 30,278 (30,278)
(a) - ------ ------- ------- NET REVENUES 194,655 2,554 197,209
------- ----- ------- EXPENSES Employee Compensation and Benefits
146,663 (7,452) (h) 139,211 Occupancy and Equipment Rental 12,671 -
12,671 Professional Fees 16,173 - 16,173 Travel and Related
Expenses 10,139 - 10,139 Communications and Information Services
2,984 - 2,984 Depreciation and Amortization 4,189 (1,884) (b) 2,305
Special Charges 4,132 (4,132) (i) - Acquisition and Transition
Related Costs 1,596 (1,596) (c) - Other Operating Expenses 5,492
(136) (d) 5,356 ----- ---- ----- TOTAL EXPENSES 204,039 (15,200)
188,839 ------- ------- ------- INCOME (LOSS) BEFORE INCOME TAXES,
MINORITY INTEREST AND INTEREST EXPENSE ON LONG-TERM DEBT (9,384)
17,754 8,370 Interest Expense on Long-term Debt - 2,554 (a) 2,554 -
----- ----- INCOME (LOSS) BEFORE INCOME TAXES AND MINORITY INTEREST
(9,384) 15,200 5,816 Provision (Benefit) for Income Taxes 179 1,589
(e) 1,768 Minority Interest (4,850) 4,850 (d) - ------ ----- ------
NET INCOME (LOSS) $(4,713) $8,761 $4,048 ======= ====== ======
Adjusted Class A Common Stock Outstanding Basic and Diluted
Weighted Average Shares of Class A Common Stock Outstanding 11,587
85 (f) 11,672 Vested Partnership Units - 15,188 (f) 15,188 Unvested
Partnership Units - 4,853 (f) 4,853 Vested Restricted Stock Units -
Event Based 1,211 (2) (f) 1,209 Unvested Restricted Stock Units -
Event Based - 801 (f) 801 Vested Restricted Stock Units - Service
Based 274 - 274 Unvested Restricted Stock Units - Service Based -
36 (f) 36 Unvested Restricted Stock - Service Based - 103 (f) 103 -
--- --- Total Shares 13,072 21,064 34,136 ====== ====== ====== Net
Income (Loss) per Share: Basic $(0.36) $0.12 Diluted $(0.36) $0.12
A-6 EVERCORE PARTNERS INC. CONDENSED CONSOLIDATED ADJUSTED PRO
FORMA STATEMENT OF OPERATIONS TWELVE MONTHS ENDED DECEMBER 31, 2007
(dollars in thousands, except per share data) (UNAUDITED) Evercore
Partners Evercore Inc. Partners Pro Adjusted Inc. Forma Pro U.S.
GAAP Adjustments Forma ---------- ------------ --------- REVENUES
Advisory Revenue $295,751 $- $295,751 Investment Management Revenue
20,158 - 20,158 Other Revenue 24,141 (18,451) (a) 5,690 ------
------- ----- TOTAL REVENUES 340,050 (18,451) 321,599 Interest
Expense 18,451 (18,451) (a) - ------ ------- - NET REVENUES 321,599
- 321,599 ------- ------- ------- EXPENSES Employee Compensation
and Benefits 299,327 (125,994) (g) 173,333 Occupancy and Equipment
Rental 13,486 - 13,486 Professional Fees 28,691 - 28,691 Travel and
Related Expenses 8,803 - 8,803 Communications and Information
Services 2,321 - 2,321 Depreciation and Amortization 17,421
(15,038) (b) 2,383 Special Charges - - - Acquisition and Transition
Related Costs - - - Other Operating Expenses 6,485 - 6,485 ----- -
----- TOTAL EXPENSES 376,534 (141,032) 235,502 ------- --------
------- INCOME (LOSS) BEFORE INCOME TAXES, MINORITY INTEREST AND
INTEREST EXPENSE ON LONG-TERM DEBT (54,935) 141,032 86,097 Interest
Expense on Long-term Debt - - - ------- -------- -------INCOME
(LOSS) BEFORE INCOME TAXES AND MINORITY INTEREST (54,935) 141,032
86,097 Provision for Income Taxes 12,401 22,253 (e) 34,654 Minority
Interest (32,841) 32,841 (d) - ------- -------- ------- NET INCOME
(LOSS) $(34,495) $85,938 $51,443 ======== ======= ======= Adjusted
Class A Common Stock Outstanding Basic and Diluted Weighted Average
Shares of Class A Common Stock Outstanding 9,354 41 (f) 9,395
Vested Partnership Units - 16,433 (f) 16,433 Unvested Partnership
Units - 4,853 (f) 4,853 Vested Restricted Stock Units - Event Based
865 379 (f) 1,244 Unvested Restricted Stock Units - Event Based -
881 (f) 881 Vested Restricted Stock Units - Service Based - 78 (f)
78 Unvested Restricted Stock Units - Service Based - 51 (f) 51
Unvested Restricted Stock - Service Based - 7 (f) 7 ------ --------
------- Total Shares 10,219 22,723 32,942 ====== ====== ====== Net
Income (Loss) per Share: Basic $(3.38) $1.56 Diluted $(3.38) $1.56
A-7 EVERCORE PARTNERS INC. ADJUSTED PRO FORMA SEGMENT
RECONCILIATION TO U.S. GAAP THREE MONTHS ENDED DECEMBER 31, 2008
AND 2007 (dollars in thousands) (UNAUDITED) Three Months Ended
December 31, 2008 --------------------------------------------
Adjusted Pro Forma U.S. GAAP Basis Basis ------------------
--------- Investment Consolidated Advisory Management Adjustments
Results -------- ----------- ----------- ------------ REVENUES
Advisory Revenue $31,738 $- $- $31,738 Investment Management
Revenue - 775 - 775 Other Revenue 2,440 167 6,385 (a) 8,992 -----
--- ----- ----- TOTAL REVENUES 34,178 942 6,385 41,505 Interest
Expense - - 8,269 (a) 8,269 - - ----- ----- NET REVENUES 34,178 942
(1,884) 33,236 ------ --- ------ ------ EXPENSES Employee
Compensation and Benefits 26,030 8,555 - 34,585 Non-compensation
Costs 10,698 2,273 2,201 (b) 15,172 (c) (d) ------ ----- -----
------ TOTAL EXPENSES 36,728 10,828 2,201 49,757 ------ ------
----- ------ Income (Loss) Before Income Taxes, Minority Interest
and Interest Expense on Long-term Debt (2,550) (9,886) (4,085)
(16,521) Interest Expense on Long-term Debt - 1,884 (1,884) (a) -
----- ----- ------ ----- Income (Loss) Before Income Taxes and
Minority Interest $(2,550) $(11,770) $(2,201) $(16,521) =======
======== ======= ======== Three Months Ended December 31, 2007
---------------------------------------------- Adjusted Pro Forma
U.S. GAAP Basis Basis ------------------ --------- Investment
Consolidated Advisory Management Adjustments Results --------
----------- ----------- ------------ REVENUES Advisory Revenue
$87,824 $- $- $87,824 Investment Management Revenue - 4,347 - 4,347
Other Revenue 728 893 6,808 (a) 8,429 --- --- ----- ----- TOTAL
REVENUES 88,552 5,240 6,808 100,600 ------ ----- ----- -------
Interest Expense - - 6,808 (a) 6,808 - - ----- ----- NET REVENUES
88,552 5,240 - 93,792 ------ ----- ----- ------ EXPENSES Employee
Compensation and Benefits 48,446 11,494 (2,189) (g) 57,751
Non-compensation Costs 13,513 4,796 3,481 (b) 21,790 ------ -----
----- ------ TOTAL EXPENSES 61,959 16,290 1,292 79,541 ------
------ ----- ------ Income (Loss) Before Income Taxes, Minority
Interest and Interest Expense on Long-term Debt 26,593 (11,050)
(1,292) 14,251 Interest Expense on Long-term Debt - - - - ------
------ ----- ------ Income (Loss) Before Income Taxes and Minority
Interest $26,593 $(11,050) $(1,292) $14,251 ======= ========
======= ======= A-8 EVERCORE PARTNERS INC. ADJUSTED PRO FORMA
SEGMENT RECONCILIATION TO U.S. GAAP TWELVE MONTHS ENDED DECEMBER
31, 2008 AND 2007 (dollars in thousands) (UNAUDITED) Twelve Months
Ended December 31, 2008
------------------------------------------------ Adjusted Pro Forma
U.S. GAAP Basis Basis ------------------ --------- Investment
Consolidated Advisory Management Adjustments Results --------
----------- ----------- ------------ REVENUES Advisory Revenue
$181,608 $- $- $181,608 Investment Management Revenue - 9,440 -
9,440 Other Revenue 5,020 1,141 27,724 (a) 33,885 ----- -----
------ ------ TOTAL REVENUES 186,628 10,581 27,724 224,933 Interest
Expense - - 30,278 (a) 30,278 - - ------ ------ NET REVENUES
186,628 10,581 (2,554) 194,655 ------- ------ ------ -------
EXPENSES Employee Compensation and Benefits 116,433 22,778 7,452
(h) 146,663 Non-compensation Costs 40,664 8,964 7,748 (b) 57,376
(i) (c) (d) ------ ----- ----- ------ TOTAL EXPENSES 157,097 31,742
15,200 204,039 ------- ------ ------ ------- Income (Loss) Before
Income Taxes, Minority Interest and Interest Expense on Long-term
Debt 29,531 (21,161) (17,754) (9,384) Interest Expense on Long-term
Debt - 2,554 (2,554) (a) - ------ ----- ------ ------ Income (Loss)
Before Income Taxes and Minority Interest $29,531 $(23,715)
$(15,200) $(9,384) ======= ======== ======== ======= Twelve Months
Ended December 31, 2007
---------------------------------------------- Adjusted Pro Forma
U.S. GAAP Basis Basis ------------------ --------- Investment
Consolidated Advisory Management Adjustments Results --------
----------- ----------- ------------ REVENUES Advisory Revenue
$295,751 $- $- $295,751 Investment Management Revenue - 20,158 -
20,158 Other Revenue 3,959 1,731 18,451 (a) 24,141 ----- -----
------ ------ TOTAL REVENUES 299,710 21,889 18,451 340,050 Interest
Expense - - 18,451 (a) 18,451 - - ------ ------ NET REVENUES
299,710 21,889 - 321,599 ------- ------ ------ ------- EXPENSES
Employee Compensation and Benefits 147,077 26,256 125,994 (g)
299,327 Non-compensation Costs 46,127 16,042 15,038 (b) 77,207
------ ------ ------ ------ TOTAL EXPENSES 193,204 42,298 141,032
376,534 ------- ------ ------- ------- Income (Loss) Before Income
Taxes, Minority Interest and Interest Expense on Long-term Debt
106,506 (20,409) (141,032) (54,935) Interest Expense on Long-term
Debt - - - - ------- ------ ------- ------- Income (Loss) Before
Income Taxes and Minority Interest $106,506 $(20,409) $(141,032)
$(54,935) ======== ======== ========= ======== A-9 Notes to
Unaudited Condensed Consolidated Adjusted Pro Forma Statements of
Operations (a) Adjusted Pro Forma segment information classifies
interest expense on short-term repurchase agreements within the
Investment Management segment as Other Revenue, net, whereas U.S.
GAAP results reflect this in Interest Expense. Interest Expense on
Long-term Debt is presented as a separate line on a segment basis
and is included in Interest Expense on a U.S. GAAP Basis. (b)
Reflects expenses associated with amortization of intangible assets
acquired in the Protego and Braveheart acquisitions. (c) The
Company has reflected $1.6 million of charges for the fourth
quarter and twelve months ended December 31, 2008, as Acquisition
and Transition Related Costs in relation to costs incurred in
connection with acquisitions currently in process. This charge
reflects the change in accounting for deal-related costs required
by SFAS 141(R), which is effective January 1, 2009. Evercore has
recognized all of the costs in the fourth quarter as contemplated
by the transition provision of the new accounting standard. (d)
Reflects adjustment to eliminate minority interest related to all
Evercore LP partnership units which are assumed to be converted to
Class A common stock. (e) Evercore is organized as a series of
Limited Liability Companies, Partnerships and a Public Corporation
and therefore, not all of the Company's income is subject to
corporate level taxes. As a result, an adjustment has been made to
increase Evercore's effective tax rate to approximately 40% for the
three months ended December 31, 2008, and increase the effective
tax rate to 30% for the twelve months ended December 31, 2008. The
effect of these adjustments increased the effective tax rate to 40%
for both the three and twelve months ended December 31, 2007. These
adjustments assume that the Company has adopted a conventional
corporate tax structure and is taxed as a C Corporation in the U.S.
at the prevailing corporate rate, that all deferred tax assets
relating to foreign operations are fully realizable within that
structure on a consolidated basis and that adjustments for deferred
tax assets related to tax deductions for equity-based compensation
awards are made directly to stockholders' equity. (f) Assumes the
vesting of all LP partnership units and restricted stock unit
event-based awards and reflects on a weighted average basis, the
dilution of unvested service-based awards. In the computation of
outstanding common stock equivalents for U.S. GAAP net income per
share, the unvested Evercore LP partnership units and event-based
restricted stock units are excluded from the calculation. (g)
Adjustment for reduction of compensation associated with
event-based vesting of stock-based awards related to the follow-on
offering ($123.8 million), as well as a severance agreement
recognized in the third quarter of 2007 ($2.2 million). (h)
Reflects an adjustment for a reduction of $7.5 million of
compensation expense associated with the issuance of restricted
stock to the former shareholders of Braveheart in the first quarter
of 2008 as additional deferred consideration pursuant to the Sale
and Purchase Agreement associated with the Braveheart acquisition.
(i) The Company has reflected $4.1 million of charges in 2008, as
Special Charges in connection with the write-off of certain
capitalized costs associated with ECP III fund raising initiatives,
employee severance, accelerated share-based vesting and facilities
costs associated with the closing of the Los Angeles office. A-10
DATASOURCE: Evercore Partners Inc. CONTACT: Investor: Robert B.
Walsh, Chief Financial Officer, Evercore Partners, +1-212-857-3100,
or Media: Kenny Juarez, The Abernathy MacGregor Group, for Evercore
Partners, +1-212-371-5999 Web Site: http://www.evercore.com/
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