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March 1, 2005
Mail Stop 0408
By U.S. Mail and facsimile to (212) 403-2000.
Scott D. Hoffman
General Counsel and V.P.
Lazard Ltd.
30 Rockefeller Plaza
New York, NY 10020
Re: Lazard Ltd.
Form S-1 amended February 11, 2005
File No. 333-121407
Dear Mr. Hoffman:
We have reviewed your filing and have the following comments.
Where indicated, we think you should revise your document in
response
to these comments. If you disagree, we will consider your
explanation as to why our comment is inapplicable or a revision is
unnecessary. Please be as detailed as necessary in your
explanation.
In some of our comments, we may ask you to provide us with
supplemental information so we may better understand your
disclosure.
After reviewing this information, we may or may not raise
additional
comments.
Please understand that the purpose of our review process is
to
assist you in your compliance with the applicable disclosure
requirements and to enhance the overall disclosure in your filing.
We look forward to working with you in these respects. We welcome
any questions you may have about our comments or any other aspect
of
our review. Feel free to call us at the telephone numbers listed
at
the end of this letter.
General comments on your filing
1. We note that in response to a number of comments, you have
stated
that you are unable to provide updated or more detailed disclosure
at
this time. The staff awaits revised disclosure regarding these
items.
2. In your response to prior comment 11, you state that the
company
is still in negotiations with former managing directors to enter
into
retention agreements. Please advise the staff regarding the
percentage of your revenues represented by managing directors who
have not yet entered into retention agreements. We may have
further
comment based upon your response or any revision to your
disclosure
in response to prior comment 11.
3. Please revise to update your financial statements based on the
requirements set forth in Rule 3-12 of Regulation S-X.
Our Core Values; Introductory Note - pages i-ii
4. Please consider moving the information on the inside cover page
to
the Summary. Information about the offering should appear in the
body of the prospectus.
5. To the extent that you continue to retain the information in
the
Introductory Note in the Summary or elsewhere in the prospectus,
please consider removing the glossary or shortened terms. We are
sympathetic to your wish to make the document as easy to
understand
as possible. To the extent possible, however, shortened terms
should
be clear from the contexts, and if any of the names of the
entities
that will participate in the offering or the separation
transactions
are not clear, they should be fully explained at the point that
they
are first used.
Summary - page 1
Lazard`s Ownership Structure - page 8
6. Please clarify that while Lazard Ltd.`s shareholders will hold
100% of the "economic rights," the LAZ-MD will receive
distributions
from Lazard Group which will not necessarily be distributed to
Lazard
Ltd or the public shareholders.
Bermuda Law - page 12
7. Please expand the bullet pointed disclosure regarding the
differences in shareholder rights between a Bermuda Company and a
U.S. Corporation to briefly but more completely describe the
differences in shareholder rights noted. For example,
shareholders
have less opportunity to vote under the Bermuda Companies Act of
1981
than under U.S. corporate law.
The Separation and Recapitalization Transactions
The Recapitalization of LAZ-MD Holdings and Lazard Group - page 47
8. Please address the following with respect to your responses to
prior comments 22 and 68 and your revisions on pages 47 and F-30.
Please revise to clearly describe each of the events that resulted
in
additional amounts allocated to historical partner capital.
Describe
the impact of each of these events on your consolidated financial
statements as well as the individual Members` capital accounts for
internal capital reporting purposes. To avoid investor confusion,
please ensure that you are clear in your discussion, here and
throughout your filing, the difference between your revaluation of
the business and goodwill/intangibles for internal capital
measurement purposes and the impact of these fundamental corporate
events on your financial reporting.
Unaudited Pro Forma Financial Information
Unaudited Pro Forma Condensed Consolidated Statements of Income -
pages 66 and 68
9. We note your supplemental response to our prior comment 28.
The
purpose of presenting the historical results of operations
adjusted
for recognizing additional employee compensation and income tax
expenses is to separately show the impact of the change in your
capital structure. Please revise to present the weighted average
shares outstanding and net income per share data based on your
historical results adjusted for the separation transaction and the
additional employee compensation and income taxes that would have
been reported had you been a corporation (i.e. if all outstanding
membership units had been exchanged for common shares).
10. Please supplementally tell us how you intend to present
earnings
per share data in your comparative financial statements in your
`34
Act filings subsequent to the effectiveness of your registration.
11. We note your supplemental response to prior comment 29 and
your
revisions on pages 66, 67, 68, and 71. Please revise to describe
the
terms of the additional financing transactions, as available, and
clarify when you expect these transactions to be consummated.
12. We note your revisions on pages 69 and 83 in response to our
prior comment 30. Please revise to separately quantify your
estimate
of the impact of the new managing directors` retention agreements
and
the expiration of contractual agreements requiring payment to
managing directors for services performed and founders of LAM.
Disclose the expected timing of effectiveness of the new retention
agreements.
13. Please revise to describe your plans for the reassessment of
staffing needs, the potential impact (i.e. reduction of employees,
reallocation of resources), and your estimate of the time-frame
for
performing the reassessment and implementing any changes.
Management`s Discussion and Analysis of Financial Position and
Results of Operations
Financial Advisory - page 89
14. We note your revisions on pages 89 - 91 in response to our
prior
comment 33. Please revise to describe any trends in gross profit
margin (gross revenues less direct transaction-related expenses)
for
your different types of financial advisory services during the
periods presented.
Capital Markets and Other - page 96
15. We note the revisions that you made on page 96 in response to
our
prior comment 36. Your statement at the bottom of page 96 that
"the
activities described as part of this segment will remain in this
segment subsequent to the separation" may suggest that you will
continue to report results from these operations subsequent to the
separation transaction. Please revise to clearly explain which
activities will be disposed of as part of the separation
transaction
and which activities, if any, you will continue to perform
subsequent
to the separation transaction.
Critical Accounting Policies and Estimates - page 103
16. We note that you present the consolidation of VIEs as a
critical
accounting policy in response to our prior comment 42. Please
revise
to address the following:
* Describe the qualitative and quantitative analyses that you
perform
to determine if an entity has sufficient equity at risk.
* Describe the type(s) of models used to estimated the expected
losses and expected residual returns.
* Discuss the types of events that would cause you to reconsider
your
initial assessment of whether you are the primary beneficiary of a
VIE.
Material Federal Income Tax Consequences - page 167
17. Remove the word "should" from the last full paragraph on page
168
and clarify whether Counsel or Management believes that changes in
U.S. taxation will or will not apply to Lazard and its
subsidiaries.
18. Please revise to reflect the opinions on the material tax
consequences of the transaction requested below.
Lazard LLC Consolidated Financial Statements
Note 2 - Significant Accounting Policies
Revenue Recognition - page F-12
19. We note your supplemental response to prior comment 56.
Please
revise to briefly describe how you report client reimbursement of
expenses and quantify the amount of client reimbursements for each
period presented.
20. We note your supplemental response and revisions in response
to
our prior comment 58. Please revise to quantify your estimate of
contingent gains from merchant banking incentive fees that have
yet
to be recognized because the underlying investments have not been
liquidated as of December 31, 2003. Refer to paragraph 17(b) of
SFAS
5 with respect to the care to be exercised in making this
disclosure.
Note 6 - Formation of LAM - page F-20
21. We note your supplemental responses to prior comment 62 and 63
and your revisions on page F-20. Please supplementally explain
how
you determined that the LAM equity interests granted to employees
were within the scope of FIN 38. Specifically discuss how you
determined that these equity interests met the definition of
"junior
stock."
Note - 11 - Commitments and Contingencies - page F-28
22. We note your supplemental response to prior comment 66 and the
associated revisions. Due to the potential material impact on
future
operating results, please revise your discussion on pages F-29 and
F-
48 to describe any significant judicial, regulatory or arbitration
proceedings and provide an estimate of the possible loss or range
of
loss. If such an estimate cannot be made, revise to explain why.
In
addition, state whether you have recorded an accrual for such
estimated losses. Refer to paragraphs 9 and 10 of SFAS 5.
Note 18 - Subsequent Events - Initial Public Offering - page F-38
23. We note your supplemental response to our prior comment 74.
Please supplementally tell us how you determine that both criteria
in
paragraph 42 of SFAS 144 will be met after the separation
Exhibits
Exhibit 5.1 - Legal Opinion of Conyers Dill and Pearman
24. Please provide an opinion that addresses the material tax
consequences of owning stock in Lazard under Bermuda Law and any
interpretations of Bermuda Law that U.S. Tax Counsel must rely
upon
to deliver their opinion. An opinion that the disclosure is
materially accurate is not sufficient. Please refer to Item
601(b)(8)
25. Please delete assumption (f) which assumes the opinion. You
can
assume that the shares will be sold as described in the
registration
statement.
26. Please delete the parenthetical phrase after non-assessable;
it
is inappropriate.
Exhibit 8.1 - Opinion of Wachtell Lipton
27. The opinion of counsel provided in this exhibit opines as to
the
accuracy of the disclosure in the Material Federal Income Tax
Consequences section. However, Item 601(b)(8) requires an opinion
regarding the material federal income tax consequences. Please
provide an opinion that opines as to the material federal income
tax
consequences of owning Lazard common stock.
* * *
Closing Comments
As appropriate, please amend your registration statement in
response to these comments. You may wish to provide us with
marked
copies of the amendment to expedite our review. Please furnish a
cover letter with your amendment that keys your responses to our
comments and provides any requested supplemental information.
Detailed cover letters greatly facilitate our review. Please
understand that we may have additional comments after reviewing
your
amendment and responses to our comments.
We urge all persons who are responsible for the accuracy and
adequacy of the disclosure in the filings reviewed by the staff to
be
certain that they have provided all information investors require
for
an informed decision. Since the company and its management are in
possession of all facts relating to a company`s disclosure, they
are
responsible for the accuracy and adequacy of the disclosures they
have made.
Notwithstanding our comments, in the event the company
requests
acceleration of the effective date of the pending registration
statement, it should furnish a letter, at the time of such
request,
acknowledging that
* should the Commission or the staff, acting pursuant to delegated
authority, declare the filing effective, it does not foreclose the
Commission from taking any action with respect to the filing;
* the action of the Commission or the staff, acting pursuant to
delegated authority, in declaring the filing effective, does not
relieve the company from its full responsibility for the adequacy
and
accuracy of the disclosure in the filing; and
* the company may not assert this action as a defense in any
proceeding initiated by the Commission or any person under the
federal securities laws of the United States.
In addition, please be advised that the Division of
Enforcement
has access to all information you provide to the staff of the
Division of Corporation Finance in connection with our review of
your
filing or in response to our comments on your filing.
We direct your attention to Rules 460 and 461 regarding
acceleration of a registration statement. Please allow adequate
time
after the filing of any amendment for further review before
submitting a request for acceleration. Please provide this
request
at least two business days in advance of the requested effective
date.
You may contact Angela Jackson, Staff Accountant, at (202)
942-
2865 or Joyce Sweeney, Senior Accountant, at (202) 942-1939 if you
have questions regarding comments on the financial statements and
related matters. Please contact Christian Windsor, Special
Counsel
at (202) 942-1974 or me at (202) 942-1874 with any other
questions.
Sincerely,
Mark Webb,
Branch Chief
cc: Via Facsimile: (212) 403-2000
Craig M. Wasserman, Esq.
Wachtell, Lipton, Rosen & Katz
51 West 52nd Street
New York, NY 10019
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Lazard LTD
Scott Hoffman, General Counsel, V.P.
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