Evercore Reports First Quarter 2019 Results; Increases Quarterly Dividend To $0.58 Per Share

NEW YORK, April 24, 2019 /PRNewswire/ --

Evercore Inc. (NYSE: EVR) today announced its results for the first quarter ended March 31, 2019.

LEADERSHIP COMMENTARY

Ralph Schlosstein, President and Chief Executive Officer

"While our revenues and operating earnings were below our record first quarter last year, we experienced balanced contributions from all of our businesses in the first quarter, with increased numbers of completed transactions in both Advisory and Underwriting. We continued to build our backlog of assignments and provided independent research of value to our institutional investor clients," said Ralph Schlosstein, President and Chief Executive Officer. "Human capital remains the most important investment that we make in our business, and we continued to add talent throughout the firm. We returned $137 million of capital to shareholders through share repurchases and dividends in the first quarter. Our Board reviewed our capital return objectives in April, increasing our quarterly dividend to $0.58 per quarter, a 16% increase. The Board also affirmed our objective of offsetting the dilution associated with bonus and new hire equity and returning all earnings not required for investment in future growth through dividends and share repurchases."

John S. Weinberg, Executive Chairman

"We continue to find talented professionals at all levels who are attracted to our platform," said John S. Weinberg, Executive Chairman. "Our objective is to further broaden our Advisory and Research coverage of key industries and product areas to provide the highest level service and advice to our clients."

Roger C. Altman, Founder and Senior Chairman

"The fundamentals underpinning the transaction market remain solid. Low interest rates, good credit availability, favorable equity valuations and reasonable levels of business confidence. Evercore is benefiting from these fundamentals and our own continued gains in market share. This is evident in our having advised on three of the five largest announced mergers around the world for 2019 to date," said Roger C. Altman, Founder and Senior Chairman.

Selected Financial Data - U.S. GAAP Results:

The following is a discussion of Evercore's results on a U.S. GAAP basis.

Net Revenues

For the three months ended March 31, 2019, Net Revenues of $415.3 million decreased 10% versus the three months ended March 31, 2018, primarily driven by a decrease in Advisory Fees. See the Business Line Reporting - Discussion of U.S. GAAP Results below for further information.

Compensation Ratio

For the three months ended March 31, 2019, the compensation ratio was 59.6% versus 59.4% for the three months ended March 31, 2018, reflecting a decrease in Net Revenues in the Investment Banking business. See the Business Line Reporting - Discussion of U.S. GAAP Results below for further information.

Operating Income

For the three months ended March 31, 2019, Operating Income of $83.8 million decreased 26% versus the three months ended March 31, 2018, driven by a decrease in Net Revenues in the Investment Banking business, partially offset by decreased compensation costs in the Investment Banking business. See the Business Line Reporting - Discussion of U.S. GAAP Results below for further information.

Effective Tax Rate

For the three months ended March 31, 2019, the effective tax rate was 9.1% versus 4.3% for the three months ended March 31, 2018. The effective tax rate is impacted by the non-deductible treatment of compensation associated with Evercore LP Units, as well as the deduction associated with the appreciation or depreciation in the Firm's share price upon vesting of employee share-based awards above or below the original grant price.

Net Income and Earnings Per Share

For the three months ended March 31, 2019, Net Income Attributable to Evercore Inc. and Earnings Per Share of $67.2 million and $1.52, respectively, decreased 30% and 28%, respectively, versus the three months ended March 31, 2018, principally driven by a decrease in Net Revenues in the Investment Banking business, partially offset by decreased compensation costs in the Investment Banking business.

Selected Financial Data - Adjusted Results:

The following is a discussion of Evercore's results on an Adjusted basis. See pages 5 and A-2 to A-10 for further information and reconciliations of these non-GAAP metrics to our U.S. GAAP results.

Adjusted Net Revenues

For the three months ended March 31, 2019, Adjusted Net Revenues of $419.8 million decreased 10% versus the three months ended March 31, 2018, primarily driven by a decrease in Advisory Fees. See the Business Line Reporting - Discussion of Adjusted Results below for further information.

Adjusted Compensation Ratio

For the three months ended March 31, 2019, the Adjusted compensation ratio was 58.0%, flat compared to the three months ended March 31, 2018. See the Business Line Reporting - Discussion of Adjusted Results below for further information.

Adjusted Operating Income

For the three months ended March 31, 2019, Adjusted Operating Income of $95.7 million decreased 23% versus the three months ended March 31, 2018, driven by a decrease in Net Revenues in the Investment Banking business, partially offset by decreased compensation costs in the Investment Banking business. See the Business Line Reporting - Discussion of Adjusted Results below for further information.

Adjusted Effective Tax Rate

For the three months ended March 31, 2019, the Adjusted effective tax rate was 11.1% versus 6.3% for the three months ended March 31, 2018. The Adjusted effective tax rate is impacted by the deduction associated with the appreciation or depreciation in the Firm's share price upon vesting of employee share-based awards above or below the original grant price.

Adjusted Net Income and Earnings Per Share

For the three months ended March 31, 2019, Adjusted Net Income Attributable to Evercore Inc. and Adjusted Earnings Per Share of $81.7 million and $1.66, respectively, decreased 28% and 26%, respectively, versus the three months ended March 31, 2018, driven by a decrease in Net Revenues in the Investment Banking business, partially offset by decreased compensation costs in the Investment Banking business.

Evercore's quarterly results may fluctuate significantly due to the timing and amount of transaction fees earned, as well as other factors. Accordingly, financial results in any particular quarter may not be representative of future results over a longer period of time.

Non-GAAP Measures:

Throughout this release certain information is presented on an Adjusted basis, which is a non-GAAP measure. Adjusted results begin with information prepared in accordance with accounting principles generally accepted in the United States of America ("U.S. GAAP"), and then those results are adjusted to exclude certain items and reflect the conversion of vested and certain unvested Evercore LP Units and Interests into Class A shares. Evercore believes that the disclosed Adjusted 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 facilitate an understanding of Evercore's operating results. Evercore uses these measures to evaluate its operating performance, as well as the performance of individual employees. These measures should not be considered a substitute for, or superior to, measures of financial performance prepared in accordance with U.S. GAAP.

Evercore's Adjusted Net Income Attributable to Evercore Inc. for the three months ended March 31, 2019 was higher than U.S. GAAP as a result of the exclusion of expenses associated with awards granted in conjunction with certain of the Company's acquisitions, and certain other business acquisition-related charges and Special Charges.

Acquisition-related compensation charges for 2019 include expenses associated with awards granted in conjunction with the Company's acquisition of ISI. Acquisition-related charges for 2019 also include professional fees incurred and amortization of intangible assets.

Special Charges for 2019 relate to the acceleration of depreciation expense for leasehold improvements in conjunction with the previously announced expansion of our headquarters in New York.

Evercore's Adjusted Diluted Shares Outstanding for the three months ended March 31, 2019 were higher than U.S. GAAP, as a result of the inclusion of certain Evercore LP Units.

Further details of these adjustments, as well as an explanation of similar amounts for the three months ended March 31, 2018 are included in Annex I, pages A-2 to A-10.

Reclassifications:

During the fourth quarter of 2018, the Company's Adjusted presentation for current and prior periods was revised to eliminate the netting of client related expenses, expenses associated with revenue sharing engagements with third parties and provisions for uncollected receivables with their related revenue. The revised presentation reflects the expense and related revenue gross. The Company revised its presentation for these expenses in order to align with the treatment under U.S. GAAP. There was no impact on Adjusted Operating Income, Net Income or Earnings Per Share. Further details of these reclassifications, as well as a revised Adjusted presentation for the quarterly and full year results for 2018, 2017 and 2016 are available on the For Investors section of Evercore's website at www.evercore.com.

Business Line Reporting - Discussion of U.S. GAAP Results

The following is a discussion of Evercore's segment results on a U.S. GAAP basis.

Investment Banking

Revenues

During the three months ended March 31, 2019, fees from Advisory services decreased 14% versus the three months ended March 31, 2018, reflecting a decrease in the size of Advisory fees. Underwriting Fees of $26.9 million for the three months ended March 31, 2019 decreased 11% versus the three months ended March 31, 2018. We participated in 22 underwriting transactions during the three months ended March 31, 2019 (vs. 20 in Q1 2018); 16 as a bookrunner (vs. 17 in Q1 2018). Commissions and Related Fees for the three months ended March 31, 2019 decreased 3% versus the three months ended March 31, 2018.

Other Revenue, net, for the three months ended March 31, 2019 increased versus the three months ended March 31, 2018, primarily reflecting gains on the investment funds portfolio which is used as an economic hedge against our deferred cash compensation program.

Expenses

Compensation costs were $239.1 million for the three months ended March 31, 2019, a decrease of 11% from the first quarter of last year. The compensation ratio was 59.6% for the three months ended March 31, 2019, compared to 59.4% for the three months ended March 31, 2018. The increase in the compensation ratio reflects the decrease in Net Revenues in the Investment Banking business in 2019.

Non-compensation Costs for the three months ended March 31, 2019 were $79.1 million, up 12% compared to the first quarter of last year. The increase in Non-compensation Costs versus last year reflects the addition of personnel, increased occupancy costs and increased professional fees. The increase in Non-compensation Costs versus last year also reflects an increase in client related expenses which are expected to be reimbursed in the future. The level of these costs was elevated during the quarter, as deal activity remained high. The ratio of Non-compensation Costs to Net Revenues for the three months ended March 31, 2019 of 19.7% increased from 15.6% for the first quarter of last year, primarily driven by a decrease in Net Revenues and higher occupancy costs in 2019.

Special Charges for the three months ended March 31, 2019 reflect the acceleration of depreciation expense for leasehold improvements in conjunction with the previously announced expansion of our headquarters in New York. Special Charges for the three months ended March 31, 2018 reflect separation benefits and costs of terminating certain contracts associated with closing the agency trading platform in the U.K.

Investment Management

Revenues

Asset Management and Administration Fees of $12.4 million for the three months ended March 31, 2019 increased 5% compared to the first quarter of last year. Fees from Wealth Management clients increased 4%, as associated AUM increased 8%.

Expenses

Investment Management's expenses for the three months ended March 31, 2019 were $12.3 million, an increase of 9% compared to the first quarter of last year, principally due to an increase in compensation costs.

Business Line Reporting - Discussion of Adjusted Results

The following is a discussion of Evercore's segment results on an Adjusted basis. See pages 5 and A-2 to A-10 for further information and reconciliations of these metrics to our U.S. GAAP results.

Investment Banking

Adjusted Revenues

During the three months ended March 31, 2019, fees from Advisory services decreased 14% versus the three months ended March 31, 2018, reflecting a decrease in the size of Advisory fees. Underwriting Fees of $26.9 million for the three months ended March 31, 2019 decreased 11% versus the three months ended March 31, 2018. We participated in 22 underwriting transactions during the three months ended March 31, 2019 (vs. 20 in Q1 2018); 16 as a bookrunner (vs. 17 in Q1 2018). Commissions and Related Fees for the three months ended March 31, 2019 decreased 3% versus the three months ended March 31, 2018.

Other Revenue, net, for the three months ended March 31, 2019 increased versus the three months ended March 31, 2018, primarily reflecting gains on the investment funds portfolio which is used as an economic hedge against our deferred cash compensation program.

Adjusted Expenses

Adjusted compensation costs were $235.0 million for the three months ended March 31, 2019, a decrease of 11% from the first quarter of last year. The Adjusted compensation ratio was 58.2% for the three months ended March 31, 2019, flat compared to the three months ended March 31, 2018.

Adjusted Non-compensation Costs for the three months ended March 31, 2019 were $76.9 million, up 13% from the first quarter of last year. The increase in Adjusted Non-compensation Costs versus last year reflects the addition of personnel, increased occupancy costs and increased professional fees. The increase in Adjusted Non-compensation Costs versus last year also reflects an increase in client related expenses which are expected to be reimbursed in the future. The level of these costs was elevated during the quarter, as deal activity remained high. The ratio of Adjusted Non-compensation Costs to Adjusted Net Revenues for the three months ended March 31, 2019 of 19.0% increased from 15.1% for the first quarter of last year, primarily driven by a decrease in Net Revenues and higher occupancy costs in 2019.

Investment Management

Adjusted Revenues

Adjusted Asset Management and Administration Fees of $14.3 million for the three months ended March 31, 2019 increased 3% compared to the first quarter of last year. Fees from Wealth Management clients increased 4%, as associated AUM increased 8%.

Equity in Earnings of Affiliates of $2.0 million for the three months ended March 31, 2019 decreased relative to the first quarter of last year, driven principally by lower income earned in the first quarter of 2019 by ABS.

Adjusted Expenses

Investment Management's Adjusted expenses for the three months ended March 31, 2019 were $12.2 million, up 9% compared to the first quarter of last year, principally due to an increase in compensation costs.

Balance Sheet

The Company continues to maintain a strong balance sheet, holding cash, cash equivalents and marketable securities of $551.8 million at March 31, 2019. Current assets exceed current liabilities by $690.7 million at March 31, 2019. Amounts due related to the Long-Term Notes Payable were $168.7 million at March 31, 2019.

The Company adopted the new accounting guidance on leases under ASU 2016-02 during the quarter, which replaced existing lease guidance. This resulted in the recognition of $218.9 million of lease liabilities on the balance sheet as of March 31, 2019, along with associated right-of-use assets.

Capital Transactions

On April 23, 2019, the Board of Directors of Evercore declared a quarterly dividend of $0.58 per share to be paid on June 14, 2019 to common stockholders of record on May 31, 2019.

During the three months ended March 31, 2019, the Company repurchased approximately 0.9 million shares from employees for the net settlement of stock-based compensation awards at an average price per share of $89.53 and approximately 0.3 million shares at an average price per share of $74.07 in open market transactions pursuant to the Company's share repurchase program. The aggregate approximately 1.2 million shares were acquired at an average price per share of $86.19.

During the first quarter of 2019, as part of the 2018 bonus awards, the Company granted to certain employees approximately 2.4 million unvested RSUs at a grant date fair value of $91.44. The total shares available to be granted in the future under the Amended and Restated 2016 Evercore Inc. Stock Incentive Plan was approximately 2.9 million as of March 31, 2019.

Reclassifications

During the fourth quarter of 2018, the Company's Adjusted presentation for current and prior periods was revised to eliminate the netting of client related expenses, expenses associated with revenue sharing engagements with third parties and provisions for uncollected receivables with their related revenue. The revised presentation reflects the expense and related revenue gross. The Company revised its presentation for these expenses in order to align with the treatment under U.S. GAAP. There was no impact on Adjusted Operating Income, Net Income or Earnings Per Share. Further details of these reclassifications, as well as a revised Adjusted presentation for the quarterly and full year results for 2018, 2017 and 2016 are available on the For Investors section of Evercore's website at www.evercore.com.

Conference Call

Evercore will host a related conference call beginning at 8:00 a.m. Eastern Time, Wednesday, April 24, 2019, accessible via telephone and the Internet. Investors and analysts may participate in the live conference call by dialing (877) 359-9508 (toll-free domestic) or (224) 357-2393 (international); passcode: 9975219. 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 (855) 859-2056 (toll-free domestic) or (404) 537-3406 (international); passcode: 9975219. A live audio webcast of the conference call will be available on the For Investors section of Evercore's website at www.evercore.com. The webcast will be archived on Evercore's website for 30 days after the call.

About Evercore

Evercore (NYSE: EVR) is a premier global independent investment banking advisory firm. We are dedicated to helping our clients achieve superior results through trusted independent and innovative advice on matters of strategic significance to boards of directors, management teams and shareholders, including mergers and acquisitions, strategic shareholder advisory, restructurings, and capital structure. Evercore also assists clients in raising public and private capital and delivers equity research and equity sales and agency trading execution, in addition to providing wealth and investment management services to high net worth and institutional investors. Founded in 1995, the Firm is headquartered in New York and maintains offices and affiliate offices in major financial centers in North America, Europe, the Middle East and Asia. For more information, please visit www.evercore.com.

Basis of Alternative Financial Statement Presentation

Our Adjusted results are a non-GAAP measure. As discussed further under "Non-GAAP Measures", Evercore believes that the disclosed Adjusted 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 management's view of operating results. 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 our U.S. GAAP results to Adjusted results is presented in the tables included in Annex I.

Forward-Looking Statements

This release 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," "backlog," "believes," "expects," "potential," "probable," "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, 2018, subsequent quarterly reports on Form 10-Q, current reports on Form 8-K and Registration Statements. These factors should not be construed as exhaustive and should be read in conjunction with the other cautionary statements that are included in this release. 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

A-1

 

Adjusted Results

Throughout the discussion of Evercore's business segments and elsewhere in this release, information is presented on an Adjusted basis (formerly called "Adjusted Pro Forma"), which is a non-generally accepted accounting principles ("non-GAAP") measure. Adjusted 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 and reflect the conversion of vested and certain unvested Evercore LP Units and Interests, as well as Acquisition Related Share Issuances and Unvested Restricted Stock Units granted to ISI employees, into Class A shares. Evercore believes that the disclosed Adjusted 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 facilitate an understanding of Evercore's operating results. The Company uses these measures to evaluate its operating performance, as well as the performance of individual employees. These measures should not be considered a substitute for, or superior to, measures of financial performance prepared in accordance with U.S. GAAP. These Adjusted amounts are allocated to the Company's two business segments: Investment Banking and Investment Management. The differences between the Adjusted and U.S. GAAP results are as follows:

1.  Assumed Vesting of Evercore LP Units and Exchange into Class A Shares.  The Company incurred expenses, in Employee Compensation and Benefits, resulting from the vesting of Class E LP Units issued in conjunction with the acquisition of ISI, as well as the Class H LP Interests and Class J LP Units. The amount of expense for the Class H LP Interests was based on the determination if it was probable that Evercore ISI would achieve certain earnings and margin targets in 2017 and in future periods. The Adjusted results assume these LP Units and certain Class H LP Interests have vested and have been exchanged for Class A shares. Accordingly, any expense associated with these units and interests, and related awards, is excluded from the Adjusted results, and the noncontrolling interest related to these units is converted to a controlling interest. The Company's management believes that it is useful to provide the per-share effect associated with the assumed conversion of these previously granted equity interests, and thus the Adjusted results reflect the exchange of certain vested and unvested Evercore LP partnership units and interests and IPO related restricted stock unit awards into Class A shares.

2.  Adjustments Associated with Business Combinations and Divestitures.  The following charges resulting from business combinations and divestitures have been excluded from the Adjusted results because the Company's Management believes that operating performance is more comparable across periods excluding the effects of these acquisition-related charges:

a.  Amortization of Intangible Assets and Other Purchase Accounting-related Amortization.  Amortization of intangible assets and other purchase accounting-related amortization from the acquisition of ISI and certain other acquisitions.

b.  Acquisition and Transition Costs.  Primarily professional fees incurred and costs related to transitioning acquisitions or divestitures.

c.  Gain on Sale of Institutional Trust and Independent Fiduciary business of ETC.  The gain resulting from the sale of the Institutional Trust and Independent Fiduciary business of ETC in the fourth quarter of 2017.

d.  Foreign Exchange Gains / (Losses).  Release of cumulative foreign exchange losses resulting from the restructuring of our equity method investment in G5 in the fourth quarter of 2017.

3.  Special Charges.  Expenses during 2019 that are excluded from the Adjusted presentation relate to the acceleration of depreciation expense for leasehold improvements in conjunction with the previously announced expansion of our headquarters in New York. Expenses during 2018 that are excluded from the Adjusted presentation relate to separation benefits and costs of terminating certain contracts associated with closing the agency trading platform in the U.K.

4.  Income Taxes.  Evercore is organized as a series of Limited Liability Companies, Partnerships, C-Corporations and a Public Corporation and therefore, not all of the Company's income is subject to corporate-level taxes. As a result, adjustments have been made to the Adjusted earnings to assume that the Company is subject to the statutory tax rates of a C-Corporation under a conventional corporate tax structure in the U.S. at the prevailing corporate rates and that all deferred tax assets relating to foreign operations are fully realizable within the structure on a consolidated basis. This assumption is consistent with the assumption that certain Evercore LP Units are vested and exchanged into Class A shares, as discussed in Item 1 above, as the assumed exchange would change the tax structure of the Company.

A-2

Excluded from the Company's Adjusted results are adjustments related to the impact of the enactment of the Tax Cuts and Jobs Act that was signed into law on December 22, 2017, which resulted in a reduction in income tax rates in the U.S. in 2018 and future years. The tax reform resulted in an estimated adjustment to Other Revenue for the fourth quarter of 2017 of $77.5 million related to the re-measurement of amounts due pursuant to our tax receivable agreement, which was reduced due to the lower enacted income tax rates in the U.S. in 2018 and future years.

5.  Presentation of Interest Expense.  The Adjusted results present interest expense on short-term repurchase agreements, within the Investment Management segment, in Other Revenues, net, as the Company's Management believes it is more meaningful to present the spread on net interest resulting from the matched financial assets and liabilities. In addition, Adjusted Investment Banking and Investment Management Operating Income are presented before interest expense on debt, which is included in interest expense on a U.S. GAAP basis.

6.  Presentation of Income from Equity Method Investments.  The Adjusted results present Income from Equity Method Investments within Revenue as the Company's Management believes it is a more meaningful presentation.

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A-4

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A-6
 

A-7

A-8

Notes to Unaudited Condensed Consolidated Adjusted Financial Data

For further information on these adjustments, see page A-2.

(1)  Income (Loss) from Equity Method Investments has been reclassified to Revenue in the Adjusted presentation.

(2)  Interest Expense on Debt is excluded from Net Revenues and presented below Operating Income in the Adjusted results and is included in Interest Expense on a U.S. GAAP basis.

(3)  Expenses incurred from the assumed vesting of Class E LP Units, Class H LP Interests and Class J LP Units issued in conjunction with the acquisition of ISI are excluded from the Adjusted presentation.

(4)  Expenses during 2019 that are excluded from the Adjusted presentation relate to the acceleration of depreciation expense for leasehold improvements in conjunction with the previously announced expansion of our headquarters in New York. Expenses during 2018 that are excluded from the Adjusted presentation relate to separation benefits and costs of terminating certain contracts associated with closing the agency trading platform in the U.K.

(5)  Non-compensation Costs on an Adjusted basis reflect the following adjustments:

A-9

(5a)  The exclusion from the Adjusted presentation of expenses associated with amortization of intangible assets and other purchase accounting-related amortization from the acquisition of ISI and certain other acquisitions.

(5b)  Primarily the exclusion from the Adjusted presentation of professional fees incurred and costs related to transitioning acquisitions or divestitures.

(6)  Evercore is organized as a series of Limited Liability Companies, Partnerships, C-Corporations and a Public Corporation and therefore, not all of the Company's income is subject to corporate-level taxes. As a result, adjustments have been made to the Adjusted earnings to assume that the Company is subject to the statutory tax rates of a C-Corporation under a conventional corporate tax structure in the U.S. at the prevailing corporate rates and that all deferred tax assets relating to foreign operations are fully realizable within the structure on a consolidated basis. This assumption is consistent with the assumption that certain Evercore LP Units are vested and exchanged into Class A shares, as the assumed exchange would change the tax structure of the Company.

Excluded from the Company's Adjusted results are adjustments related to the impact of the enactment of the Tax Cuts and Jobs Act that was signed into law on December 22, 2017, which resulted in a reduction in income tax rates in the U.S. in 2018 and future years. The tax reform resulted in an estimated adjustment to Other Revenue of $77.5 million in the fourth quarter of 2017 related to the re-measurement of amounts due pursuant to our tax receivable agreement, which was reduced due to the lower enacted income tax rates in the U.S. in 2018 and future years.

(7)  Reflects an adjustment to eliminate noncontrolling interest related to all Evercore LP partnership units which are assumed to be converted to Class A common stock in the Adjusted presentation.

(8)  Assumes the vesting, and exchange into Class A shares, of certain Evercore LP partnership units and IPO related restricted stock unit awards in the Adjusted presentation. In the computation of outstanding common stock equivalents for U.S. GAAP net income per share, the Evercore LP partnership units are anti-dilutive.

(9)  The gain resulting from the sale of the Institutional Trust and Independent Fiduciary business of ETC in the fourth quarter of 2017 is excluded from the Adjusted presentation.

(10)  Release of cumulative foreign exchange losses resulting from the restructuring of our equity method investment in G5 in the fourth quarter of 2017 are excluded from the Adjusted presentation.

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SOURCE Evercore

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