UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 8-K
CURRENT REPORT PURSUANT
TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of report (Date of earliest event reported) November 9, 2005
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Lazard Ltd
(Exact Name of Registrant as Specified in Its Charter)
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Bermuda
(State or Other Jurisdiction of Incorporation)
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001-32492 98-0437848
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(Commission File Number) (IRS Employer Identification No.)
Clarendon House, 2 Church Street, Hamilton, Bermuda HM 11
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(Address of Principal Executive Offices) (Zip Code)
441-295-1422
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(Registrant's Telephone Number, Including Area Code)
Not Applicable
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(Former Name or Former Address, if Changed Since Last Report)
Check the appropriate box below if the Form 8-K filing is intended to
simultaneously satisfy the filing obligation of the registrant under any of the
following provisions (see General Instruction A.2. below):
|_| Written communications pursuant to Rule 425 under the Securities Act
(17 CFR 230.425)
|_| Soliciting material pursuant to Rule 14a-12 under the Exchange Act
(17 CFR 240.14a-12)
|_| Pre-commencement communications pursuant to Rule 14d-2(b) under the
Exchange Act (17 CFR 240.14d-2(b))
|_| Pre-commencement communications pursuant to Rule 13e-4(c) under the
Exchange Act (17 CFR 240.13e-4(c))
Item 2.02. Results of Operations and Financial Condition
On November 9, 2005, Lazard Ltd issued a press release announcing
financial results for its fiscal third quarter ended September 30, 2005. A copy
of Lazard Ltd's press release containing this information is being furnished as
Exhibit 99.1 to this Report on Form 8-K and is incorporated herein by reference.
The information furnished pursuant to this Item 2.02, including Exhibit
99.1, shall not be deemed "filed" for purposes of Section 18 of the Securities
Exchange Act of 1934 (the "Exchange Act") or otherwise subject to the
liabilities under that Section and shall not be deemed to be incorporated by
reference into any filing of Lazard Ltd under the Securities Act of 1933 or the
Exchange Act.
Item 9.01. Financial Statements and Exhibits.
(c) Exhibits.
The following exhibits are filed as part of this Report on Form 8-K:
99.1 Press Release issued on November 9, 2005.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, the registrant has duly caused this report on Form 8-K to be signed on its
behalf by the undersigned, thereunto duly authorized.
Dated: November 9, 2005
LAZARD LTD
By: /s/ Scott D. Hoffman
------------------------------------
Name: Scott D. Hoffman
Title: Managing Director and
General Counsel
EXHIBIT INDEX
99.1 Press Release issued on November 9, 2005.
Exhibit 99.1
Lazard Ltd Reports Strong Financial Results for the Third Quarter
and First Nine Months of 2005; M&A Revenues up 78% for the Third
Quarter
NEW YORK--(BUSINESS WIRE)--Nov. 9, 2005--Lazard Ltd (NYSE: LAZ):
Highlights
-- Mergers and Acquisitions ("M&A") revenues increased 78% to
$187.2 million for the third quarter of 2005 and 57% to $491.6
million for the first nine months of 2005
-- Operating revenues(1) increased 63% to $374.3 million for the
third quarter of 2005 and 35% to $969.9 million for the first
nine months of 2005
-- Operating income(2) increased 312% to $77.3 million for the
third quarter of 2005 and 167% to pro forma $171.8 million for
the first nine months of 2005
-- Pro forma net income on a fully exchanged basis increased 210%
to $51.7 million or $0.52 per common share (diluted) for the
third quarter 2005 and 132% to $115.0 million or $1.15 per
common share (diluted) for the first nine months of 2005
-- Net income from continuing operations before exchange of
outstanding exchangeable interests increased 204% to $19.0
million or $0.51 per common share (diluted) for the third
quarter of 2005 and 130% to pro forma $42.7 million or $1.14
per common share (diluted) for the first nine months of 2005
Lazard Ltd (NYSE: LAZ) today announced strong financial results
for the third quarter and nine months ended September 30, 2005.
Operating revenues(1) increased 63% to $374.3 million and 35% to
$969.9 million for the third quarter and the first nine months of
2005, respectively, compared to $229.3 million and $720.4 million for
the comparable 2004 periods.
Operating income increased 312% to $77.3 million for the third
quarter of 2005 compared to pro forma $18.8 million for the third
quarter of 2004. Operating income increased 167% to pro forma $171.8
million for the first nine months of 2005 compared to pro forma $64.4
million for first nine months of 2004.
(1) Operating revenues exclude interest expense relating to financing
activities which are included in net revenues.
(2) Operating income is after interest expense and before income taxes and
minority interest.
Pro forma net income, assuming full exchange of outstanding
exchangeable interests, increased to $51.7 million, or $0.52 cents per
common share (diluted), for the 2005 third quarter, representing an
increase of 210% from $16.7 million, or $0.17 cents per common share
(diluted), for the 2004 third quarter. For the first nine months of
2005, pro forma net income, assuming full exchange of outstanding
exchangeable interests, was $115.0 million, or $1.15 per common share
(diluted), an increase of 132% from the $49.6 million, or $0.50 per
common share (diluted) for the year earlier period.
Net income from continuing operations before exchange of
outstanding exchangeable interests increased 204% to $19.0 million, or
$0.51 cents per common share (diluted), for the third quarter of 2005
compared with pro forma $6.3 million, or $0.17 cents per common share
(diluted), for the third quarter of 2004 and 130% to pro forma $42.7
million, or $1.14 cents per common share (diluted), for the first nine
months of 2005 compared to pro forma $18.6 million, or $0.50 cents per
common share (diluted), for the first nine months of 2004.
"It is now clear that we are effectively executing our plan," said
Bruce Wasserstein, Chairman and Chief Executive Officer of Lazard Ltd.
"The Lazard franchise is vibrant, our professionals are enthusiastic
and the outlook for our business remains positive. Our clients
continue to value independent advice and our global strategy positions
us to continue to take advantage of the strong M&A environment. We are
also pleased that our Asset Management business is beginning to
benefit from the investments we have made. We are excited about
Lazard's future."
Steven J. Golub, Lazard's Vice Chairman, noted, "We are very
pleased with our exceptional performance for the third quarter and
year-to-date. M&A revenues and pro forma net income per share for the
nine month period ended September 30, 2005 have already exceeded the
respective amounts for the full year 2004. Our reported results
reflect the continuing increase in the productivity of our people
supported by our recent recruitment of highly talented senior
professionals in both our Asset Management and Financial Advisory
businesses. These initiatives, together with our continued focus on
cost containment, have enhanced the profitability of our firm."
Lazard believes that pro forma results assuming full exchange of
outstanding exchangeable interests provide the most meaningful basis
for comparison among present, historical and future periods. See
section "Historical Results" and "Basis of Historical and Pro Forma
Information" later in this release for a discussion of Lazard's
historical results and the basis of presentation for Lazard Ltd's
historical and pro forma financial information.
The Company's quarterly revenues and profits can fluctuate
materially depending on the number and size of completed transactions
on which it advised, as well as seasonality and other factors.
Accordingly, the revenues and profits in any particular quarter may
not be indicative of future results.
Net Revenues
Financial Advisory
Lazard's Financial Advisory business encompasses general strategic
and transaction-specific advice to public and private companies,
governments and other parties, and includes Financial Restructuring as
well as various corporate finance services. Some of our assignments
and, therefore, related revenues are not reflected in publicly
available information.
Financial Advisory revenues increased 96% to $257.8 million, and
54% to $626.6 million for the third quarter and the first nine months
of 2005, respectively, compared to $131.7 million and $407.3 million
for the comparable 2004 periods.
M&A
M&A revenues increased 78% to $187.2 million and 57% to $491.6
million for the third quarter and the first nine months of 2005,
respectively, compared to $105.1 million and $314.1 million for the
comparable 2004 periods.
Completed third-quarter 2005 M&A transactions included the
following transactions on which Lazard advised:
-- Nextel in its $43 billion merger with Sprint
-- SunGard in its $11.3 billion sale to a private equity
consortium
-- Royal Dutch Shell in its EUR 4.4 billion sale of Basell
-- Resolution Life Group in its GBP 1.8 billion merger with
Britannic Group
-- Yellow Brick Road Management in its EUR 1.8 billion sale to a
group of private investors
-- Omnicare on its $1.8 billion merger with NeighborCare
-- Pfizer in its $1.8 billion acquisition of Vicuron
Pharmaceuticals
-- Pirelli S.p.A. in the EUR 1.3 billion sale of its energy and
telecom cables and systems businesses
-- IIR Holdings in its GBP 768 million sale to T&F Informa
-- Groupe Danone in its GBP 470 million sale of its sauce
business (HP Foods and Lea & Perrins) to H.J. Heinz Company
-- Navios Maritime in its approximately $608 million sale to
International Shipping
-- Anglo American in its $545 million sale of Boart Longyear to
Advent International
-- Neuf Telecom in its merger with Cegetel
Among the pending M&A transactions announced since the second
quarter and on which Lazard is advising are the following
transactions:
-- Gas Natural in its EUR 22.5 potential offer for Endesa
-- Jefferson-Pilot in its $7.5 billion merger with Lincoln
Financial
-- Wellchoice in its $6.6 billion merger with WellPoint
-- Old Mutual in its GBP 3.3 billion offer for Skandia
-- Prentiss Properties in its $3.3 billion sale to Brandywine
Realty Trust
-- Maytag in its $2.7 billion sale to Whirlpool
-- Marconi in its GBP 1.2 billion sale of its telecommunications
equipment and international services businesses to Ericsson
-- Versatel Telecom in its EUR 1.1 billion sale to Tele2 and Apax
-- Bon-Ton in its $1.1 billion acquisition of the Northern
Department Store Group of Saks
-- Degussa in its EUR 540 million sale of its food ingredients
operations to Cargill
-- Tupperware on its $557 million acquisition of Sara Lee's
direct selling operations
Financial Restructuring
Financial Restructuring revenues were $40.0 million for the third
quarter of 2005 compared to $20.8 million for the third quarter of
2004 and were $80.4 million for the first nine months of 2005 compared
to $52.5 million for the comparable 2004 period.
Completed third quarter 2005 Restructuring transactions include
advising the Air Transportation Stabilization Board in connection with
US Airways' Chapter 11 proceedings and sale to America West, advising
Parmalat on the largest Restructuring in Italy and advising Charter
Communications in connection with its recently consummated debt
exchange.
Notable Restructuring assignments announced since the second
quarter of 2005 include our retention to advise the Unsecured
Creditors Committee in connection with Northwest Airlines' Chapter 11
filing. In addition, we are continuing to work on a number of
Restructuring assignments including those involving Collins & Aikman,
Eurotunnel, Meridian Automotive, Olympic Airlines, Tower Automotive
and the UAW (with regard to alternatives for restructuring General
Motors' post-retirement healthcare obligations to UAW members).
Asset Management
Asset management net revenues increased 24% to $111.0 million, and
13% to $326.7 million for the third quarter and the first nine months
of 2005, respectively, compared with $89.3 million and $290.0 million
for the comparable 2004 periods.
Management and other fees, which excludes incentive fees,
increased 16% to $108.3 million, and 11% to $316.0 million for the
third quarter and the first nine months of 2005, respectively,
compared with $93.1 million and $284.6 million for the comparable 2004
periods. The increases in each of the 2005 periods compared to the
corresponding 2004 periods were driven by growth in average assets
under management, which rose 9% to $85.6 billion for the first nine
months of 2005 from $78.7 billion for the corresponding 2004 period.
Assets under management totaled $86.6 billion at the end of September
2005, up 4% from the end of the 2005 second quarter due to asset
appreciation partially offset by net outflows.
Expenses
Compensation and Benefits
The compensation and benefits expenses, on a pro forma basis, for
the third quarter and the first nine months of 2005 are consistent
with the increase in operating revenues and as such, the compensation
and benefits expense to operating revenues ratio remained at 57.5% for
both periods. Compensation and benefits expenses increased 63% to
$215.2 million, and 35% to pro forma $557.7 million for the third
quarter and the first nine months of 2005, respectively, compared with
pro forma $131.9 million and pro forma $414.2 million for the
comparable 2004 periods.
For the first nine months of 2004, pro forma compensation and
benefits expenses also included a reduction of $177.1 million to
reflect new compensation arrangements with managing directors to
achieve a target compensation expense to operating revenues ratio of
57.5%. Without this adjustment, the 2004 ratio would have been 82.1%.
In 2005, the new compensation arrangements were in effect and no
similar reduction was necessary.
Non-Compensation
Non-compensation expenses were $64.4 million or 17.2% of operating
revenues for the third quarter of 2005, compared with $59.4 million or
25.9% of operating revenues for the corresponding 2004 period, and
were $183.9 million or 19.0% of operating revenues for the first nine
months of 2005 (excluding one-time IPO-related costs) compared with
$183.6 million or 25.5% of operating revenues for the prior year
period. The decrease in the year-to-date ratio is due to operating
leverage from higher operating revenues. Total year-to-date
non-compensation and benefits expenses were flat year over year
reflecting lower travel and entertainment expenses and premises and
occupancy expenses, offset by higher costs associated with operating
as a public company.
Provision for Income Taxes
For the third quarter and on a pro forma basis for the first nine
months of 2005, the provision for taxes was $17.2 million and $41.4
million, respectively, compared with a pro forma provision for taxes
of $3.7 million and $12.8 million for the corresponding 2004 periods.
The pro forma effective tax rate for the first nine months of 2005 and
2004 was 24.1% and 19.9%, respectively. This increase in effective tax
rate was due to an increase in non-U.S. income taxes allocable to the
minority interest's
share of Lazard Group's income. On a fully exchanged basis, the pro forma
effective tax rate for the first nine months of 2005 and 2004 was 28% in
each period.
Pro Forma Non-GAAP Information
The unaudited pro forma financial information are included for
informational purposes only and do not purport to reflect the results
of operations of Lazard Ltd or Lazard Group that would have occurred
had they operated as separate, independent companies during the
periods presented. Actual results might have differed from pro forma
results if Lazard Ltd or Lazard Group had operated independently.
The pro forma consolidated financial information should not be
relied upon as being indicative of Lazard Ltd or Lazard Group's
results of operations had the transactions contemplated in connection
with the separation and recapitalization transactions, including the
IPO and the additional financing transactions, been completed on the
dates assumed. The pro forma financial information also does not
project the results of operations for any future period.
Pro forma operating income, net income and net income per share
amounts for the first nine months of 2005, exclude one-time
IPO-related professional fees and other costs of $4.6 million or 3
cents per fully diluted share incurred in the second quarter.
Historical Results
Historical net income is reported as a historical partnership
until the IPO on May 10, 2005 and for periods prior to the IPO does
not include payments for services rendered by managing directors as
compensation expense, a provision for U.S. federal income taxes and a
charge for the minority interest relating to the outstanding
exchangeable interests. Such payments, tax provisions and minority
interest expense are included in subsequent periods. Therefore,
historical results for periods prior to the IPO on May 10, 2005 and
subsequent to the IPO are not comparable. Notwithstanding such lack of
comparability, historical net income from continuing operations
decreased by 56% to $19.0 million for the third quarter of 2005 from
$42.8 million for the third quarter of 2004, and increased 9% to
$137.1 million for the first nine months of 2005 from $125.6 million
for the first nine months of 2004, reflecting these differences in
reporting payments for services rendered by managing directors and in
tax provisions and minority interest expense.
On an historical basis, compensation and benefits increased 97% to
$215.2 million, and 47% to $482.2 million for the third quarter and
the first nine months of 2005, respectively, compared with $109.2
million and $329.1 million for the comparable 2004 period. Historical
compensation and benefits are not on a comparable basis between
periods prior to the IPO and subsequent to the IPO. Prior to the IPO,
payments for services rendered by all managing directors and by
employee members of LAM were not included in compensation and benefits
expense whereas for periods subsequent to the IPO they are included.
On an historical basis, the provision for income taxes for the
third quarter and the first nine months of 2005 was $17.2 million and
$50.4 million, respectively, compared with a tax provision of $0.9
million and $13.2 million for the corresponding periods in 2004. The
increases in the provisions in 2005 were due to increased
profitability in locations that are subject to corporate income taxes,
including a provision for U.S. federal income taxes for the period
commencing May 10, 2005.
Additional financial, statistical and business-related information
is included in a financial supplement. This earnings release, the
financial supplement and recently enhanced transaction information is
available today on the website at www.lazard.com.
Lazard, one of the world's preeminent financial advisory and asset
management firms, operates from 29 cities across 16 countries in North
America, Europe, Asia, Australia and South America. With origins
dating back to 1848, the firm provides services including mergers and
acquisitions advice, asset management, and restructuring advice to
corporations, partnerships, institutions, governments, and
individuals. For more information on Lazard, please visit
www.lazard.com.
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 Registration Statement on Form S-1 (Commission file number
333-121407) under the caption "Risk Factors," 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;
-- Competitive pressure.
Basis of Historical and Pro Forma Information
In connection with the IPO on May 10, 2005, Lazard Ltd and its
subsidiaries entered into a series of separation and recapitalization
transactions, including the separation of its Capital Markets and
Other activities from Lazard Group LLC, a Delaware limited liability
company that holds Lazard Ltd's businesses. As a result of completing
the IPO, Lazard Ltd has no material operating assets other than its
indirect ownership of the common membership interests of Lazard Group
and its managing member interest in Lazard Group. As of September 30,
2005, the Lazard Group common membership interests were held 37.6% by
Lazard Ltd and 62.4% by LAZ-MD Holdings which are effectively
exchangeable over time, on a one-for-one basis, for shares of Lazard
Ltd common stock. LAZ-MD Holdings is a holding company owned by
current and former managing directors of Lazard Group.
Under generally accepted accounting principles in the United
States (U.S. GAAP), Lazard's historical consolidated financial
statements reflect the historical results of operations of Lazard
Group, including the separated businesses, until May 10, 2005, which
was the effective date of the separation. The separated businesses are
presented as discontinued operations as required under U.S. GAAP.
The historical financial statements do not reflect what the
results of operations of Lazard Ltd or Lazard Group would have been
had these companies operated as separate, independent public entities
for the periods presented. In addition, the historical results of
operations for periods prior to and subsequent to the IPO are not on a
comparable basis. Specifically, for periods prior to the IPO the
historical results of operations under U.S. GAAP do not give effect to
the following matters:
-- The separation of Lazard's Capital Markets and Other
activities; and specified non-operating assets and liabilities
(which are reported as discontinued operations),
-- Payments for services rendered by Lazard's managing directors,
which, as a result of Lazard operating as a limited liability
company, had been accounted for prior to the IPO as
distributions from members' capital, or, in some cases, as
minority interest, rather than as compensation and benefits
expense, and
-- U.S. corporate federal income taxes, since Lazard has operated
in the U.S. as a limited liability company that was treated as
a partnership for U.S. federal income tax purposes.
For periods subsequent to the IPO, the historical results of
operations under U.S. GAAP include:
-- Payments for services rendered by managing directors within
compensation and benefits expense,
-- Provision for U.S. federal income taxes, and
-- Allocation of profits to LAZ-MD Holdings' membership interest
in Lazard Group as minority interest.
The unaudited pro forma condensed consolidated statements of
income information contained in this press release present Lazard's
historical financial information adjusted to reflect the separation
and recapitalization transactions, including the IPO and the
additional financing transactions, assuming they had been completed as
of the beginning of each period presented. The adjustments also
include:
-- Payments for services rendered by managing directors,
-- Income taxes Lazard expects to pay as a corporation,
-- Minority interest expense reflecting LAZ-MD Holdings'
ownership of the Lazard Group common membership interests, and
-- Exclusion of one-time IPO-related costs.
LAZARD LTD
PRO FORMA OPERATING REVENUES
Three Months Ended September 30, Nine Months Ended September 30,
------------------------------------------------------------------------------
Increase / Increase /
2004 2005 (Decrease) 2004 2005 (Decrease)
------------------------------------------------------------------------------
($ in thousands)
Financial Advisory
M&A $105,131 $187,241 $82,110 78% $314,073 $491,559 $177,486 57%
Financial Restructuring 20,800 39,956 19,156 92% 52,500 80,367 27,867 53%
Corporate Finance and Other 5,749 30,588 24,839 432% 40,678 54,684 14,006 34%
------------------------------- --------------------------------
Total 131,680 257,785 126,105 96% 407,251 626,610 219,359 54%
Asset Management
Management and Other Fees 93,099 108,277 15,178 16% 284,638 316,045 31,407 11%
Incentive Fees (3,830) 2,717 6,547 - 5,318 10,650 5,332 -
------------------------------- --------------------------------
Total 89,269 110,994 21,725 24% 289,956 326,695 36,739 13%
Corporate (10,913) (11,876) (963) - (35,088) (39,905) (4,817) -
------------------------------- --------------------------------
Net Revenues 210,036 356,903 146,867 70% 662,119 913,400 251,281 38%
Subtract LAM GP Related Revenue - (2,752) (2,752) - - (2,752) (2,752) -
Add Back Non-LFB Interest
Expense 19,289 20,109 820 - 58,243 59,272 1,029 -
------------------------------- --------------------------------
Operating Revenues $229,325 $374,260 $144,935 63% $720,362 $969,920 $249,558 35%
=============================== ================================
LAZARD LTD
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENTS OF INCOME
Pro Forma
-------------------------------------------------
Three Months Nine Months
Ended September 30, Ended September 30,
------------------------ ------------------------
2004 2005 2004 2005
------------ ----------- ------------ -----------
($ in thousands, except per share data)
Total revenues $233,657 $378,749 $733,768 $985,154
LFB interest expense (4,332) (4,489) (13,406) (15,234)
------------ ----------- ------------ -----------
Operating
revenues 229,325 374,260 720,362 969,920
LAM GP related
revenue - 2,752 - 2,752
Other interest
expense (19,289) (20,109) (58,243) (59,272)
------------ ----------- ------------ -----------
Net revenues 210,036 356,903 662,119 913,400
Operating expenses:
Compensation and
benefits 131,862 215,199 414,208 557,704
Premises and
occupancy costs 17,791 16,653 54,396 50,513
Professional fees 9,923 12,516 30,598 33,176
Travel and
entertainment 8,942 10,663 33,479 30,768
Other 22,740 24,583 65,077 69,467
------------ ----------- ------------ -----------
Operating expenses 191,258 279,614 597,758 741,628
------------ ----------- ------------ -----------
Operating income 18,778 77,289 64,361 171,772
Provision for income
taxes 3,733 17,177 12,792 41,445
------------ ----------- ------------ -----------
Income before
minority interests 15,045 60,112 51,569 130,327
Minority interests
(excluding LAZ-MD)* (3,155) 4,728 (3,283) 9,440
Minority interests
(LAZ-MD only) 11,948 36,373 36,244 78,173
------------ ----------- ------------ -----------
Net income from
continuing
operations $6,252 $19,011 $18,608 $42,714
============ =========== ============ ===========
Net income assuming
full exchange of
exchangeable
interests $16,675 $51,690 $49,623 $115,006
============ =========== ============ ===========
Weighted average
shares outstanding:
Basic 37,500,000 37,500,000 37,500,000 37,500,000
Diluted 100,000,000 37,528,978 100,000,000 37,509,765
Net income per
share:
Basic $0.17 $0.51 $0.50 $1.14
Diluted $0.17 $0.51 $0.50 $1.14
Weighted average
shares outstanding,
assuming full
exchange of
exchangeable
interests:
Basic 100,000,000 99,726,494 100,000,000 99,907,829
Diluted 100,000,000 99,755,472 100,000,000 99,917,595
Net income per
share, assuming
full exchange of
exchangeable
interests:
Basic $0.17 $0.52 $0.50 $1.15
Diluted $0.17 $0.52 $0.50 $1.15
* Primarily includes (i) (credits) / charges relating to our strategic
alliances in Italy of ($1,243) and $1,322 in the three months ended
September 30, 2004 and 2005, respectively and ($400) and $5,674 in the
nine months ended September 30, 2004 and 2005, respectively, and (ii)
$2,752 related to the consolidation of LAM related GPs in the three
and nine months ended September 30, 2005.
See Notes to Unaudited Pro Forma Condensed Consolidated Statements of Income
LAZARD LTD
UNAUDITED HISTORICAL CONDENSED CONSOLIDATED STATEMENTS OF INCOME
Historical net income is reported as a historical partnership until
the IPO on May 10, 2005 and does not include payments for services
rendered by managing directors as compensation expense and a provision
for U.S. federal income taxes. In addition, historical net income for
periods prior to the IPO do not include a charge for the minority
interest relating to the outstanding exchangeable interests. Such
payments, tax provisions and minority interest expense are included in
subsequent periods. Therefore, historical results for periods prior to
the IPO on May 10, 2005 and subsequent to the IPO are not comparable.
Historical
-------------------------------------------
Three Months Nine Months
Ended September 30, Ended September 30,
--------------------- ---------------------
2004 2005 2004 2005
--------- ----------- --------- -----------
($ in thousands, except per share data)
Total revenues $233,657 $378,749 $733,768 $985,154
LFB interest expense (4,332) (4,489) (13,406) (15,234)
--------- ----------- --------- -----------
Operating revenues 229,325 374,260 720,362 969,920
LAM GP related revenue - 2,752 - 2,752
Other interest expense (5,345) (20,109) (16,412) (38,307)
--------- ----------- --------- -----------
Net revenues 223,980 356,903 703,950 934,365
Operating expenses:
Compensation and
benefits 109,153 215,199 329,116 482,228
Premises and occupancy
costs 17,791 16,653 54,396 50,513
Professional fees 9,923 12,516 30,598 36,111
Travel and
entertainment 8,942 10,663 33,479 30,768
Other 22,740 24,583 65,077 69,467
--------- ----------- --------- -----------
Operating expenses 168,549 279,614 512,666 669,087
--------- ----------- --------- -----------
Operating income 55,431 77,289 191,284 265,278
Provision for income taxes 872 17,177 13,214 50,443
--------- ----------- --------- -----------
Income before minority
interests 54,559 60,112 178,070 214,835
Minority interests
(excluding LAZ-MD)* 11,717 4,728 52,426 18,521
Minority interests (LAZ-MD
only) - 36,373 - 59,186
--------- ----------- --------- -----------
Income from continuing
operations 42,842 19,011 125,644 137,128
Income (loss) from
discontinued operations
and extraordinary gain (2,942) (408) 8,672 (17,576)
--------- ----------- --------- -----------
Net income $39,900 $18,603 $134,316 $119,552
========= =========== ========= ===========
Weighted average shares
outstanding:
Basic - 37,500,000 - 37,500,000
Diluted - 37,528,978 - 37,518,513
Net income per share from
continuing operations:
Basic - $0.51 - $0.81
Diluted - $0.51 - $0.81
* Includes (i) (credits) / charges relating to our strategic alliances
in Italy of ($1,243) and $1,322 in the three months ended September
30, 2004 and 2005, respectively and ($400) and $5,674 in the nine
months ended September 30, 2004 and 2005, respectively, (ii) $2,752
related to the consolidation of LAM related GPs in the three and nine
months ended September 30, 2005, and (iii) payments for services
rendered by our managing directors and employee members of LAM of
$14,872 in the three months ended September 30, 2004 and $55,709 and
$9,081 in the nine months ended September 30, 2004 and 2005,
respectively.
See Notes to Unaudited Pro Forma Condensed Consolidated Statements of Income
LAZARD LTD
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF INCOME
Three Month Period Ended September 30, 2005
--------------------------------------------------------------------------
Pro Forma
as Adjusted, Pro Forma Pro Forma
Prior to Adjustment as Adjusted,
Pro Forma Full for Full After Full
Historical Adjustments Exchange Exchange Exchange
----------- ------------ ----------- ----------- -------------
($ in thousands, except per share data)
Total revenues $378,749 $- $378,749 $- $378,749
LFB interest expense (4,489) - (4,489) - (4,489)
----------- ------------ ----------- ----------- -------------
Operating revenues 374,260 - 374,260 - 374,260
LAM GP related revenue 2,752 (a) - 2,752 - 2,752
Other interest expense (20,109)(b) - (20,109) - (20,109)
----------- ------------ ----------- ----------- -------------
Net revenues 356,903 - 356,903 - 356,903
Operating expenses:
Compensation and benefits 215,199 - 215,199 - 215,199
Premises and occupancy costs 16,653 - 16,653 - 16,653
Professional fees 12,516 - 12,516 - 12,516
Travel and entertainment 10,663 - 10,663 - 10,663
Other 24,583 - 24,583 - 24,583
----------- ------------ ----------- ----------- -------------
Operating expenses 279,614 - 279,614 - 279,614
----------- ------------ ----------- ----------- -------------
Operating income (loss) 77,289 - 77,289 - 77,289
Provision for income taxes 17,177 - 17,177 3,694 (j) 20,871
----------- ------------ ----------- ----------- -------------
Income (loss) before minority
interests 60,112 - 60,112 (3,694) 56,418
Minority interests (excluding LAZ-
MD) 4,728 - 4,728 - 4,728
Minority interests (LAZ-MD only) 36,373 - 36,373 (36,373)(k) -
----------- ------------ ----------- ----------- -------------
Income from continuing operations 19,011 - 19,011 32,679 51,690
Income (loss) from discontinued (c)
operations (408) 408 - - -
----------- ------------ ----------- ----------- -------------
Net income $18,603 $408 $19,011 $32,679 $51,690
=========== ============ =========== =========== =============
Weighted average shares outstanding:
Basic 37,500,000 (h) 99,726,494 (l)
Diluted 37,528,978 (h) 99,755,472 (m)
Net income per share:
Basic $0.51 (i) $0.52 (n)
Diluted $0.51 (i) $0.52 (n)
See Notes to Unaudited Pro Forma Condensed Consolidated Statements of Income
LAZARD LTD
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF INCOME
Three Month Period Ended September 30, 2004
--------------------------------------------------------------------------
Pro Forma Pro Forma Pro Forma
as Adjusted, Adjustment as Adjusted,
Pro Forma Prior to Full for Full After Full
Historical Adjustments Exchange Exchange Exchange
----------- ------------ ------------ -------------- -------------
($ in thousands, except per share data)
Total revenues $233,657 $- $233,657 $- $233,657
LFB interest expense (4,332) - (4,332) - (4,332)
----------- ------------ ------------ -------------- -------------
Operating revenues 229,325 - 229,325 - 229,325
Other interest expense (5,345)(b) (13,944)(d) (19,289) - (19,289)
----------- ------------ ------------ -------------- -------------
Net revenues 223,980 (13,944) 210,036 - 210,036
Operating expenses:
Compensation and benefits 109,153 22,709 (e) 131,862 - 131,862
Premises and occupancy costs 17,791 - 17,791 - 17,791
Professional fees 9,923 - 9,923 - 9,923
Travel and entertainment 8,942 - 8,942 - 8,942
Other 22,740 - 22,740 - 22,740
----------- ------------ ------------ -------------- -------------
Operating expenses 168,549 22,709 191,258 - 191,258
----------- ------------ ------------ -------------- -------------
Operating income (loss) 55,431 (36,653) 18,778 - 18,778
Provision for income taxes 872 2,861 (f) 3,733 1,525 (j) 5,258
----------- ------------ ------------ -------------- -------------
Income (loss) before minority
interests 54,559 (39,514) 15,045 (1,525) 13,520
Minority interests (excluding LAZ- (e)
MD) 11,717 (14,872) (3,155) - (3,155)
Minority interests (LAZ-MD only) - 11,948 (g) 11,948 (11,948)(k) -
----------- ------------ ------------ -------------- -------------
Income (loss) from continuing
operations 42,842 (36,590) 6,252 10,423 16,675
Income (loss) from discontinued
operations
and extraordinary gain (2,942) 2,942 (c) - - -
----------- ------------ ------------ -------------- -------------
Net income (loss) $39,900 ($33,648) $6,252 $10,423 $16,675
=========== ============ ============ ============== =============
Weighted average shares
outstanding:
Basic 37,500,000 (h) 100,000,000 (l)
Diluted 100,000,000 (h) 100,000,000 (m)
Net income per share:
Basic $0.17 (i) $0.17 (n)
Diluted $0.17 (i) $0.17 (n)
See Notes to Unaudited Pro Forma Condensed Consolidated Statements of Income
LAZARD LTD
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF INCOME
Nine Month Period Ended September 30, 2005
------------------------------------------------------------------------
Pro Forma
as Adjusted, Pro Forma Pro Forma
Prior to Adjustment as Adjusted,
Pro Forma Full for Full After Full
Historical Adjustments Exchange Exchange Exchange
----------- ------------ ----------- ------------- -------------
($ in thousands, except per share data)
Total revenues $985,154 $- $985,154 $- $985,154
LFB interest expense (15,234) - (15,234) - (15,234)
----------- ------------ ----------- ------------- -------------
Operating revenues 969,920 - 969,920 - 969,920
LAM GP related revenue 2,752 (a) - 2,752 - 2,752
Other interest expense (38,307)(b) (20,965)(d) (59,272) - (59,272)
----------- ------------ ----------- ------------- -------------
Net revenues 934,365 (20,965) 913,400 - 913,400
Operating expenses:
Compensation and benefits 482,228 75,476 (e) 557,704 - 557,704
Premises and occupancy costs 50,513 - 50,513 - 50,513
Professional fees 36,111 (2,935)(o) 33,176 - 33,176
Travel and entertainment 30,768 - 30,768 - 30,768
Other 69,467 - 69,467 - 69,467
----------- ------------ ----------- ------------- -------------
Operating expenses 669,087 72,541 741,628 - 741,628
----------- ------------ ----------- ------------- -------------
Operating income (loss) 265,278 (93,506) 171,772 - 171,772
Provision for income taxes 50,443 (8,998)(f) 41,445 5,881 (j) 47,326
----------- ------------ ----------- ------------- -------------
Income (loss) before minority
interests 214,835 (84,508) 130,327 (5,881) 124,446
Minority interests (excluding LAZ-MD) 18,521 (9,081)(e) 9,440 - 9,440
Minority interests (LAZ-MD only) 59,186 18,987 (g) 78,173 (78,173)(k) -
----------- ------------ ----------- ------------- -------------
Income (loss) from continuing
operations 137,128 (94,414) 42,714 72,292 115,006
Income (loss) from discontinued (c)
operations (17,576) 17,576 - - -
----------- ------------ ----------- ------------- -------------
Net income (loss) $119,552 ($76,838) $42,714 $72,292 $115,006
=========== ============ =========== ============= =============
Weighted average shares outstanding:
Basic 37,500,000 (h) 99,907,829 (l)
Diluted 37,509,765 (h) 99,917,595 (m)
Net income per share:
Basic $1.14 (i) $1.15 (n)
Diluted $1.14 (i) $1.15 (n)
See Notes to Unaudited Pro Forma Condensed Consolidated Statements of Income
LAZARD LTD
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF INCOME
Nine Month Period Ended September 30, 2004
-----------------------------------------------------------------------
Pro Forma
as Adjusted, Pro Forma Pro Forma
Prior to Adjustment as Adjusted,
Full for Full After Full
Historical Other Exchange Exchange Exchange
----------- ---------- ------------ ------------- -------------
($ in thousands, except per share data)
Total revenues $733,768 $- $733,768 $- $733,768
LFB interest expense (13,406) - (13,406) - (13,406)
----------- ---------- ------------ ------------- -------------
Operating revenues 720,362 - 720,362 - 720,362
Other interest expense (16,412)(b) (41,831)(d) (58,243) - (58,243)
----------- ---------- ------------ ------------- -------------
Net revenues 703,950 (41,831) 662,119 - 662,119
Operating expenses:
Compensation and benefits 329,116 85,092 (e) 414,208 - 414,208
Premises and occupancy costs 54,396 - 54,396 - 54,396
Professional fees 30,598 - 30,598 - 30,598
Travel and entertainment 33,479 - 33,479 - 33,479
Other 65,077 - 65,077 - 65,077
----------- ---------- ------------ ------------- -------------
Operating expenses 512,666 85,092 597,758 - 597,758
----------- ---------- ------------ ------------- -------------
Operating income (loss) 191,284 (126,923) 64,361 - 64,361
Provision for income taxes 13,214 (422)(f) 12,792 5,229 (j) 18,021
----------- ---------- ------------ ------------- -------------
Income (loss) before minority
interests 178,070 (126,501) 51,569 (5,229) 46,340
Minority interests (excluding LAZ- (e)
MD) 52,426 (55,709) (3,283) - (3,283)
Minority interests (LAZ-MD only) - 36,244 (g) 36,244 (36,244)(k) -
----------- ---------- ------------ ------------- -------------
Income (loss) from continuing
operations 125,644 (107,036) 18,608 31,015 49,623
Income (loss) from discontinued
operations
and extraordinary gain 8,672 (8,672)(c) - - -
----------- ---------- ------------ ------------- -------------
Net income (loss) $134,316 ($115,708) $18,608 $31,015 $49,623
=========== ========== ============ ============= =============
Weighted average shares outstanding:
Basic 37,500,000 (h) 100,000,000 (l)
Diluted 100,000,000 (h) 100,000,000 (m)
Net income per share:
Basic $0.50 (i) $0.50 (n)
Diluted $0.50 (i) $0.50 (n)
See Notes to Unaudited Pro Forma Condensed Consolidated Statements of Income
LAZARD LTD
Notes to Unaudited Pro Forma Condensed Consolidated Statements of
Income
(a) LAM GP related revenue relates to interests in LAM general
partnerships held directly by various of our managing directors
which is also deducted in minority interests.
(b) For the nine-month period ended September 30, 2004, interest
expense includes $6,000 in accrued dividends relating to Lazard
Group's mandatorily redeemable preferred stock issued in March
2001. The nine-month period ended September 30, 2005 includes a
credit of $8,000, which represents accrued dividends on Lazard
Group's mandatorily redeemable preferred stock which was cancelled
in connection with the redemption of membership interests of
historical partners.
(c) Represents adjustments necessary to remove Lazard Group's
discontinued operations, and when applicable extraordinary items,
related to the separated businesses.
(d) Represents (i) net incremental interest expense related to the
separation and recapitalization transactions, including the
financing transactions and the amortization of capitalized costs
associated with the financing transactions and (ii) for the
nine-month period ended September 30, 2005 only, exclusion of
one-time IPO- related costs of $1,661.
(e) The adjustment reflects payments for services rendered by our
employee members of LAM and managing directors, which prior to the
IPO were accounted for as either distributions from members'
capital or as minority interest expense. Following the completion
of the IPO, our policy is that our employee compensation and
benefits expense, including that payable to our managing
directors, will not exceed 57.5% of operating revenue each year
(although we retain the ability to change this policy in the
future). The adjustment has been determined as if the new
compensation policy had been in place during 2004 and 2005.
Accordingly, the pro forma condensed consolidated statements of
income data reflect compensation and benefits expense based on new
retention agreements that are in effect.
(f) Represents (i) a tax benefit related to the reclassification of
LAM minority interest, (ii) the net income tax impact associated
with the separation and recapitalization transactions and (iii) an
adjustment for Lazard Ltd entity-level taxes.
(g) Represents the adjustment for LAZ-MD Holdings' ownership of 62.5%
of the Lazard Group common membership interests outstanding
immediately after the IPO and 62.4% as of September 30, 2005.
(h) For basic net income per share, the weighted average shares
outstanding reflects the 37,500,000 shares of Class A common stock
outstanding immediately following the equity public offering. For
diluted net income per share, the weighted average shares
outstanding reflects LAZ-MD Holdings exchangeable interests for
the 2004 periods only, on an as-if-exchanged basis, as the
exchangeable interests were not dilutive in the 2005 periods. In
addition, the 2005 periods include incremental shares issuable
from non-vested stock unit awards. Shares issuable with respect to
the exercise of the purchase contracts associated with the equity
security units offered in the ESU offering and the IXIS ESU
placement are not included because, under the treasury stock
method of accounting, such securities are not currently dilutive.
(i) Calculated after considering the impact of all the pro forma
adjustments described above and based on the weighted average
basic and diluted shares outstanding, as applicable, as described
in note (h) above.
(j) Represents an adjustment for Lazard Ltd entity-level taxes to
effect a full exchange of LAZ-MD Holdings' ownership of Lazard
Group common membership interests, as of January 1, 2004.
(k) Represents a reversal of the minority interests related to LAZ-MD
Holdings' ownership of Lazard Group common membership interests to
effect a full exchange of interests as of January 1, 2004.
(l) For basic net income per share, as if the LAZ-MD Holdings
exchangeable interests were fully exchanged as of January 1, 2004,
the weighted average shares outstanding, (i) for the three and
nine month periods ended September 30, 2004, reflects 100,000,000
shares of Class A Common Stock outstanding, which includes Class A
Common Stock outstanding immediately following the equity public
offering, the IXIS private placement and recapitalization and the
LAZ-MD Holdings' membership interests in Lazard Group,
exchangeable on a one-for-one basis for Class A Common Stock,
immediately following the equity public offering, respectively,
and (ii) for the three and nine month periods ended September 30,
2005, reflects 99,726,494 and 99,907,829 shares of Class A Common
Stock outstanding, which includes the 100,000,000 shares mentioned
above less the impact of the repurchase of interests in LAZ-MD
Holdings on July 26, 2005, respectively.
(m) For diluted net income per share, as if the LAZ-MD Holdings
exchangeable interests were fully exchanged as of January 1, 2004,
the weighted average shares outstanding, (i) for the three and
nine month periods ended September 30, 2004 reflects 100,000,000
shares of Class A Common Stock outstanding, which includes Class A
Common Stock outstanding immediately following the equity public
offering, the IXIS private placement and recapitalization and the
LAZ-MD Holdings' membership interests in Lazard Group,
exchangeable on a one-for-one basis for Class A Common Stock,
immediately following the equity public offering, respectively and
(ii) for the three and nine month periods ended September 30, 2005
reflects 99,755,472 and 99,917,595 shares of Class A Common Stock
outstanding, which includes the 100,000,000 shares mentioned above
plus incremental shares issuable from non-vested stock unit awards
less the impact of the repurchase of interests in LAZ-MD Holdings
on July 26, 2005, respectively.
(n) Calculated after considering the impact of all the pro forma
adjustments described above and based on the weighted average
basic and diluted shares outstanding, as applicable, as described
in notes (l) and (m) above.
(o) Represents exclusion of one-time IPO-related costs of $2,935 for
the nine-month period ended September 30, 2005 only.
LAZARD LTD
UNAUDITED CONDENSED CONSOLIDATED
STATEMENT OF FINANCIAL CONDITION
As Of September 30, 2005
ASSETS
------
Cash and cash equivalents $371,983
Cash and securities segregated for regulatory purposes 20,878
Marketable investments -
Securities owned - at fair value 292,582
Receivables 753,050
Other assets 370,766
-----------
Total assets $1,809,259
===========
LIABILITIES & STOCKHOLDERS' EQUITY (DEFICIENCY)
-----------------------------------------------
Payables $577,892
Accrued compensation and benefits 247,415
Other liabilities 591,055
Senior notes:
Underlying equity security units 437,500
Others 568,418
Subordinated loans 200,000
-----------
Total liabilities 2,622,280
Commitments and contingencies
Minority interest 104,460
STOCKHOLDERS' EQUITY (DEFICIENCY)
Common stock:
Class A, par value $ .01 per share 375
Class B, par value $ .01 per share
Additional paid-in capital (913,860)
Accumulated other comprehensive income (loss), net of tax (32,423)
Retained earnings 28,427
-----------
Total stockholders' equity (deficiency) (917,481)
-----------
Total liabilities and stockholders' equity (deficiency) $1,809,259
===========
LAZARD LTD
RECONCILIATION OF PRO FORMA SHARES OUTSTANDING AND
NET INCOME FOR BASIC AND DILUTED E.P.S - - Before Full Exchange
Three Months Ended September Three Months Ended September 30, 2005
30, 2004
-------------------------------- ------------------------------------------
Weighted
Average Net Weighted Net
Shares Net Income Average Shares Net Income
Outstanding Income Per Share Outstanding Income Per Share
-------------------- --------- ---------------------------- -----------
($ in thousands, except per share data)
Amounts as reported for basic
net income per share 37,500,000 $6,252 $0.17 37,500,000 $19,011 $0.51
========= ===========
Amounts applicable to LAZ-MD
exchangeable interests:
Share of Lazard Group (a)
income 11,948 -
Additional Corporate tax (1,525)(b) -
Shares issuable 62,500,000 -
Restricted stock units - 28,978
-------------------- ----------------------------
Amounts as reported
for diluted net income per
share 100,000,000 $16,675 $0.17 37,528,978 $19,011 $0.51 (c)
==================== ========= ============================ ===========
Nine Months Ended September 30, Nine Months Ended September 30, 2005
2004
-------------------------------- ------------------------------------------
Weighted Net Weighted Net
Average Net Income Average Shares Net Income
Shares
Outstanding Income Per Outstanding Income Per Share
Share
-------------------- --------- ---------------------------- -----------
($ in thousands, except per share data)
Amounts as reported for basic
net income per share 37,500,000 $18,608 $0.50 37,500,000 $42,714 $1.14
========= ===========
Amounts applicable to LAZ-MD
exchangeable interests:
Share of Lazard Group (a)
income 36,244
Additional Corporate tax (5,229)(b)
Shares issuable 62,500,000
Restricted stock units 9,765
-------------------- ----------------------------
Amounts as reported
for diluted net income per
share 100,000,000 $49,623 $0.50 37,509,765 $42,714 $1.14 (c)
==================== ========= ============================ ===========
(a) Approximately 62.5% of pro forma Lazard Group net income of
$19,115 and $57,990 for the three and nine months ended September
30, 2004.
(b) Based on pro forma Lazard Group operating income of $18,778 and
$64,361 for the three and nine months ended September 30, 2004.
(c) The LAZ-MD exchangeable interests and the ESUs were antidilutive
and consequently the effect of their conversion to shares of Class
A Common Stock has been excluded from diluted earnings per share
during the periods presented.
LAZARD LTD
RECONCILIATION OF PRO FORMA SHARES OUTSTANDING AND
NET INCOME FOR BASIC AND DILUTED E.P.S - - Assuming Full Exchange as of January 1, 2004
Three Months Ended September 30, Three Months Ended September 30, 2005
2004
--------------------------------- ------------------------------------------
Weighted Net Weighted Net
AverageShares Net Income Average Shares Net Income
Outstanding Income Per Share Outstanding Income Per Share
--------------------- --------- -------------------------- -------------
($ in thousands, except per share data)
Amounts as reported for basic
net income per share 100,000,000 $16,675 $0.17 99,726,494 $51,690 $0.52
========= =============
Restricted stock units - 28,978
--------------------- --------------------------
Amounts as reported
for diluted net income per
share 100,000,000 $16,675 $0.17 99,755,472 $51,690 $0.52
===================== ========= ========================== =============
Nine Months Ended Nine Months Ended
September 30, 2004 September 30, 2005
--------------------------------- ------------------------------------------
Weighted Net Weighted Net
Average Net Income Average Shares Net Income
Shares
Outstanding Income Per Outstanding Income Per Share
Share
--------------------- --------- -------------------------- -------------
($ in thousands, except per share data)
Amounts as reported for basic
net income per share 100,000,000 $49,623 $0.50 99,907,829 $115,006 $1.15
========= =============
Restricted stock units - 9,766
--------------------- --------------------------
Amounts as reported
for diluted net income per
share 100,000,000 $49,623 $0.50 99,917,595 $115,006 $1.15
===================== ========= ========================== =============
ASSETS UNDER MANAGEMENT (AUM)
-----------------------------
As of
-----------------------------------------------------------
September 30, December 31, March 31, June 30, September 30,
2004 2004 2005 2005 2005
------------- ------------ --------- -------- -------------
($ in millions)
Total
Equities $61,976 $69,745 $69,724 $66,077 $69,154
Total Fixed
Income 11,723 11,204 11,314 11,211 11,454
Alternative
Investments 2,270 2,800 2,921 3,054 3,204
Merchant
Banking 453 551 523 801 801
Cash 2,072 2,135 1,775 1,869 1,979
------------- ------------ --------- -------- -------------
Total
AUM $78,494 $86,435 $86,257 $83,012 $86,592
============= ============ ========= ======== =============
Three Months Ended Nine Months Ended
September 30, September 30,
------------------ -----------------
2004 2005 2004 2005
--------- -------- -------- --------
AUM - Beginning
of Period $77,982 $83,012 $78,371 $86,435
Net Flows (200) (1,751) (1,863) (4,349)
Market
Appreciation
(Depreciation) 523 5,369 2,121 5,654
Foreign
Currency
Adjustments 189 (38) (135) (1,148)
--------- -------- -------- --------
AUM - End of
Period $78,494 $86,592 $78,494 $86,592
========= ======== ======== ========
Average AUM
(note) $78,238 $84,802 $78,712 $85,574
========= ======== ======== ========
Note: Average AUM is based on an average of quarterly ending balances
for the respective periods
LAZARD LTD
SCHEDULE OF PRO FORMA INCOME TAX PROVISION
ALLOCATION OF OPERATING INCOME
------------------------------
Three Months Nine Months
Ended September 30, Ended September 30,
-------------------- --------------------
2004 2005 2004 2005
--------- --------- --------- ---------
($ in thousands)
Operating income:
Lazard Group $18,778 $77,776 $64,361 $172,349
Lazard Ltd - (487) - (577)
--------- --------- --------- ---------
Total $18,778 $77,289 $64,361 $171,772
========= ========= ========= =========
Operating income allocable
to Lazard Ltd:
Lazard Group
(approximately 37.5%) $7,042 $29,254 $24,135 $64,719
Lazard Ltd (100%) - (487) - (577)
--------- --------- --------- ---------
Total $7,042 $28,767 $24,135 $64,142
========= ========= ========= =========
Operating income allocable
to LAZ-MD Holdings:
Lazard Group
(approximately 62.5%) $11,736 $48,522 $40,226 $107,630
========= ========= ========= =========
PRO FORMA INCOME TAX PROVISION
------------------------------
Three Months Nine Months
Ended September 30, Ended September 30,
-------------------- --------------------
2004 2005 2004 2005
--------- --------- --------- ---------
($ in thousands)
Lazard Ltd's entity level
taxes (28%) $1,972 $7,765 $6,758 $17,670
Flow through provision for
Lazard Group income taxes
applicable to LAZ-MD
Holdings' approximately
62.5% ownership - effective
tax rates of 15.0% and
19.0% for the three month
periods ended September 30,
2004 and 2005 and 15.0% and
21.9% for the nine month
periods ended September 30,
2004 and 2005, respectively 1,761 9,412 6,034 23,775
--------- --------- --------- ---------
Total pro forma provision
for income taxes 3,733 17,177 12,792 41,445
Pro forma provision for
income taxes before final
adjustment for the equity
public offering 2,817 17,177 9,654 42,391
--------- --------- --------- ---------
Pro forma adjustment $916 - $3,138 (946)
========= ========= ========= =========
Lazard Ltd consolidated
effective tax rate 19.9% 22.2% 19.9% 24.1%
========= ========= ========= =========
CONTACT: Media:
Richard Silverman, 212-632-6285
richard.silverman@lazard.com
OR
Investors:
Michael J. Castellano, 212-632-8262
OR
Jean Greene, 212-632-1905
investorrelations@lazard.com