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Feb 07, 2013
Lazard Ltd Reports Full-Year and Fourth-Quarter 2012 Results
Lazard Ltd Reports Full-Year and Fourth-Quarter 2012 Results
Highlights
-
Net income per share, as adjusted1, of
$1.44 (diluted) for the year endedDecember 31, 2012 , and$0.61 (diluted) for the 2012 fourth quarter, excluding charges in both periods2; compared to$1.31 (diluted) and$0.01 (diluted) for the respective 2011 periods -
Operating revenue1 of
$1,971 million for 2012, up 5% from full-year 2011; fourth-quarter 2012 operating revenue of$574 million , up 22% from prior-year period -
Financial Advisory operating revenue of
$1,049 million for 2012, up 6% from full-year 2011; Financial Advisory fourth-quarter 2012 operating revenue of$309 million , up 19% from prior-year period -
M&A and Other Advisory operating revenue of
$793 million for 2012, up 13% from full-year 2011; M&A and Other Advisory fourth-quarter 2012 operating revenue of$234 million , up 40% from prior-year period -
Asset Management operating revenue of
$882 million for 2012, effectively matching the record full-year 2011 period; fourth-quarter 2012 operating revenue of$245 million , up 20% from prior-year period and up 11% from third-quarter 2012 -
Assets under management as of
December 31, 2012 , a record$167 billion , up 18% from year-end 2011 and up 4% fromSeptember 30, 2012 . Net inflows of$2.7 billion for full-year 2012; net outflows of$47 million for fourth-quarter 2012 -
Implementation of recently announced cost saving initiatives on
plan, with related fourth-quarter 2012 charge of
$103 million -
Return of capital to shareholders totaling
$540 million 3 in 2012
|
($ in millions, except per share data and AUM) |
Year Ended
|
Fourth Quarter | ||||||||||||||
| 2012 | 2011 | %'12-'11 | 2012 | 2011 |
%'12'-11 |
|||||||||||
|
As Adjusted1 |
||||||||||||||||
| Operating revenue |
|
|
5% |
|
|
22% | ||||||||||
| Financial Advisory |
|
|
6% |
|
|
19% | ||||||||||
| Asset Management |
|
|
- |
|
|
20% | ||||||||||
| Net income2 |
|
|
9% |
|
|
n/m* | ||||||||||
| Diluted net income per share2 |
|
|
10% |
|
|
n/m* | ||||||||||
|
|
||||||||||||||||
| Net income |
|
|
(52)% |
|
|
- | ||||||||||
| Diluted net income per share |
|
|
(52)% |
|
|
(25)% | ||||||||||
|
|
||||||||||||||||
| Ending AUM ($ in billions) |
|
|
18% | |||||||||||||
| Average AUM ($ in billions) |
|
|
2% |
|
|
17% | ||||||||||
|
*not meaningful |
||||||||||||||||
Fourth-quarter 2012 operating revenue was
Full-year 2012 net income on a U.S. GAAP basis was
"Lazard's 2012 results underscore the strength and resilience of our
business model," said
"As we reinforce the breadth and depth of our client services around the
world, we are building shareholder value by enhancing our profitability
and increasing our operating leverage.
"The implementation of cost saving initiatives we announced in October
is on track," said
"In 2012, we returned
OPERATING REVENUE
Financial Advisory
In the text portion of this press release, we present our Financial
Advisory results as Strategic Advisory and Restructuring. Strategic
Advisory includes 1) M&A and Other Advisory (Other includes Capital
Structure Advisory and Sovereign Advisory) and 2) Capital Raising
(includes
Full Year
Financial Advisory operating revenue was
Strategic Advisory operating revenue was
Restructuring operating revenue was
During 2012,
Our Sovereign Advisory business remained active in worldwide
assignments, including: advising the government of
During 2012 we were involved in many of the most notable recent
restructurings, including: Lehman Brothers; the
Please see a more complete list of M&A and Restructuring assignments
on which
* Source: Thomson Reuters
Fourth Quarter
Financial Advisory operating revenue was
Strategic Advisory operating revenue was
Restructuring operating revenue was
Please see a list of M&A and Restructuring assignments on which
Asset Management
Full Year
Asset Management operating revenue was
Assets under management (AUM) were a record
Management fees were
Incentive fees during the period totaled
In 2012, we continued to invest in our Asset Management business,
extending our investment platforms with new strategies. In addition,
Lazard Asset Management opened an office in
We continued to win significant new mandates in most of our major platforms from clients around the world. A sample of these new mandates is reflected in the investor presentation on our website.
Fourth Quarter
Asset Management operating revenue was
Average AUM for the fourth quarter of 2012 was
Management fees were
Incentive fees were
OPERATING EXPENSES
Compensation and Benefits
In managing compensation and benefits expense, we focus on annual awarded compensation (cash compensation and benefits plus deferred incentive compensation with respect to the applicable year, net of estimated future forfeitures and excluding charges). We believe annual awarded compensation reflects the actual annual compensation cost more accurately than the GAAP measure of compensation cost, which includes applicable-year cash compensation and the amortization of deferred incentive compensation principally attributable to previous years' deferred compensation. We believe that by managing our business using awarded compensation with a consistent deferral policy, we can better manage our compensation costs, increase our flexibility in the future and build shareholder value over time.
Adjusted GAAP compensation and benefits expense1 for
full-year 2012 was
The 2012 adjusted GAAP compensation ratio includes, among other items,
amortization expense related to 2008 deferred compensation, which had a
comparatively longer, four-year vesting period. For full-year 2012, we
expensed approximately
Our 2012 awarded compensation ratio was 59.4%, compared to our 2011
awarded compensation ratio of 62.0%. Awarded compensation expense for
2012 was
Our goal remains to grow awarded compensation expense at a slower rate than revenue growth, and to achieve a compensation-to-operating revenue ratio over the cycle in the mid- to high-50s percentage range on both an awarded and adjusted GAAP basis, with consistent deferral policies.
Non-Compensation Expense
Adjusted non-compensation expense1 for full-year 2012 was
Adjusted non-compensation expense for the fourth quarter of 2012,
excluding related 2012 charges, was
Our goal remains to achieve an adjusted non-compensation expense-to-operating revenue ratio over the cycle of 16% to 20%.
TAXES
The provision for taxes, on an adjusted basis1, was
CAPITAL MANAGEMENT AND BALANCE SHEET
Our primary capital management goals include managing debt and returning capital to shareholders through dividends and share repurchases.
In 2012, we achieved our objective of returning
For the full-year 2012,
In the fourth quarter of 2012, we repurchased 4.6 million shares of our
Class A common stock for
Lazard's financial position remains strong. Our cash and cash
equivalents at
COST SAVING INITIATIVES
In Lazard's third-quarter 2012 earnings release, the firm announced cost
saving initiatives expected to result in approximately
The cost saving initiatives are intended to improve the firm's
profitability with minimal impact on revenue growth. Approximately
Associated implementation expenses are expected to range between
- An awarded compensation-to-operating revenue ratio1 of 59.4%, down from 62.0% for 2011
- An adjusted non-compensation expense-to-operating revenue ratio1 of 21.4%, approximately even with 2011.
- An operating margin based on awarded compensation5 of 19.2%, up from 16.8% for 2011. We are making progress toward our operating margin target of 25% in 2014 based on 2012 activity levels
-
Return of capital to shareholders totaling
$540 million 3, including$200 million in surplus cash4 one year ahead of target
We believe our financial discipline is increasing the firm's operating
leverage, putting
***
CONFERENCE CALL
A replay of the conference call will be available by
ABOUT
***
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", "target", "goal" 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 our 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 on our businesses and on our ability to retain our employees.
Although we believe the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee the accuracy of our estimated targets, future results, level of activity, performance or achievements. Moreover, neither we nor any other person assumes responsibility for the accuracy or completeness of any of these forward-looking statements. You should not rely upon forward-looking statements as predictions of future events. We are under no duty to update any of these forward-looking statements to conform our prior statements to actual results or revised expectations and we do not intend to do so.
***
FINANCIAL ADVISORY ASSIGNMENTS
Mergers and Acquisitions (Completed in the fourth quarter of 2012)
Among the large, publicly announced M&A Advisory transactions or
assignments completed during the fourth quarter of 2012 on which
-
Carrefour in the €2.0 billion sale of its business in
Colombia to Cencosud -
Hertz's
$2.3 billion acquisition of Dollar Thrifty - ANF Immobilier's €786 million sale of a real estate portfolio to a consortium led by Foncière des Murs and to funds managed by Grosvenor
-
OPNET Technologies'
$1.0 billion sale to Riverbed -
HiSoft Technology's $750 million merger of equals
with
VanceInfo Technologies to formPactera Technology International -
Independent Non-Executive Directors of
ENRC in the company's$550 million acquisition of the remaining 49.5% of Camrose Resources not already owned byENRC -
BHP Billiton's
$430 million sale of its Yeelirrie uranium deposit to Cameco -
Trimble Navigation's
$335 million acquisition ofTMW Systems - Piraeus Bank in its acquisition of Société Générale's 99.1% stake in Geniki Bank
- Oriental Trading Company's sale to Berkshire Hathaway
-
Magnablend's sale to
Univar -
ArrMaz Custom Chemicals on its sale to
Golden Gate Capital - L'Oréal's acquisition of Urban Decay
- Synchronous Aerospace Group's sale to Precision Castparts
-
The Rock Creek Group on the sale of a minority interest to Wells Fargo Asset Management -
HOCHTIEF's sale of a 45% interest in the Vespucio Norte Express
toll highway to a consortium led by
Brookfield
Mergers and Acquisitions (Announced)
Among the ongoing, large, publicly announced M&A transactions and
assignments on which
-
Deutsche Telekom on the
$32.8 billion combination of T-Mobile and MetroPCS -
Microsoft in its role in Dell's
$24.4 billion going-private transaction -
Anheuser-Busch InBev's
$20.1 billion acquisition of the remaining stake inGrupo Modelo it does not already own and Grupo Modelo's related$1.9 billion sale of its 50% interest inCrown Imports to Constellation Brands -
IntercontinentalExchange's
$8.2 billion acquisition of NYSE Euronext -
Caisse des Dépôts' €2.6 billion indirect acquisition of Silic
from
Groupama -
Cerberus in Albertsons'
$3.6 billion acquisition of five grocery banners from SUPERVALU and tender offer for up to 30% of SUPERVALU's outstanding public shares - Total's €2.4 billion proposed sale of TIGF to a consortium
-
Ameristar Casinos'
$2.8 billion sale to Pinnacle Entertainment -
Permian Mud Service (parent company of Champion Technologies and CorsiTech) in its$2.2 billion merger with Ecolab -
PPG Industries on the
$2.1 billion merger of its commodity chemicals business with Georgia Gulf -
Athene Holding in its$1.6 billion acquisition of Aviva's U.S. annuity and life insurance operations -
The Special Committee of CNH Global on Fiat Industrial's$1.7 billion acquisition of the remaining shares in CNH Global that it does not already own -
CH Energy Group's
$1.5 billion sale to Fortis -
Principal Financial Group's
$1.5 billion acquisition of Cuprum -
LNR Property's
$1.05 billion sale to Starwood Property Trust andStarwood Capital Group -
EQT in the exchange of its natural gas distribution business
with
SteelRiver Infrastructure Partners for$720 million and the receipt of assets and other consideration -
The Special Committee of CreXus Investment Corp. in the company's sale to Annaly Capital Management for an implied valuation of$1.0 billion -
Petra Foods'
$950 million sale of its cocoa ingredients business to Barry Callebaut -
Sportingbet in its £485 million proposed sale to
William Hill and GVC Holdings -
Unilever in the
$700 million sale of its Skippy peanut butter business to Hormel -
Eastman Kodak's
$525 million sale of its digital imaging patents to a consortium -
Qatar Holding on its approximately 12% stake in Xstrata in connection with the proposed merger with Glencore International - Caisse des Dépôts on the reorganization of Dexia
- EADS on the reorganization of its governance and shareholding structure
-
Jereissati Group and Renosa in the merger of Norsa, Renosa and Guararapes -
Scailex on the sale of an interest in Partner Communications to
Saban Capital Group - Hera's merger with AcegasAps
Restructuring and Debt Advisory Assignments
Restructuring and debtor or creditor advisory assignments completed
during the fourth quarter of 2012 on which
Notable Chapter 11 bankruptcies on which
-
Airlines:
Allied Pilots Association with respect toAmerican Airlines - Consumer/Food: Hostess Brands
-
Gaming, Entertainment and Hospitality: Indianapolis Downs,
MSR Resorts - Power & Energy: A123 Systems
-
Professional/Financial Services:
Ambac - Technology/Media/Telecom: Eastman Kodak, LightSquared
Among other publicly announced restructuring and debt advisory
assignments on which
- Belvédère — advising the FRN noteholder committee
-
Financial Guaranty Insurance Company (FGIC) — advisor to
Weil, Gotshal & Manges in its capacity as counsel to theNew York Liquidation Bureau -
Mediannuaire Holding — advising the working group of first and second lien lenders in connection with the company's debt restructuring - Munshaat — on its debt restructuring
-
National Association of Letter Carriers — in connection with the USPS's restructuring efforts - PMI — advisor to the receiver of PMI on certain asset dispositions
***
ENDNOTES
1 A non-U.S. GAAP measure. See attached financial schedules and related notes for a detailed explanation of adjustments to corresponding U.S. GAAP results. We believe that presenting our results on an adjusted basis, in addition to the U.S. GAAP results, is the most meaningful and useful way to compare our operating results across periods.
2 2012 results exclude pre-tax charges of
3 In 2012 we: (i) paid
4 Surplus cash is defined as that which is not needed for regulatory, tax or other business purposes, or which is reserved for accrued compensation.
5 Operating margin based on awarded compensation is defined
as operating revenue (
LAZ-G
|
|
|||||||||
| SELECTED SUMMARY FINANCIAL INFORMATION (a) | |||||||||
| (Non-GAAP - unaudited) | |||||||||
| Three Months Ended | % Change From | ||||||||
|
|
December 31, 2012 |
September 30, 2012 |
December 31, 2011 |
September 30, 2012 |
December 31, 2011 |
||||
|
($ in thousands, except per share data) |
|||||||||
| Revenues: | |||||||||
| Financial Advisory | |||||||||
| M&A and Other Advisory |
|
|
|
36% | 40% | ||||
| Capital Raising | 27,685 | 14,174 | 17,691 | 95% | 56% | ||||
| Strategic Advisory | 261,202 | 185,591 | 184,790 | 41% | 41% | ||||
| Restructuring | 48,095 | 34,382 | 75,704 | 40% | (36%) | ||||
| Total | 309,297 | 219,973 | 260,494 | 41% | 19% | ||||
| Asset Management | |||||||||
| Management fees | 208,637 | 202,324 | 190,073 | 3% | 10% | ||||
| Incentive fees | 26,755 | 10,606 | 5,373 | NM | NM | ||||
| Other | 9,815 | 7,397 | 8,960 | 33% | 10% | ||||
| Total | 245,207 | 220,327 | 204,406 | 11% | 20% | ||||
| Corporate | 19,143 | 2,911 | 3,807 | NM | NM | ||||
| Operating revenue (b) |
|
|
|
29% | 22% | ||||
| Expenses: | |||||||||
| Compensation and benefits expense (c) |
|
|
|
23% | 1% | ||||
| Ratio of compensation to operating revenue | 59.6% | 62.7% | 71.9% | ||||||
| Non-compensation expense (d) |
|
|
|
21% | 6% | ||||
| Ratio of non-compensation to operating revenue | 20.0% | 21.5% | 23.2% | ||||||
| Earnings: | |||||||||
| Earnings from operations (e) |
|
|
|
67% | NM | ||||
| Operating margin (f) | 20.4% | 15.8% | 4.9% | ||||||
| Net income (g) |
|
|
|
NM | NM | ||||
| Diluted net income per share |
|
|
|
NM | NM | ||||
| Diluted weighted average shares | 133,855,611 | 135,380,036 | 135,721,618 | (1%) | (1%) | ||||
| Effective tax rate (h) | 15.1% | 26.7% | NM | ||||||
| This presentation includes non-U.S. GAAP ("non-GAAP") measures. Our non-GAAP measures are not meant to be considered in isolation or as a substitute for the corresponding U.S. GAAP measures, and should be read only in conjunction with our consolidated financial statements prepared in accordance with U.S. GAAP. For a detailed explanation of the adjustments made to the corresponding U.S. GAAP measures, see Reconciliation of U.S. GAAP to Selected Summary Financial Information and Notes to Financial Schedules. | |||||||||
|
|
|||||
| SELECTED SUMMARY FINANCIAL INFORMATION (a) | |||||
| (Non-GAAP - unaudited) | |||||
|
Year Ended |
|||||
| ($ in thousands, except per share data) | 2012 | 2011 | % Change | ||
| Revenues: | |||||
| Financial Advisory | |||||
| M&A and Other Advisory |
|
|
13% | ||
| Capital Raising | 73,403 | 93,888 | (22%) | ||
| Strategic Advisory | 866,331 | 794,427 | 9% | ||
| Restructuring | 182,759 | 197,743 | (8%) | ||
| Total | 1,049,090 | 992,170 | 6% | ||
| Asset Management | |||||
| Management fees | 806,044 | 818,038 | (1%) | ||
| Incentive fees | 43,661 | 26,245 | 66% | ||
| Other | 32,470 | 38,494 | (16%) | ||
| Total | 882,175 | 882,777 | - | ||
| Corporate | 39,551 | 8,922 | NM | ||
| Operating revenue (b) |
|
|
5% | ||
| Expenses: | |||||
| Compensation and benefits expense (c) |
|
|
4% | ||
| Ratio of compensation to operating revenue | 61.8% | 62.0% | |||
| Non-compensation expense (d) |
|
|
5% | ||
| Ratio of non-compensation to operating revenue | 21.4% | 21.2% | |||
| Earnings: | |||||
| Earnings from operations (e) |
|
|
5% | ||
| Operating margin (f) | 16.8% | 16.8% | |||
| Net income (g) |
|
|
9% | ||
| Diluted net income per share |
|
|
10% | ||
| Diluted weighted average shares | 135,116,690 | 137,629,525 | (2%) | ||
| Effective tax rate (h) | 21.3% | 20.7% | |||
| This presentation includes non-U.S. GAAP ("non-GAAP") measures. Our non-GAAP measures are not meant to be considered in isolation or as a substitute for the corresponding U.S. GAAP measures, and should be read only in conjunction with our consolidated financial statements prepared in accordance with U.S. GAAP. For a detailed explanation of the adjustments made to the corresponding U.S. GAAP measures, see Reconciliation of U.S. GAAP to Selected Summary Financial Information and Notes to Financial Schedules. | |||||
|
|
|||||||||||||||||
| COMPENSATION AND BENEFITS - ANALYSIS | |||||||||||||||||
| (unaudited) | |||||||||||||||||
| ($ in millions except share price) | |||||||||||||||||
| 2006 | 2007 | 2008 | 2009 | 2010 | 2011 | 2012 | |||||||||||
| ADJUSTED U.S. GAAP BASIS (c) | |||||||||||||||||
| Base salary and benefits |
|
|
|
|
|
|
|
||||||||||
| Cash incentive compensation | 470.6 | 562.1 | 224.7 | 404.6 | 472.8 | 372.4 | 367.2 | ||||||||||
| Total cash compensation and benefits | 868.4 | 1,018.3 | 692.4 | 827.2 | 925.7 | 878.8 | 883.0 | ||||||||||
| Amortization of deferred incentive awards | 23.0 | 104.8 | 238.3 | 333.4 | 240.5 | 289.4 | 334.8 | ||||||||||
| Compensation and benefits - Adjusted U.S. GAAP basis (i) |
|
|
|
|
|
|
|
||||||||||
| % of Operating Revenue | 56.7% | 55.7% | 55.6% | 71.7% | 58.9% | 62.0% | 61.8% | ||||||||||
| AWARDED BASIS | |||||||||||||||||
| Total cash compensation and benefits (per above) |
|
|
|
|
|
|
|
||||||||||
| Deferred year-end incentive awards | 203.9 | 336.7 | 351.7 | 239.3 | 292.7 | 282.4 | 272.4 | ||||||||||
| Compensation and benefits - before special deferred | |||||||||||||||||
| incentive awards | 1,072.3 | 1,355.0 | 1,044.1 | 1,066.5 | 1,218.4 | 1,161.2 | 1,155.4 | ||||||||||
| Sign-on and other special deferred incentive awards (j) | 12.8 | 87.9 | 179.6 | 39.2 | 27.3 | 40.0 | 42.1 | ||||||||||
| Year-end foreign exchange adjustment (k) | 6.9 | 6.6 | (9.7) | 5.6 | 3.3 | (4.6) | 1.4 | ||||||||||
| Total Compensation and benefits - Notional | 1,092.0 | 1,449.5 | 1,214.0 | 1,111.3 | 1,249.0 | 1,196.6 | 1,198.9 | ||||||||||
| Adjustment for actual/estimated forfeitures (l) | (23.8) | (35.2) | (21.7) | (17.1) | (27.8) | (28.0) | (27.4) | ||||||||||
| Total Compensation and benefits - Awarded |
|
|
|
|
|
|
|
||||||||||
| % of Operating Revenue - Awarded Basis | 68.0% | 70.2% | 71.2% | 67.6% | 61.7% | 62.0% | 59.4% | ||||||||||
| Memo: | |||||||||||||||||
| Total value of deferred equity-based year end | |||||||||||||||||
| incentive awards |
|
|
|
|
|
|
TBD | ||||||||||
| Equity-based year end awards - share equivalents ('000) | 3,971 | 8,787 | 6,489 | 6,477 | 5,775 | 6,932 | TBD | ||||||||||
| Price at issuance |
|
|
|
|
|
|
TBD | ||||||||||
| Deferred compensation awards ratio (m) | 19.1% | 23.8% | 29.5% | 21.9% | 24.0% | 24.2% | 23.3% | ||||||||||
| Operating revenue |
|
|
|
|
|
|
|
||||||||||
| This presentation includes non-U.S. GAAP ("non-GAAP") measures. Our non-GAAP measures are not meant to be considered in isolation or as a substitute for comparable U.S. GAAP measures, and should be read only in conjunction with our consolidated financial statements prepared in accordance with U.S. GAAP. For a detailed explanation of the adjustments made to comparable U.S. GAAP measures, see Reconciliation of U.S. GAAP to Adjusted Statement of Operations and Notes to Financial Schedules. | |||||||||||||||||
|
|
|||||||||
| UNAUDITED CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS | |||||||||
| (U.S. GAAP) | |||||||||
| Three Months Ended | % Change From | ||||||||
|
|
|
|
|
|
|||||
| ($ in thousands, except per share data) | 2012 | 2012 | 2011 | 2012 | 2011 | ||||
| Total revenue |
|
|
|
29% | 23% | ||||
| Interest expense | (20,164) | (20,658) | (21,331) | ||||||
| Net revenue | 560,693 | 428,806 | 451,778 | 31% | 24% | ||||
| Operating expenses: | |||||||||
| Compensation and benefits | 445,602 | 283,818 | 338,934 | 57% | 31% | ||||
| Occupancy and equipment | 32,854 | 25,680 | 30,668 | ||||||
| Marketing and business development | 25,888 | 19,096 | 29,577 | ||||||
| Technology and information services | 23,750 | 21,474 | 22,646 | ||||||
| Professional services | 12,859 | 8,514 | 13,929 | ||||||
| Fund administration and outsourced services | 12,090 | 13,179 | 12,016 | ||||||
| Amortization of intangible assets related to acquisitions | 2,187 | 2,494 | 7,019 | ||||||
| Other | 10,660 | 7,825 | 11,447 | ||||||
| Subtotal | 120,288 | 98,262 | 127,302 | 22% | (6%) | ||||
| Provision pursuant to tax receivable agreement | - | - | 429 | ||||||
| Operating expenses | 565,890 | 382,080 | 466,665 | 48% | 21% | ||||
| Operating income (loss) | (5,197) | 46,726 | (14,887) | NM | 65% | ||||
| Provision (benefit) for income taxes | (1,091) | 13,053 | (6,764) | NM | NM | ||||
| Net income (loss) | (4,106) | 33,673 | (8,123) | NM | 49% | ||||
| Net income (loss) attributable to noncontrolling interests | 1,259 | 372 | (3,330) | ||||||
|
Net income (loss) attributable to |
|
|
|
NM | (12%) | ||||
| Attributable to Lazard Ltd Common Stockholders: | |||||||||
| Weighted average shares outstanding: | |||||||||
| Basic | 114,747,744 | 115,603,351 | 119,369,997 | (1%) | (4%) | ||||
| Diluted | 114,747,744 | 135,380,036 | 119,369,997 | (15%) | (4%) | ||||
| Net income (loss) per share: | |||||||||
| Basic |
|
|
|
NM | (25%) | ||||
| Diluted |
|
|
|
NM | (25%) | ||||
|
|
||||||
| UNAUDITED CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS | ||||||
| (U.S. GAAP) | ||||||
| Year Ended | ||||||
|
|
|
|||||
| ($ in thousands, except per share data) | 2012 | 2011 | % Change | |||
| Total revenue |
|
|
4% | |||
| Interest expense | (81,565) | (90,126) | ||||
| Net revenue | 1,912,448 | 1,829,512 | 5% | |||
| Operating expenses: | ||||||
| Compensation and benefits | 1,351,129 | 1,168,945 | 16% | |||
| Occupancy and equipment | 113,163 | 100,698 | ||||
| Marketing and business development | 95,573 | 88,411 | ||||
| Technology and information services | 86,892 | 83,212 | ||||
| Professional services | 43,958 | 48,324 | ||||
| Fund administration and outsourced services | 51,390 | 52,793 | ||||
| Amortization of intangible assets related to acquisitions | 8,359 | 11,915 | ||||
| Other | 38,099 | 39,286 | ||||
| Subtotal | 437,434 | 424,639 | 3% | |||
| Provision pursuant to tax receivable agreement | - | 429 | ||||
| Operating expenses | 1,788,563 | 1,594,013 | 12% | |||
| Operating income | 123,885 | 235,499 | (47%) | |||
| Provision for income taxes | 31,100 | 44,940 | (31%) | |||
| Net income | 92,785 | 190,559 | (51%) | |||
| Net income attributable to noncontrolling interests | 8,476 | 15,642 | ||||
|
Net income attributable to |
|
|
(52%) | |||
| Attributable to Lazard Ltd Common Stockholders: | ||||||
| Weighted average shares outstanding: | ||||||
| Basic | 116,953,989 | 118,032,020 | (1%) | |||
| Diluted | 129,325,622 | 137,629,525 | (6%) | |||
| Net income per share: | ||||||
| Basic |
|
|
(51%) | |||
| Diluted |
|
|
(52%) | |||
|
|
|||||
| UNAUDITED CONDENSED CONSOLIDATED | |||||
| STATEMENT OF FINANCIAL CONDITION | |||||
| (U.S. GAAP) | |||||
|
|
|
||||
| ($ in thousands) | 2012 | 2011 | |||
|
ASSETS |
|||||
| Cash and cash equivalents |
|
|
|||
| Deposits with banks | 292,494 | 286,037 | |||
| Cash deposited with clearing organizations and other segregated cash | 65,232 | 75,506 | |||
| Receivables | 478,043 | 504,455 | |||
| Investments | 414,673 | 378,521 | |||
| Goodwill and other intangible assets | 392,822 | 393,099 | |||
| Other assets | 493,439 | 440,527 | |||
| Total Assets |
|
|
|||
|
LIABILITIES & STOCKHOLDERS' EQUITY |
|||||
| Liabilities | |||||
| Deposits and other customer payables |
|
|
|||
| Accrued compensation and benefits | 467,578 | 383,513 | |||
| Senior debt | 1,076,850 | 1,076,850 | |||
| Other liabilities | 521,162 | 466,290 | |||
| Total liabilities | 2,335,353 | 2,215,080 | |||
| Commitments and contingencies | |||||
| Stockholders' equity | |||||
|
Preferred stock, par value |
- | - | |||
|
Common stock, par value |
1,282 | 1,230 | |||
| Additional paid-in capital | 846,050 | 659,013 | |||
| Retained earnings | 182,647 | 258,646 | |||
| Accumulated other comprehensive loss, net of tax | (110,541) | (88,364) | |||
| 919,438 | 830,525 | ||||
| Class A common stock held by subsidiaries, at cost | (349,782) | (104,382) | |||
|
Total |
569,656 | 726,143 | |||
| Noncontrolling interests | 81,884 | 140,713 | |||
| Total stockholders' equity | 651,540 | 866,856 | |||
| Total liabilities and stockholders' equity |
|
|
|||
|
|
|||||||||
| ASSETS UNDER MANAGEMENT ("AUM") | |||||||||
| (unaudited) | |||||||||
| ($ in millions) | |||||||||
| As of | Variance | ||||||||
|
|
|
December 31, | |||||||
| 2012 | 2012 | 2011 | Qtr to Qtr | YTD | |||||
| Equities |
|
|
|
4.5% | 18.7% | ||||
| Fixed Income | 22,718 | 21,905 | 17,750 | 3.7% | 28.0% | ||||
| Alternative Investments | 4,600 | 4,753 | 5,349 | (3.2%) | (14.0%) | ||||
| Private Equity | 1,398 | 1,428 | 1,486 | (2.1%) | (5.9%) | ||||
| Cash | 173 | 94 | 92 |
84.0% |
88.0% |
||||
| Total AUM |
|
|
|
4.1% | 18.4% | ||||
|
Three Months Ended |
Year Ended December 31, | ||||||||
| 2012 | 2011 | 2012 | 2011 | ||||||
| AUM - Beginning of Period |
|
|
|
|
|||||
| Net Flows | (47) | (294) | 2,741 | (1,048) | |||||
| Market and foreign exchange | |||||||||
| appreciation (depreciation) | 6,696 | 5,521 | 23,280 | (13,250) | |||||
| AUM - End of Period |
|
|
|
|
|||||
| Average AUM |
|
|
|
|
|||||
| % Change in average AUM | 16.9% | 2.3% | |||||||
| Note: Average AUM is generally based on an average of quarterly ending balances for the respective periods. | |||||||||
|
|
||||||||||
| RECONCILIATION OF U.S. GAAP TO SELECTED SUMMARY FINANCIAL INFORMATION (a) | ||||||||||
| (unaudited) | ||||||||||
| Three Months Ended | Year Ended | |||||||||
|
|
|
|
|
|
||||||
| ($ in thousands, except per share data) | 2012 | 2012 | 2011 | 2012 | 2011 | |||||
| Operating Revenue | ||||||||||
| Net revenue - U.S. GAAP Basis |
|
|
|
|
|
|||||
| Adjustments: | ||||||||||
| Gain on repurchase of subordinated debt | - | - | - | - | (18,171) | |||||
| Revenue related to noncontrolling interests (n) | (3,963) | (1,193) | (2,351) | (14,104) | (16,696) | |||||
| Loss (gain) related to Lazard Fund Interests ("LFI") and other similar arrangements | (2,918) | (4,728) | (937) | (7,557) | 3,024 | |||||
| Interest expense | 19,835 | 20,326 | 20,217 | 80,029 | 86,200 | |||||
| Operating revenue, as adjusted |
|
|
|
|
|
|||||
| Compensation & Benefits Expense | ||||||||||
| Compensation & benefits expense - U.S. GAAP Basis |
|
|
|
|
|
|||||
| Adjustments: | ||||||||||
| Charges pertaining to cost savings initiatives (Q4) | (99,987) | - | - | (99,987) | - | |||||
| Charges pertaining to staff reductions (Q1) | - | - | - | (21,754) | - | |||||
| (Charges) credits pertaining to LFI and other similar arrangements compensation liability | (2,918) | (4,728) | (937) | (7,557) | 3,024 | |||||
| Compensation related to noncontrolling interests (n) | (931) | (1,020) | (990) | (4,040) | (3,740) | |||||
| Compensation & benefits expense, as adjusted |
|
|
|
|
|
|||||
| Non-Compensation Expense | ||||||||||
| Non-compensation expense - Subtotal - U.S. GAAP Basis |
|
|
|
|
|
|||||
| Adjustments: | ||||||||||
| Charges pertaining to cost savings initiatives (Q4) | (2,589) | - | - | (2,589) | - | |||||
| Charges pertaining to staff reductions (Q1) | - | - | - | (2,905) | - | |||||
|
Write-off of |
- | - | (5,500) | - | (5,500) | |||||
|
Provision for onerous lease contract for |
- | - | (5,539) | - | (5,539) | |||||
| Amortization of intangible assets related to acquisitions | (2,187) | (2,494) | (7,019) | (8,359) | (11,915) | |||||
| Non-compensation expense related to noncontrolling interests (n) | (604) | (655) | (570) | (2,558) | (2,008) | |||||
| Non-compensation expense, as adjusted |
|
|
|
|
|
|||||
| Earnings From Operations | ||||||||||
| Operating Income (loss) - U.S. GAAP Basis |
|
|
|
|
|
|||||
| Other adjustments: | ||||||||||
| Charges pertaining to cost savings initiatives (Q4) | 102,576 | - | - | 102,576 | - | |||||
| Charges pertaining to staff reductions (Q1) | - | - | - | 24,659 | - | |||||
| Gain on repurchase of subordinated debt | - | - | - | - | (18,171) | |||||
|
Write-off of |
- | - | 5,500 | - | 5,500 | |||||
|
Provision for onerous lease contract for |
- | - | 5,539 | - | 5,539 | |||||
| Revenue related to noncontrolling interests (n) | (3,963) | (1,193) | (2,351) | (14,104) | (16,696) | |||||
| Interest expense | 19,835 | 20,326 | 20,217 | 80,029 | 86,200 | |||||
| Expenses related to noncontrolling interests (n) | 1,535 | 1,675 | 1,560 | 6,598 | 5,748 | |||||
| Amortization of intangible assets related to acquisitions | 2,187 | 2,494 | 7,019 | 8,359 | 11,915 | |||||
| Adjustment related to the provision pursuant to the tax receivable agreement ("TRA") | - | - | 429 | - | 429 | |||||
| Earnings from operations, as adjusted |
|
|
|
|
|
|||||
|
Net Income attributable to |
||||||||||
|
Net income (loss) attributable to |
|
|
|
|
|
|||||
| Adjustments: | ||||||||||
| Charges pertaining to cost savings initiatives (Q4) | 102,576 | - | - | 102,576 | - | |||||
| Charges pertaining to staff reductions (Q1) | - | - | - | 24,659 | - | |||||
| Gain on repurchase of subordinated debt | - | - | - | - | (18,171) | |||||
|
Write-off of |
- | - | 5,500 | - | 5,500 | |||||
|
Provision for onerous lease contract for |
- | - | 5,539 | - | 5,539 | |||||
| Tax (benefits) allocated to adjustments | (15,542) | 140 | (4,634) | (21,108) | - | |||||
| Amount attributable to LAZ-MD Holdings | (1,340) | (49) | (390) | (2,449) | 411 | |||||
| Adjustment for full exchange of exchangeable interests (o): | ||||||||||
| Tax adjustment for full exchange | (200) | 5 | (190) | (643) | (1,135) | |||||
| Amount attributable to LAZ-MD Holdings | 1,498 | 1,987 | 399 | 7,563 | 11,553 | |||||
| Net income, as adjusted |
|
|
|
|
|
|||||
| Diluted net income (loss) per share: | ||||||||||
| U.S. GAAP Basis |
|
|
|
|
|
|||||
| Non-GAAP Basis, as adjusted |
|
|
|
|
|
|||||
| This presentation includes non-U.S. GAAP ("non-GAAP") measures. Our non-GAAP measures are not meant to be considered in isolation or as a substitute for comparable U.S. GAAP measures, and should be read only in conjunction with our consolidated financial statements prepared in accordance with U.S. GAAP. For a detailed explanation of the adjustments made to comparable U.S. GAAP measures, see Notes to Financial Schedules. | ||||||||||
|
|
|||||||||||||||
| Notes to Financial Schedules | |||||||||||||||
| (a) |
Selected Summary Financial Information are non-U.S. GAAP
("non-GAAP") measures. |
||||||||||||||
| (b) |
A non-GAAP measure which excludes (i) gains/losses related to the
changes in the fair value of investments held in connection with
Lazard Fund Interests and other similar deferred compensation
arrangements for which a corresponding equal amount is excluded from
compensation & benefits expense, (ii) revenues related to
non-controlling interests (see (n) below), (iii) interest expense
primarily related to corporate financing activities, and (iv) for
the twelve month period ended |
||||||||||||||
| (c) |
A non-GAAP measure which excludes (i) charges/credits related to the
changes in the fair value of the compensation liability recorded in
connection with Lazard Fund Interests and other similar deferred
compensation arrangements, (ii) compensation and benefits related to
noncontrolling interests (see (n) below), (iii) for the three and
twelve month periods ended |
||||||||||||||
| (d) |
A non-GAAP measure which excludes (i) amortization of intangible
assets related to acquisitions, (ii) expenses related to
noncontrolling interests (see (n) below), (iii) for the three and
twelve month periods ended |
||||||||||||||
| (e) |
A non-GAAP measure which excludes (i) amortization of intangible
assets related to acquisitions, (ii) interest expense primarily
related to corporate financing activities, (iii) revenues and
expenses related to noncontrolling interests (see (n) below), (iv)
for the three and twelve month periods ended |
||||||||||||||
| (f) | Represents earnings from operations as a percentage of operating revenue, and is a non-GAAP measure. (See Reconciliation of U.S. GAAP to Selected Summary Financial Information) | ||||||||||||||
| (g) |
A non-GAAP measure which is adjusted to reflect the full conversion
of outstanding exchangeable interests held by members of LAZ-MD
Holdings and excludes (i) for the three and twelve month periods
ended |
||||||||||||||
| (h) |
Effective tax rate is a non-GAAP measure which is computed based on
a quotient, the numerator of which is the provision (benefit) for
income taxes of |
||||||||||||||
| (i) | A reconciliation of U.S. GAAP compensation and benefits expense to compensation and benefits expense, as adjusted: | ||||||||||||||
|
Year Ended |
|||||||||||||||
| ($ in thousands) | 2006 | 2007 | 2008 | 2009 | 2010 | 2011 | 2012 | ||||||||
| Compensation & benefits expense - U.S. GAAP Basis |
|
|
|
|
|
|
|
||||||||
| Adjustments: | |||||||||||||||
| Charges pertaining to cost savings initiatives (Q4) | - | - | - | - | - | - | (99,987) | ||||||||
| Charges pertaining to staff reductions (Q1) | - | - | - | - | - | - | (21,754) | ||||||||
| (Charges) credits pertaining to LFI and other similar arrangements comp. liability | - | - | - | - | - | 3,024 | (7,557) | ||||||||
| Acceleration of restricted stock unit vesting related to retirement policy change | - | - | - | - | (24,860) | - | - | ||||||||
| Acceleration of unamortized restricted stock units | - | - | - | (86,514) | - | - | - | ||||||||
| Acceleration of unamortized deferred cash awards | - | - | - | (60,512) | - | - | - | ||||||||
| LAM Equity Charge | - | - | (197,550) | - | - | - | - | ||||||||
| Compensation related to noncontrolling interests (n) | - | - | - | (1,657) | (3,098) | (3,740) | (4,040) | ||||||||
| Compensation & benefits expense, as adjusted |
|
|
|
|
|
|
|
||||||||
|
|
|||||||||||||||
| Notes to Financial Schedules (continued) | |||||||||||||||
| (j) | Special deferred incentive awards are granted outside the year end compensation process and include grants to new hires. | ||||||||||||||
| (k) | Represents an adjustment to year end foreign exchange spot rate from full year average rate for year end incentive compensation awards. | ||||||||||||||
| (l) | Under U.S. GAAP, an estimate is made for future forfeitures of the deferred portion of such awards. This estimate is based on both historical experience and future expectations. The result reflects the cost associated with awards that are expected to vest. This calculation is undertaken in order to present awarded compensation on a similar basis to GAAP compensation. Amounts for 2007-2009 represent actual forfeiture experience. The 2010-2012 amounts represent estimated forfeitures. | ||||||||||||||
| (m) | Deferred compensation awards ratio is year end incentive awards excluding special incentive awards that are outside of the year-end compensation process such as sign-on and retention awards, divided by total awarded compensation. | ||||||||||||||
| (n) | Noncontrolling interests include revenue and expenses principally related to Edgewater, and is a non-GAAP measure. (See Reconciliation of U.S. GAAP to Selected Summary Financial Information) | ||||||||||||||
| (o) |
Represents a reversal of noncontrolling interests related to LAZ-MD
Holdings' ownership of |
||||||||||||||
| NM | Not meaningful | ||||||||||||||
| TBD | To be determined | ||||||||||||||
Media:
Judi Frost Mackey,+1 212 632 1428
judi.mackey@lazard.com
or
Investors:
kathryn.harmon@lazard.com
Source:
News Provided by Acquire Media
Investor Relations Contact
Alexandra Deignan
Head of Investor Relations
alexandra.deignan@lazard.com
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