NEW YORK, Feb 03, 2010 (BUSINESS WIRE) -- Lazard Ltd (NYSE: LAZ) today announced financial results for the fourth quarter and full year ended December 31, 2009. On a U.S. GAAP basis, which is before exchange of exchangeable interests, the net loss was $142.4 million, or $1.64 per share, for the fourth quarter of 2009, compared to net income of $38.0 million, or $0.50 per share (diluted), for the fourth quarter of 2008. The net loss was $130.2 million, or $1.68 per share, for the full year of 2009, compared to net income of $3.1 million or $0.06 per share (diluted) for the full year of 2008.

Net loss on a fully exchanged basis was $54.9 million, or $0.46 per share, for the fourth quarter of 2009, excluding pre-tax 2009 special charges of $147.0 million, compared to net income of $61.2 million, or $0.50 per share (diluted), for the fourth quarter of 2008. Net income on a fully exchanged basis was $11.1 million, or $0.09 per share (diluted), for the full year of 2009, excluding the 2009 special charges, compared to $196.4 million, or $1.65 per share (diluted) for the full year of 2008, excluding the 2008 special charge^(d).

Lazard's operating revenues in both its Financial Advisory and Asset Management businesses exhibit the continued improvement of those businesses, which began in the second quarter of 2009. Lazard's results were impacted negatively by significant special charges related to compensation and changes in its compensation policies, which are described in detail later in this release.

A reconciliation of the U.S. GAAP results to the adjusted results is presented on page 15 of this release.

Lazard believes that results assuming full exchange of outstanding exchangeable interests and excluding special charges provide the most meaningful basis for comparison among present, historical and future periods.

Operating Revenue and Operating Income

Operating revenue was $514.4 million for the fourth quarter of 2009, the third highest quarter in Lazard's history, a 28% increase over $402.5 million for the fourth quarter of 2008 and a 19% increase over $431.5 million for the third quarter of 2009. Operating loss was $74.6 million for the 2009 fourth quarter, excluding 2009 special charges of $147.0 million, compared to operating income of $54.1 million for the fourth quarter of 2008.

Operating revenue was $1,617.6 million for the 2009 full year, compared to $1,675.1 million for the full year of 2008. Operating income was $27.3 million for the 2009 full year, excluding 2009 special charges of $209.6 million, compared to operating income of $224.7 million for the full year of 2008, excluding the 2008 special charge of $199.6 million.

The Company's quarterly revenue and profits can fluctuate materially depending on the number, size and timing of completed transactions on which it advised, as well as seasonality and other factors. Accordingly, the revenue and profits in any particular quarter may not be indicative of future results. As such, Lazard management believes that annual results are the most meaningful.

Comments

"We achieved the third highest quarter of operating revenue in our history, with the second half of the year improving in excess of 40% over the first half," said Kenneth M. Jacobs, Chairman and Chief Executive Officer of Lazard. "This is a testament to the success of our strategy and the strength of our model. During the second half of 2009, Financial Advisory revenue increased 38% and Asset Management revenue increased 54% over the first half of the year. M&A fourth-quarter revenue increased 37% over the third quarter of 2009. Assets Under Management increased 42% during the year to $130 billion, including net inflows of $10 billion for the year."

"Our performance in the second half of 2009 demonstrates the substantial opportunities for growth inherent in our two businesses of Financial Advisory and Asset Management," said Mr. Jacobs. "We enter 2010 with strong trends in our Asset Management business, continued strength in Restructuring and gathering momentum in M&A and Capital Structure Advisory. The breadth and depth of our franchise position us well to benefit from a turn of the cycle and to capitalize on our ongoing investments in our business."

"At the same time, as part of the 2009 compensation cycle, we took special charges during the fourth quarter relating to compensation, and have made changes to our compensation policies, which result in our substantially exceeding the previous year's ratio of compensation to revenues. These special charges and changes to our compensation policies should enhance our competitiveness and drive shareholder value," said Mr. Jacobs. "Our goal is to grow annual compensation expense at a slower rate than revenues and to achieve over the cycle compensation levels on average consistent with the targets we established when we went public in 2005."

Revenue

Financial Advisory

Financial Advisory operating revenue increased 24% to $313.6 million for the 2009 fourth quarter, compared to $252.4 million for the fourth quarter of 2008 and increased 21% compared to $260.2 million for the third quarter of 2009. Financial Advisory operating revenue was $990.4 million for the full year of 2009, compared to $1,024.0 million for the full year of 2008.

Lazard's Financial Advisory business of M&A and Strategic Advisory, Restructuring, and Capital Markets and Other Advisory encompasses general strategic and transaction-specific advice to public and private companies, governments and other parties, and includes various corporate finance advisory services. Some of our assignments and, therefore, related revenue, are not reflected in publicly available statistical information. Restructuring assignments normally are executed over a six- to eighteen-month period, which has an impact on the timing of the recognition of Restructuring revenue.

M&A and Strategic Advisory

M&A and Strategic Advisory operating revenue was $170.2 million for the fourth quarter of 2009, compared to $192.7 million for the fourth quarter of 2008 and compared to $124.7 million for the 2009 third quarter. M&A and Strategic Advisory operating revenue generally does not include M&A fees for the sale of distressed assets, which are recognized in Restructuring operating revenue. For the full year of 2009, M&A and Strategic Advisory operating revenue was $526.2 million, compared to $814.7 million for the full year of 2008.

Among the transactions completed during the fourth quarter of 2009 on which Lazard advised were the following:

• Barclays' $13.5 billion sale of the Barclays Global Investors business to BlackRock
• Transaction Committee of the Board of IMS Health on the company's $5.2 billion sale to TPG and CPP Investment Board
• Resolution's £1.9 billion acquisition of Friends Provident
• Anheuser-Busch InBev's up to $3.0 billion sale of its Central European operations to CVC
• Anheuser-Busch InBev's up to $2.7 billion sale of Busch Entertainment to Blackstone
• Special Committee of the Board of Clear Channel Outdoor on its $2.5 billion refinancing
• Nortel's $1.13 billion sale of its CDMA Business and LTE Access assets to Ericsson
• Nortel's $915 million sale of its Enterprise Solutions Business to Avaya
• Onyx Pharmaceuticals' up to $851 million acquisition of Proteolix
• Amazon.com's $807 million acquisition of Zappos.com
• Capmark Financial Group's $515 million sale of its North American servicing and mortgage banking businesses to Berkadia
• Anheuser-Busch InBev's $577 million sale of four metal beverage container manufacturing plants to Ball
• Mid Europa Partners' acquisition of a majority stake in Invitel
• Pfizer's agreement with GlaxoSmithKline to create a specialist HIV company

Among the pending, publicly announced M&A transactions on which Lazard advised in the fourth quarter, continued to advise, or completed since December 31, 2009, are the following:

• BHP Billiton's $58.0 billion Western Australian iron ore production joint venture with Rio Tinto
• Kraft Foods' $21.6 billion recommended final offer for Cadbury
• AREVA's EUR 4.1 billion sale of its transmission and distribution business
• Cisco's NOK 19.0 billion acquisition of Tandberg
• Kraft Foods' $3.7 billion sale of its North American pizza business to Nestle
• Océ's EUR 1.5 billion pending sale to Canon
• Cazenove Group's £1.0 billion sale to J.P. Morgan
• Nortel's $769 million sale of its Optical Networking and Carrier Ethernet businesses to Ciena
• Chinatrust Financial's $660 million acquisition of a 30% stake in AIG's Nan Shan Life from China Strategic Holdings
• Telefónica's EUR 400 million sale of its 32% stake in Medi Telecom (Méditel)
• FGX International's $565 million sale to Essilor International
• Nortel's $282 million sale of Carrier VoIP and Application Solutions business
• Sensor Technologies' $242 million sale to ManTech
• SIX Group's EUR 235 million joint acquisition with Deutsche Börse of STOXX
• France Telecom in the merger of Orange Switzerland and Sunrise
• Veolia Environnement in the merger of its Veolia Transport division with Transdev

Restructuring

Restructuring operating revenue was a fourth-quarter record of $103.4 million, compared to $47.1 million for the fourth quarter of 2008 and to $119.1 million for the third quarter of 2009. Restructuring operating revenue was a full-year record of $376.7 million, compared to $119.3 million for the full year of 2008. Restructuring operating revenue reflects an increased level of restructuring advisory activity in the U.S. and Europe as well as fees for advising on distressed asset sales.

Over the past decade, Lazard's global restructuring team, paired with its M&A industry specialist bankers, has advised on more than 450 restructurings worldwide, with an aggregate value over $1 trillion. The firm has been recognized as having the world's leading restructuring group, including receiving numerous awards since 2003, such as Euromoney's "Best Global Corporate Restructuring House" and IFR's "Americas Restructuring House" for 2009.

During the full year of 2009, Lazard advised on over 140 restructuring assignments worldwide, of which over 70 are currently active. The majority of assignments during 2009 were non-bankruptcy related. Lazard has advised debtors or creditors on 22 of the top 30 Chapter 11 bankruptcies since 2008, and on all of the top 10 filed in 2009.

Completed fourth-quarter 2009 Restructuring assignments include advising Charter Communications, Hayes-Lemmerz, Hawaiian Telcom, Metaldyne Corporation, Pilgrim's Pride and True Temper in connection with their Chapter 11 filings.

Notable Chapter 11 bankruptcies, on which Lazard advised debtors or creditors during or since the fourth quarter of 2009, are:

• Automotive: Cooper-Standard
• Chemicals: Chemtura, Lyondell
• Consumer Goods: Eddie Bauer
• Gaming, Entertainment and Hospitality: Station Casinos, Tropicana Entertainment, Trump Entertainment Resorts, Twin River Casino
• Professional/Financial Services: Lehman Brothers
• Real Estate/Property Development: Capmark Financial, Crescent Resources, Extended Stay Hotels, Tarragon, TOUSA
• Technology/Media/Telecom: Citadel Broadcasting Group, MIG Inc., Nortel, Tribune Co., R.H. Donnelley
• Other industries: AbitibiBowater, Smurfit-Stone Container

Among other publicly announced restructuring and debt advisory assignments on which Lazard has advised during or since the fourth quarter of 2009, are:

• Alliance Bank (Kazakhstan) on its debt restructuring
• Bavaria Yachtbau on its debt restructuring
• Belvédère - advising the FRN noteholder committee
• BTA Bank (Kazakhstan) on its debt restructuring
• CPI - advised senior lenders in the company's restructuring
• Eurotunnel on its offer for early redemption of its convertible bonds
• Gala Coral on its debt restructuring
• German Federal Ministry of Economics and Technology on the restructuring of Adam Opel GmbH/General Motors Europe
• Global Garden Products - advising the steering committee of senior lenders in the company's restructuring
• Grupo Alfonso Gallardo on the extension of certain debt facilities and new financing
• Italtel on its debt restructuring
• La Rinascente and UPIM on their debt restructuring
• Monier - advised the consortium of Apollo, TowerBrook and York Capital on the company's creditor-led restructuring
• Morris Publishing in evaluating its strategic options regarding the company's existing capital structure
• Paroc on its debt restructuring
• Polynt on its debt restructuring
• Republic of Côte d'Ivoire - advised the Ministry of Finance on the restructuring of the Republic's Brady bonds
• Republic of Senegal on its inaugural international bond issue
• Schuler on its syndicated loan extension
• SGD on its debt restructuring
• Stroili Oro on its covenant reset
• Terreal on its debt restructuring
• Thomson - advising US private placement noteholders in the company's restructuring
• TI Automotive on its restructuring through a UK scheme of arrangement

Capital Markets and Other Advisory

Capital Markets and Other Advisory operating revenue was $39.9 million for the fourth quarter of 2009, compared to $12.5 million for the fourth quarter of 2008 and compared to $16.4 million for the third quarter of 2009. Capital Markets and Other Advisory operating revenue was $87.4 million for the full year of 2009, compared to $90.0 million for the full year of 2008. This decrease in annual revenues was primarily due to a decline in Equity Capital Markets transactions and private placements during the first nine months of 2009.

Assignments in the fourth quarter of 2009 included advising on:

• IPOs: RailAmerica and STR Holdings, CFAO
• Follow-on offerings: Boise, Dendreon, Savient Pharmaceuticals, SuccessFactors and Transcend Services, JJB Sports plc and Quintain Estates & Development
• Convertible and convertible exchange transactions: DST Systems, Forest City Enterprises, GenCorp and Genesco, Neopost and Artémis-Vinci
• PIPEs, Registered Direct Offerings, Underwritten Registered Direct Offerings, and Private Placements as well as other convertible and capital markets transactions: Verenium, NicOx, Affymax, Comverge, Novavax, Beacon Power, Westport Innovations, G-III Apparel Group, Ballard Power, Amonix, and Circulite.

Asset Management

Asset Management operating revenue was $204.1 million for the fourth quarter of 2009, compared to $125.4 million for the 2008 fourth quarter, an increase of 63%, and compared to $157.3 million for the third quarter of 2009, an increase of 30%. Asset Management operating revenue was $596.0 million for the full year of 2009, compared to $628.7 million for the full year of 2008.

Assets Under Management at December 31, 2009 were $129.5 billion, representing a 42% increase over assets under management of $91.1 billion at December 31, 2008, and representing an 8% increase over assets under management of $120.2 billion at September 30, 2009. The increase for the 2009 fourth quarter and full year includes net inflows of $4.6 billion and $10.3 billion for the respective periods. At December 31, 2009, approximately 82% of Lazard's AUM was invested in equities and 14% in fixed income.

Average assets under management were $124.9 billion for the fourth quarter of 2009, representing a 22% increase over average assets under management of $102.2 billion for the fourth quarter of 2008, and a 14% increase compared to $109.1 billion for the third quarter of 2009. Average assets under management were $104.0 billion for the full year of 2009, compared to $122.8 billion for the full year of 2008.

Management fees increased 42% to $152.8 million for the fourth quarter of 2009, compared to $108.0 million for the 2008 fourth quarter and increased 15% compared to $133.4 million for the third quarter of 2009. Management fees were $486.8 million for the full year of 2009, compared to $568.4 million for the 2008 full year.

Incentive fees were $41.0 million and $74.8 million for the fourth quarter and full year of 2009, respectively, compared to $16.4 million and $35.0 million for the comparable periods in 2008. Incentive fees are recorded on the measurement date, which for most of our alternative strategies that are subject to incentive fees occurs in the fourth quarter.

Other Asset Management revenue was $10.3 million for the fourth quarter of 2009, compared to $1.0 million for the fourth quarter of 2008. Other Asset Management revenue was $34.4 million for the full year of 2009, compared to $25.3 million for the full year of 2008. The increases in the 2009 periods were due to investment losses in the 2008 respective periods, which did not occur in 2009.

Our Asset Management business provides investment management and advisory services to governments, institutions, financial intermediaries, private clients and investment vehicles around the world. Our goal in our Asset Management business is to produce superior risk-adjusted investment returns and provide investment solutions customized for our clients. Asset Management includes the management of equity and fixed income securities as well as alternative investment and private equity funds.

Corporate

Corporate operating revenue was a negative $3.3 million for the fourth quarter of 2009, compared to positive operating revenue of $24.8 million for the fourth quarter of 2008. The negative operating revenue in the fourth quarter of 2009 was due primarily to a $13 million charge relating to our investment in warrants of Sapphire Industrials Corp., which was a special purpose acquisition corporation. Fourth quarter 2008 revenue included gains of $20.3 million on the repurchase of a portion of the Company's senior notes.

Corporate operating revenue was $31.3 million for the full year of 2009, compared to $22.5 million for the full year of 2008. Revenue for the 2009 full year primarily represents net investment gains and returns on average cash balances.

Expenses

Compensation and Benefits

Compensation and benefits expense was $615.5 million and $1,309.2 million for the fourth quarter and full year of 2009, respectively, compared to $221.9 million and $1,128.3 million for the fourth quarter and full year of 2008, respectively.

Compensation and benefits expense, excluding special charges, was $468.5 million and $1,162.2 million for the fourth quarter and full year of 2009, respectively, compared to $221.9 million and $930.7 million for the fourth quarter and the full year of 2008, respectively.

During the fourth quarter of 2009, we have taken special charges and as part of the 2009 compensation cycle we have changed our compensation policies, while still maintaining significant retention mechanisms. As a result, we:

• as previously announced and pursuant to the terms of the awards, accelerated the amortization of restricted stock units previously granted to our former Chairman and Chief Executive Officer who passed away in October 2009, resulting in a non-cash special charge of $86.5 million in the fourth quarter of 2009
• accelerated the vesting of the deferred cash incentive compensation that was awarded as part of the 2008 compensation cycle, and which would have been expensed in future periods, resulting in a non-cash special charge of $60.5 million in the fourth quarter
• changed the mix from 2008 of our incentive compensation awards by increasing the current cash and deferred equity based components and eliminating deferred cash awards. These changes were made with the intention to:
  • be in line with the practices followed in the 2006 and 2007 compensation cycles
  • reduce future amortization charges and to allow greater flexibility in the future to address competitive conditions
  • more closely align current pay cycle with reported compensation and revenues
  • maintain significant retention mechanisms by focusing stock grant awards at the more senior levels, where they are more highly effective and valued
    
    While the economic cost is the same, regardless of mix, this year's change in mix increased our compensation ratio for the year by approximately 900 basis points and increased our fourth quarter compensation and benefits expense.
• held the aggregate 2009 current cash compensation plus deferrals awarded during the 2009 compensation cycle, in line with 2008 and 2006 levels
• implemented and amended a previously approved retirement policy in the first quarter of 2010, which accelerates the accounting for certain deferred stock awards and will result in a non-cash pre-tax special charge of approximately $24.8 million in the first quarter of 2010
• are implementing selective staff reductions, while simultaneously maintaining a program to hire senior bankers and Asset Management professionals. We expect to record a pre-tax charge of approximately $90 million in the first quarter of 2010, including a non-cash charge of $41 million relating to restricted stock units previously granted to individuals who are being terminated.

The ratio of compensation and benefits expense, excluding special charges, to operating revenue was 71.8% for the full year of 2009, compared to 55.6% for the full year of 2008. Adjusted for employees who will be leaving as part of staff reductions after year-end or have already left and assuming no impact on revenues from departures, the compensation ratio for the full year of 2009 would be 65.9%.

Base U.S. GAAP compensation expense going into 2010, for illustrative purposes only, assuming current levels of pay for continuing employees, no increases in staffing, and no change in mix between current and deferred compensation, is estimated to be approximately $1,060 million. Actual compensation for 2010 will depend on competitive pay conditions, our operating performance, and staffing levels, as well as the mix between deferred and current compensation. It is our goal to grow annual compensation expense at a slower rate than revenues, and to achieve over the cycle compensation levels on average consistent with the targets established at the time we went public in 2005.

Please see additional information relating to the trend of Lazard's compensation and benefits is presented in the tables on pages 17 and 18 of this release.

Non-Compensation

The ratio of non-compensation expense to operating revenue was lower in both the fourth quarter and full year of 2009, compared to the corresponding 2008 periods. The ratio of non-compensation expenses to operating revenue, excluding amortization of intangibles and the effects of our Tax Receivable Agreement, was 19.4% and 20.8% in the fourth quarter and full year of 2009, respectively, compared to 20.5% and 22.0% in the respective 2008 periods, excluding a special provision for counterparty defaults and the LAM Equity charge-related transaction costs.

Non-compensation expense increased 23% to $102.1 million for the fourth quarter of 2009, compared to $82.8 million for the fourth quarter of 2008, and decreased 11% to $342.2 million for the full year of 2009, compared to $384.7 million for the full year of 2008, excluding in each year the effects of our Tax Receivable Agreement and in the full year 2008 excludes transaction costs related to the LAM Equity charge.

Non-compensation expense includes amortization of intangibles related to acquisitions of $2.3 million and $5.0 million in the fourth quarter and full year of 2009, respectively, compared to $0.3 million and $4.6 million in the fourth quarter and full year of 2008, respectively. Other factors contributing to the quarter-over-quarter increase include higher business development expenses for travel and market related data and fund administration expenses related to the increased level of business activity and assets under management, as well as higher legal and consulting fees.

Non-compensation expense in the full year of 2008 includes a special provision for counterparty defaults of $12.4 million relating primarily to the bankruptcy filing of one of our prime brokers. Other factors contributing to the 2009 full-year decrease, include lower spending for travel and other business development expenses, consulting and recruiting fees as well as the strengthening of the U. S. dollar versus foreign currencies, partially offset by higher fees related to Asset Management outsourced services.

The percentage of non-compensation expenses to operating revenue can vary from quarter to quarter due to quarterly fluctuation in revenues, among other things. Accordingly, the results in a particular quarter may not be indicative of future results. Lazard management believes that annual results are the most meaningful basis for comparison.

Provision for Income Taxes

The provision for income taxes, on a fully exchanged basis, was $13.4 million for the full year of 2009, compared to $41.6 million for the full year of 2008, (when excluding the effects of the 2009 and 2008 special charges). The effective tax rate on the same basis for the full year of 2009 was 52.4% and was 23% for the 2008 full year, exclusive of noncontrolling interests and including the effects of our Tax Receivable Agreement.

Noncontrolling interests

Net income (loss) attributable to noncontrolling interests, on a fully exchanged basis, amounted to $1.6 million and $(3.6) million for the fourth quarters of 2009 and 2008, respectively, and was $2.8 million and $(13.3) million for the full year of 2009 and 2008, respectively. Noncontrolling interests, on a fully exchanged basis, represents interests that the Company is deemed to control but not own in (i) various LAM-related general partnerships and (ii) in Edgewater management vehicles acquired during the third quarter of 2009.

Liquidity, Capital Resources and Other Items

Lazard continues to maintain a strong liquidity position with over $1.1 billion at December 31, 2009, in cash, US Government and agency securities, and marketable equity securities.

At December 31, 2009, total stockholders' equity related to Lazard's interests was $355.4 million, which includes positive adjustments to total Accumulated Other Comprehensive Loss during the full year of 2009, due primarily to (i) net foreign currency translation adjustments of $37.4 million, and (ii) net unrealized gains of $20.6 million related to securities designated as available for sale. During the fourth quarter of 2009, Lazard did not repurchase any shares of its Class A common stock or exchangeable interests and at December 31, 2009, the remaining share repurchase authorization expired.

Due to the net loss for the quarter, there was no dilution with respect to approximately 18 million incremental issueable shares for restricted stock units, convertible notes and convertible preferred stock.

On January 27, 2010, the Board of Directors of Lazard Ltd approved a new share repurchase authorization of up to $200 million in Class A common stock and exchangeable interests, for purchases through December 31, 2011.

Non-GAAP Information

Lazard discloses certain non-GAAP financial information, which management believes provides the most meaningful basis for comparison among present, historical and future periods. The following are non-GAAP measures used in the accompanying financial information:

• Net income (loss) attributable to Lazard Ltd, assuming full exchange of exchangeable interests (or fully exchanged basis) and excluding special items
• Net income (loss) assuming full exchange of exchangeable interests (or fully exchanged basis) and excluding special items
• Operating revenue
• Operating income, excluding special items
• Noncontrolling interests assuming full exchange of exchangeable interests
• Weighted average shares outstanding, assuming full exchange of exchangeable interests and excluding special items
• Net income per share, assuming full exchange of exchangeable interests and excluding special items
• Provisions for income taxes on a fully exchanged basis
• Net income (loss) attributable to LAZ-MD
• Net income (loss) attributable to other noncontrolling interests

Additional financial, statistical and business-related information is included in a financial supplement. This earnings release, the financial supplement and selected transaction information will be available today on our website at www.lazard.com.

Lazard, one of the world's preeminent financial advisory and asset management firms, operates from 39 cities across 24 countries in North America, Europe, Asia, Australia, Central and South America. With origins dating back to 1848, the firm provides advice on mergers and acquisitions, strategic matters, restructuring and capital structure, capital raising and corporate finance, as well as asset management services to corporations, partnerships, institutions, governments and individuals. For more information on Lazard, please visit www.lazard.com.

Conference Call

Kenneth M. Jacobs, Chairman and Chief Executive Officer, and Michael J. Castellano, Chief Financial Officer, will host a conference call today at 10 am EST to discuss the company's financial results for the fourth quarter and full year of 2009. The conference call can be accessed via a live audio web cast available through Lazard's Investor Relations website at www.lazard.com, or by dialing 1 (800) 533-7954 (U.S. and Canada) or +1 (785) 830-1924 (outside of the U.S. and Canada), 15 minutes prior to the start of the conference call.

A replay of the conference call will be available beginning today at 1:00 p.m. EST, through February 17, 2010, via the Lazard Investor Relations website, or by dialing 1 (888) 203-1112 (for the U.S. and Canada) or +1 (719) 457-0820 (outside of the U.S. and Canada). The replay access code is 5041041.

Cautionary Note Regarding Forward-Looking Statements

This press release contains "forward-looking statements." In some cases, you can identify these statements by forward-looking words such as "may", "might", "will", "should", "expect", "plan", "anticipate", "believe", "estimate", "predict", "potential" or "continue", and the negative of these terms and other comparable terminology. These forward-looking statements are not historical facts but instead represent only our belief regarding future results, many of which, by their nature, are inherently uncertain and outside of our control. There are important factors that could cause our actual results, level of activity, performance or achievements to differ materially from the results, level of activity, performance or achievements expressed or implied by these forward-looking statements.

These factors include, but are not limited to, those discussed in our Annual Report on Form 10-K under Item 1A "Risk Factors," and also disclosed from time to time in reports on Forms 10-Q and 8-K including the following:

• A decline in general economic conditions or the global financial markets;
• Losses caused by financial or other problems experienced by third parties;
• Losses due to unidentified or unanticipated risks;
• A lack of liquidity, i.e., ready access to funds, for use in our businesses; and
• Competitive pressure.

Lazard Ltd is committed to providing timely and accurate information to the investing public, consistent with our legal and regulatory obligations. To that end, Lazard and its operating companies use their websites to convey information about their businesses, including the anticipated release of quarterly financial results, quarterly financial, statistical and business-related information, and the posting of updates of assets under management in various hedge funds and mutual funds and other investment products managed by Lazard Asset Management LLC and its subsidiaries. Monthly updates of these funds will be posted to the Lazard Asset Management website (www.lazardnet.com) on the third business day following the end of each month. Investors can link to Lazard and its operating company websites through www.lazard.com.

LAZ-G

^(a) Refers to pre-tax charges (i) in the fourth quarter 2009 to compensation and benefits expense of $147.0 million, including $60.5 million due to the accelerated vesting of previously awarded deferred cash incentive awards and $86.5 million due to the previously announced accelerated amortization of restricted stock units previously granted to our former Chairman and Chief Executive Officer who passed away in October 2009, and (ii) in the first quarter of 2009 to restructuring expenses of $62.6 million due to staff reductions and realignments.

^(b) Refers to net income or loss attributable to Lazard Ltd.

^(c) Refers to the full conversion of all outstanding exchangeable interests held by the members of LAZ-MD Holdings and is a non-GAAP measure.

^(d) Refers to a pre-tax charge in the third quarter 2008 of $199.6 million to compensation expense and transaction costs in connection with the firm's purchase of all outstanding Lazard Asset Management (LAM) equity units (the LAM Equity charge).