[July 26, 2018] |
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Lazard Ltd Reports Second-Quarter and First-Half 2018 Results
Lazard Ltd (NYSE:LAZ):
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Record quarterly and first-half operating revenue:
$741 million and $1,465 million, respectively
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Record quarterly and first-half operating revenue
for Financial Advisory
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Returned $588 million of capital to
shareholders in first half of year
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Lazard Ltd (NYSE: LAZ) today reported record quarterly operating revenue1
of $741 million for the quarter ended June 30, 2018. Net income, as
adjusted1 and excluding a pre-tax benefit2, was
$143 million, or $1.10 (diluted) per share for the quarter.
Second-quarter 2018 net income on a U.S. GAAP basis was $147 million, or
$1.13 per share (diluted).
First-half net income as adjusted1 and excluding a pre-tax
charge2, was $309 million, or $2.35 per share (diluted). On a
U.S. GAAP basis, first-half net income was $307 million, or $2.34 per
share (diluted).
"Record operating revenue for the second quarter and first half
underscores the differentiated strength of Lazard's franchise," said
Kenneth M. Jacobs, Chairman and Chief Executive Officer of Lazard. "Our
global platform incorporates diverse revenue streams of significant
scale, innovative client solutions that drive performance, and growth
opportunities in which we continue to invest."
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($ in millions, except per share data and AUM)
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Quarter Ended June 30,
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Six Months Ended June 30,
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2018
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2017
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%'18-'17
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2018
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2017
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%'18-'17
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Net Income
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U.S. GAAP
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$
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147
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$
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120
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22
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%
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$
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307
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$
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228
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35
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%
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Per share, diluted
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$
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1.13
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$
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0.91
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24
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%
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$
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2.34
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$
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1.72
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36
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%
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Adjusted1,2
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$
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143
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$
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130
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10
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%
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$
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309
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$
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240
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29
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%
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Per share, diluted
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$
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1.10
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$
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0.98
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12
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%
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$
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2.35
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$
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1.81
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30
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%
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Operating Revenue1
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Total operating revenue
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$
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741
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$
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720
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3
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%
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$
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1,465
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$
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1,345
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9
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%
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Financial Advisory
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$
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415
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$
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411
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1
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%
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$
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804
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$
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747
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8
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%
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Asset Management
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$
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329
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$
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307
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7
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%
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$
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659
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$
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585
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13
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%
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AUM ($ in billions)
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Period End
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$
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238
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$
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226
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5
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%
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Average
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$
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245
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$
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222
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10
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%
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$
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251
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$
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214
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17
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%
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Note: Endnotes are on page 7 of this release. A reconciliation of
adjusted GAAP to U.S. GAAP is on page 18.
OPERATING REVENUE
Operating revenue1 was a quarterly record of $741 million for
the second quarter of 2018, and a record $1,465 million for the first
half of 2018, up 3% and 9%, respectively, from the 2017 periods.
Financial Advisory
Our Financial Advisory results include M&A Advisory, Capital
Advisory, Capital Raising, Restructuring, Shareholder Advisory,
Sovereign Advisory, and other strategic advisory work for clients.
Second Quarter
Financial Advisory operating revenue was a quarterly record of $415
million for 2018, 1% higher than the record second quarter of 2017.
Operating revenue included strong performance in M&A Advisory and
Restructuring.
During the second quarter of 2018, Lazard was engaged in highly visible,
complex M&A transactions and other advisory assignments, including
cross-border transactions, spin-offs and distressed asset sales, as well
as sovereign, capital and shareholder advisory in the Americas, Europe,
Australia, Africa and Asia.
Among the major M&A transactions that were completed during the second
quarter of 2018 were the following (clients are in italics): Altice
on its $40 billion group reorganization; Unibail-Rodamco's $24.7
billion acquisition of Westfield; Great Plains Energy's $14
billion merger of equals with Westar Energy; AccorHotels' sale of
a 57.8% stake in AccorInvest; Bacardi's $5.1 billion acquisition
of Patrón Tequila; and Dover on the spin-off of Apergy.
During or since the second quarter of 2018 we have been engaged in a
broad range of highly visible and complex restructuring and debt
advisory assignments for debtors and creditors. Assignments completed
during the second quarter of 2018 on which Lazard advised included: Takata;
Community Health Systems; and Breitburn Energy Partners.
Our Sovereign and Capital Advisory services remained active globally,
advising governments and corporations on balance sheet matters,
financing strategy and capital raising.
Please see M&A transactions on which Lazard advised in the second
quarter, or continued to advise or completed since June 30, 2018, as
well as Capital Advisory, Sovereign Advisory and Restructuring
assignments, on pages 8 - 11 of this release.
First Half
Financial Advisory operating revenue was a record $804 million for the
first half of 2018, 8% higher than the record first half of 2017.
Lazard advised or continues to advise on a number of significant and
complex M&A transactions announced year to date, including: Express
Scripts' $67 billion sale to Cigna; The Woodbridge Company
in Thomson Reuters' sale of a 55% stake in its Financial & Risk business
to Blackstone; and AkzoNobel's €10.1 billion sale of its
Specialty Chemicals business to Carlyle and GIC.
Asset Management
In the text portion of this press release, we present our Asset
Management results as 1) Management fees and other revenue, and 2)
Incentive fees.
Second Quarter
Asset Management operating revenue was a second-quarter record of $329
million for the second quarter of 2018, 7% higher than the record second
quarter of 2017.
Management fees and other revenue was $317 million for the second
quarter of 2018, 9% higher than the second quarter of 2017, and 2% lower
than the first quarter of 2018.
Average assets under management (AUM) for the second quarter of 2018 was
$245 billion, 10% higher than the second quarter of 2017, and 4% lower
than the first quarter of 2018.
AUM as of June 30, 2018, was $238 billion, up 5% from June 30, 2017, and
down 6% from March 31, 2018. The sequential decrease was primarily
driven by foreign exchange movement, market depreciation, and net
outflows of $3.8 billion.
Incentive fees during the period were $12 million, compared to $17
million for the second quarter of 2017.
First Half
Asset Management operating revenue was a record $659 million for the
first half of 2018, 13% higher than the first half of 2017.
Management fees and other revenue was $641 million for the first half of
2018, 14% higher than the first half of 2017.
Average AUM for the first half of 2018 was $251 billion, 17% higher than
the first half of 2017. Net outflows were $1.4 billion for the first
half of 2018.
Incentive fees were $18 million for the first half of 2018, compared to
$24 million for the first half of 2017.
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.
For the second quarter of 2018, we accrued compensation and benefits
expense1 at an adjusted compensation1 ratio of
55.8%. This resulted in $413 million of adjusted compensation and
benefits expense, compared to $407 million for the second quarter of
2017. The increase reflected higher operating revenue.
For the first half of 2018, adjusted compensation and benefits expense1
was $817 million, compared to $760 million for the first half of
2017, also reflecting higher operating revenue.
We manage our compensation and benefits expense based on awarded
compensation with a consistent deferral policy. We take a disciplined
approach to compensation, and our goal is to maintain a
compensation-to-operating revenue ratio over the cycle in the mid- to
high-50s percentage range on both an awarded and adjusted basis, with
consistent deferral policies.
Non-Compensation Expense
Adjusted non-compensation expense1 for the second quarter of
2018 was $118 million, 2% higher than the second quarter of 2017. The
ratio of adjusted non-compensation expense to operating revenue for the
second quarter of 2018 was 16.0%, compared to 16.1% for the second
quarter of 2017.
Adjusted non-compensation expense1 for the first half of 2018
was $233 million, 4% higher than the first half of 2017. The ratio of
adjusted non-compensation expense to operating revenue for the first
half of 2018 was 15.9%, compared to 16.6% for the first half of 2017.
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 basis1,2, was $53
million for the second quarter of 2018 and $79 million for the first
half of 2018. The effective tax rate on the same basis was 26.9% for the
second quarter and 20.4% for the first half of 2018, compared to 29.6%
and 28.3% for the respective 2017 periods.
CAPITAL MANAGEMENT AND BALANCE SHEET
Our primary capital management goals include managing debt and
returning capital to shareholders through dividends and share
repurchases.
For the second quarter of 2018, Lazard returned $139 million to
shareholders, which included: $53 million in dividends; $78 million in
share repurchases of our Class A common stock; and $8 million in
satisfaction of employee tax obligations in lieu of share issuances upon
vesting of equity grants.
For the first half of 2018, Lazard returned $588 million to
shareholders, which included: $255 million in dividends; $224 million in
share repurchases of our Class A common stock; and $109 million in
satisfaction of employee tax obligations in lieu of share issuances upon
vesting of equity grants.
Year to date, we have repurchased 4.5 million shares at an average price
of $53.69 per share. In line with our objectives, these repurchases have
more than offset the potential dilution from our 2017 year-end
equity-based compensation awards (net of estimated forfeitures and tax
withholding to be paid in cash in lieu of share issuances), which were
granted at an average price of $56.22 per share. As of today, our
remaining share repurchase authorization is $308 million.
On July 25, 2018, Lazard declared a quarterly dividend of $0.44 per
share on its outstanding common stock. The dividend is payable on August
17, 2018, to stockholders of record on August 6, 2018.
Lazard's financial position remains strong. As of June 30, 2018, our
cash and cash equivalents were $845 million, and stockholders' equity
related to Lazard's interests was $1,055 million.
***
CONFERENCE CALL
Lazard will host a conference call at 8:00 a.m. EDT on July 26, 2018, to
discuss the company's financial results for the second quarter and first
half of 2018. The conference call can be accessed via a live audio
webcast available through Lazard's Investor Relations website at www.lazard.com,
or by dialing 1 (800) 239-9838 (U.S. and Canada) or +1 (323) 794-2551
(outside of the U.S. and Canada), 15 minutes prior to the start of the
call.
A replay of the conference call will be available by 10:00 a.m. EDT on
July 26, 2018, via the Lazard Investor Relations website, or by dialing
1 (888) 203-1112 (U.S. and Canada) or +1 (719) 457-0820 (outside of the
U.S. and Canada). The replay access code is 2872646.
ABOUT LAZARD
Lazard, one of the world's preeminent financial advisory and asset
management firms, operates from 43 cities across 27 countries in North
America, Europe, Asia, Australia, Central and South America. With
origins dating to 1848, the firm provides advice on mergers and
acquisitions, strategic matters, restructuring and capital structure,
capital raising and corporate finance, as well as asset management
services to corporations, partnerships, institutions, governments and
individuals. For more information on Lazard, please visit www.lazard.com.
Follow Lazard at @Lazard.
***
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", "could", "would", "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, which are
subject to known and unknown risks, uncertainties and assumptions about
us, may include projections of our future financial performance based on
our growth strategies, business plans and initiatives and anticipated
trends in our business. These statements are only predictions
based on our current expectations and projections about future events.
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
discussed from time to time in our reports on Forms 10-Q and 8-K,
including the following:
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A decline in general economic conditions or the global or regional
financial markets;
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A decline in our revenues, for example due to a decline in overall
mergers and acquisitions (M&A) activity, our share of the M&A market
or our assets under management (AUM);
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Losses caused by financial or other problems experienced by third
parties;
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Losses due to unidentified or unanticipated risks;
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A lack of liquidity, i.e., ready access to funds, for use in our
businesses; and
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Competitive pressure on our businesses and on our ability to retain
and attract employees at current compensation levels.
Although we believe the expectations reflected in the forward-looking
statements are reasonable, we cannot guarantee future results, level of
activity, performance or achievements. 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 after the date of this
release to conform our prior statements to actual results or revised
expectations and we do not intend to do so.
Lazard Ltd is committed to providing timely and accurate information
to the investing public, consistent with our legal and regulatory
obligations. To that end, Lazard and its operating companies use their
websites to convey information about their businesses, including the
anticipated release of quarterly financial results, quarterly financial,
statistical and business-related information, and the posting of updates
of assets under management in various mutual funds, hedge funds and
other investment products managed by Lazard Asset Management LLC and
Lazard Frères Gestion SAS. Investors can link to Lazard and its
operating company websites through www.lazard.com.
***
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 Second-quarter and first-half 2018 results were affected
primarily by the following benefits and charges:
-
Second-quarter and first-half 2018 adjusted results exclude pre-tax
charges of (i) $5.4 million and $12.8 million, respectively, of costs
associated with the implementation of a new Enterprise Resource
Planning (ERP) system, and (ii) $1.0 million and $2.4 million,
respectively, of office space reorganization costs primarily relating
to incremental rent expense and lease abandonment costs. In addition,
second-quarter and first-half 2018 adjusted results exclude a benefit
of $9.3 million of acquisition-related items, primarily reflecting
changes in fair value of contingent consideration associated with
certain business acquisitions. On a U.S. GAAP basis, these items
resulted in a net benefit of $3.9 million, or $0.03 (diluted) per
share, in the second quarter, and a net charge of $2.3 million, or
$0.02 (diluted) per share, for the first half of 2018.
LAZ-EPE
FINANCIAL ADVISORY ASSIGNMENTS
Mergers and Acquisitions (Completed in the second
quarter of 2018)
Among the large, publicly announced M&A Advisory transactions or
assignments completed during the second quarter of 2018 on which Lazard
advised were the following:
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Altice on its $40 billion group reorganization, including the
spin-off of Altice USA and new Altice Europe structure
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Unibail-Rodamco's $24.7 billion acquisition of Westfield
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Great Plains Energy's $14 billion merger of equals with Westar
Energy
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AccorHotels' sale of a 57.8% stake in AccorInvest to a
consortium of investors, valuing AccorInvest at €6.3 billion
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Bacardi's $5.1 billion acquisition of Patrón Tequila
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Sanofi's €3.9 billion acquisition of Ablynx
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NJJ Capital in the €3.5 billion consortium acquisition of eir
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Saint-Gobain on its agreement with Sika and the Burkard family,
including the CHF 3.2 billion acquisition of Schenker-Winkler Holding
and associated transactions
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Imagina Media Audiovisual in Orient Hontai Capital's
acquisition of a majority stake from existing shareholders, valuing
the company at €1.9 billion
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MRH's £1.2 billion combination with MFG
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Reliance Worldwide's £688 million acquisition of John Guest
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Wilson Therapeutics on its SEK 7.1 billion sale to Alexion
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Patricia Industries' SEK 7.0 billion acquisition of Piab Group
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Owens & Minor's $710 million acquisition of Halyard
Health's S&IP business
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Total on the $545 million acquisition of several Gulf of Mexico
assets from Cobalt International Energy, including a partnership with
Statoil for the North Platte assets
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Extant's $525 million sale to TransDigm
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Dover on the spin-off of Apergy
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Rhône's strategic partnership with, and sale of a 30% interest
to, Eurazeo
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Nippon Steel & Sumitomo Metal's acquisition of Ovako Group
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H.C. Starck's sale of its Tantalum and Niobium division to JX
Nippon Mining & Metals
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RugsUSA in Comvest Partners' investment in the company
Mergers and Acquisitions (Announced)
Among the ongoing, large, publicly announced M&A transactions or
assignments on which Lazard advised during or since the 2018 second
quarter, or completed since June 30, 2018, are the following:
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Aetna's $77 billion sale to CVS Health
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Express Scripts' $67 billion sale to Cigna
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The Supervisory Board of innogy in the company's €37.9
billion takeover by E.ON
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The Woodbridge Company in Thomson Reuters' sale of a 55% stake
in its Financial & Risk business to Blackstone, valuing the business
at $20 billion
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AkzoNobel's €10.1 billion sale of its Specialty Chemicals
business to Carlyle and GIC
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Beni Stabili's merger with Covivio, creating a combined entity
with a market capitalization of over €7 billion
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Thales' €5.6 billion acquisition of Gemalto through a
recommended all-cash offer
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WGL Holdings' $6.4 billion sale to AltaGas*
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WestRock's $4.9 billion acquisition of KapStone
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Sky on the sale of its stake in Sky Betting & Gaming ("SBG") as
part of SBG's $4.7 billion sale to The Stars Group*
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Altice on the sale of a 49.99% stake in Starlight France to
KKR, valuing the company at €3.6 billion
-
Quality Care Properties on its $3.9 billion sale to Welltower
in conjunction with the sale of HCR ManorCare to ProMedica
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Daily Mail & General Trust in the £2.5 billion sale of ZPG
to Silver Lake*
-
Total's €2.5 billion acquisition of Direct Energie
-
Genworth Financial's $2.7 billion sale to China Oceanwide
-
Servier's $2.4 billion acquisition of Shire's Oncology business
-
Scotiabank's $2.2 billion acquisition of BBVA's 68% interest in
BBVA Chile*
-
BASF's €1.6 billion acquisition of Solvay's global polyamide
business
-
Archer Daniels Midland's €1.5 billion acquisition of Neovia
-
CDH Investments in the AUD 1.9 billion consortium acquisition
of Sirtex
-
Space4 in its combination with Guala Closures, valuing Guala at
€1.1 billion
-
Telia Company's SEK 9.2 billion acquisition of Bonnier
Broadcasting
-
VEON on the $940 million sale of its tower business in Pakistan
-
Altice on the sale of a 75% stake in Towers of Portugal to a
consortium, valuing the company at €660 million
-
Rolls-Royce's £500 million sale of its Commercial Marine
business to KONGSBERG
-
Asco Industries' $650 million sale to Spirit AeroSystems
-
Liberty House Group's $500 million binding conditional offer to
acquire Aluminium Dunkerque from Rio Tinto
-
Alpha Bank, Eurobank, National Bank of Greece and Piraeus
Bank in the sale of majority stakes in Nireus and Selonda to
Andromeda Group, AMERRA and Mubadala, valuing the combined business at
approximately $500 million
-
Cirsa's sale to Blackstone*
-
Carrefour on the potential investment by Tencent and Yonghui in
Carrefour China and a strategic cooperation agreement with Tencent in
China
-
AviAlliance in the 20-year extension of the Athens
International Airport Concession Agreement
-
Ardian in the sale of its stake in Siaci Saint Honore
-
Selmet's sale to Consolidated Precision Products
-
Investindustrial's acquisition of HTL Strefa
*Transaction completed since June 30, 2018
Capital Advisory
Among the publicly announced Capital Advisory transactions or
assignments on which Lazard advised during or since the second quarter
of 2018 were the following:
-
Special Committee of Independent Directors of VMware in
VMware's declaration of an $11 billion cash dividend in connection
with Dell's Class V tracking stock exchange transaction
-
AXA in the $3.2 billion initial public offering of AXA
Equitable Holdings and concurrent $863 million offering of mandatory
exchangeable bonds
-
Merlin Entertainments in relation to its £600 million revolving
credit facility and $400 million senior notes issuance
-
EF Solare Italia, an equal JV between Enel and F2i, on its €1.0
billion refinancing
-
Infigen Energy on its AUD 605 million corporate loan
-
Carel Industries on its €290 million initial public offering
-
KAEFER Isoliertechnik on its €250 million senior secured notes
offering
-
Rise Broadband on its $205 million refinancing
-
Scorpio Tankers on its $189 million exchange of convertible
notes
-
AKASOL's €118 million initial public offering
Sovereign Advisory
Among the publicly announced Sovereign Advisory assignments on which
Lazard advised during or since the second quarter of 2018 were the
following:
-
The Commonwealth of Australia
-
Southern Gas Corridor CJSC of Azerbaijan
-
Economic Development Board (The Kingdom of Bahrain)
-
Ministry of Finance (The Kingdom of Bahrain)
-
The Democratic Republic of the Congo
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The Republic of the Congo
-
The Republic of Croatia
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The Federal Democratic Republic of Ethiopia
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The Gabonese Republic
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The Hellenic Republic
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The Hashemite Kingdom of Jordan
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SNIM (The Islamic Republic of Mauritania)
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The Republic of Mozambique
-
Nama Holding (Oman)
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Oman Oil Company
-
Belgrade Nikola Tesla Airport (The Republic of Serbia)
-
Eskom Holdings (Republic of South Africa)
-
Banque Ouest Africaine de Développement (Togo)
-
Ukraine and certain sub-sovereign entities
-
NJSC Naftogaz of Ukraine
-
The Republic of Zimbabwe
Restructuring and Debt Advisory Assignments
Restructuring and debtor or creditor advisory assignments completed
during the second quarter of 2018 on which Lazard advised include: Breitburn
Energy Partners, GST AutoLeather, Remington Outdoor, and Takata
in connection with their Chapter 11 bankruptcy restructurings; Community
Health Systems in connection with its liability management and
refinancing transactions; and CGG's refinancing of its first lien
indebtedness.
Notable ongoing restructuring and debtor or creditor advisory
assignments on which Lazard advised during or since the second quarter
of 2018 include: Assured Guaranty in connection with Puerto
Rico's restructuring; Claire's Stores, FirstEnergy Solutions, Nine
West, Seadrill*, and Toys "R" Us in connection with
their Chapter 11 or similar bankruptcy restructurings; lenders to Danaos
on the company's restructuring; Quality Care Properties on
strategic options in relation to HCR ManorCare; and an ad hoc group of
secured noteholders to Tops Markets with regard to the company's
restructuring.
*Assignment completed since June 30, 2018
***
LAZARD LTD
|
UNAUDITED CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
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(U.S. GAAP)
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Three Months Ended
|
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% Change From
|
|
|
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June 30,
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|
March 31,
|
|
|
June 30,
|
|
March 31,
|
|
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June 30,
|
($ in thousands, except per share data)
|
|
|
|
2018
|
|
|
|
|
2018
|
|
|
|
|
2017
|
|
|
2018
|
|
|
2017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total revenue
|
|
|
$
|
771,528
|
|
|
|
$
|
768,205
|
|
|
|
$
|
729,946
|
|
|
0
|
%
|
|
|
6
|
%
|
Interest expense
|
|
|
|
(13,590
|
)
|
|
|
|
(13,507
|
)
|
|
|
|
(12,766
|
)
|
|
|
|
|
|
Net revenue
|
|
|
|
757,938
|
|
|
|
|
754,698
|
|
|
|
|
717,180
|
|
|
0
|
%
|
|
|
6
|
%
|
Operating expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Compensation and benefits
|
|
|
|
416,159
|
|
|
|
|
405,047
|
|
|
|
|
414,612
|
|
|
3
|
%
|
|
|
0
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Occupancy and equipment
|
|
|
|
29,240
|
|
|
|
|
30,238
|
|
|
|
|
30,828
|
|
|
|
|
|
|
Marketing and business development
|
|
|
|
28,228
|
|
|
|
|
25,659
|
|
|
|
|
24,027
|
|
|
|
|
|
|
Technology and information services
|
|
|
|
32,527
|
|
|
|
|
33,252
|
|
|
|
|
32,032
|
|
|
|
|
|
|
Professional services
|
|
|
|
16,714
|
|
|
|
|
12,431
|
|
|
|
|
11,234
|
|
|
|
|
|
|
Fund administration and outsourced services
|
|
|
|
33,227
|
|
|
|
|
35,184
|
|
|
|
|
18,338
|
|
|
|
|
|
|
Amortization and other acquisition-related (benefits) costs
|
|
|
|
(8,483
|
)
|
|
|
|
866
|
|
|
|
|
1,257
|
|
|
|
|
|
|
Other
|
|
|
|
10,386
|
|
|
|
|
26,193
|
|
|
|
|
12,351
|
|
|
|
|
|
|
Subtotal
|
|
|
|
141,839
|
|
|
|
|
163,823
|
|
|
|
|
130,067
|
|
|
(13
|
%)
|
|
|
9
|
%
|
Operating expenses
|
|
|
|
557,998
|
|
|
|
|
568,870
|
|
|
|
|
544,679
|
|
|
(2
|
%)
|
|
|
2
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating income
|
|
|
|
199,940
|
|
|
|
|
185,828
|
|
|
|
|
172,501
|
|
|
8
|
%
|
|
|
16
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Provision for income taxes
|
|
|
|
51,561
|
|
|
|
|
24,167
|
|
|
|
|
51,600
|
|
|
NM
|
|
|
|
(0
|
%)
|
Net income
|
|
|
|
148,379
|
|
|
|
|
161,661
|
|
|
|
|
120,901
|
|
|
(8
|
%)
|
|
|
23
|
%
|
Net income attributable to noncontrolling interests
|
|
|
|
1,416
|
|
|
|
|
1,969
|
|
|
|
|
523
|
|
|
|
|
|
|
Net income attributable to Lazard Ltd
|
|
|
$
|
146,963
|
|
|
|
$
|
159,692
|
|
|
|
$
|
120,378
|
|
|
(8
|
%)
|
|
|
22
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Attributable to Lazard Ltd Common Stockholders:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average shares outstanding:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
|
|
120,306,257
|
|
|
|
|
119,930,106
|
|
|
|
|
122,368,150
|
|
|
0
|
%
|
|
|
(2
|
%)
|
Diluted
|
|
|
|
130,249,054
|
|
|
|
|
132,142,394
|
|
|
|
|
132,139,616
|
|
|
(1
|
%)
|
|
|
(1
|
%)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss) per share:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
|
$
|
1.22
|
|
|
|
$
|
1.33
|
|
|
|
$
|
0.98
|
|
|
(8
|
%)
|
|
|
24
|
%
|
Diluted
|
|
|
$
|
1.13
|
|
|
|
$
|
1.21
|
|
|
|
$
|
0.91
|
|
|
(7
|
%)
|
|
|
24
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
LAZARD LTD
|
UNAUDITED CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
|
(U.S. GAAP)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Six Months Ended
|
|
|
|
June 30,
|
|
|
June 30,
|
|
|
|
($ in thousands, except per share data)
|
|
|
|
2018
|
|
|
|
|
2017
|
|
|
|
% Change
|
|
|
|
|
|
|
|
|
|
|
Total revenue
|
|
|
$
|
1,539,733
|
|
|
|
$
|
1,367,366
|
|
|
|
13
|
%
|
Interest expense
|
|
|
|
(27,097
|
)
|
|
|
|
(26,722
|
)
|
|
|
|
Net revenue
|
|
|
|
1,512,636
|
|
|
|
|
1,340,644
|
|
|
|
13
|
%
|
Operating expenses:
|
|
|
|
|
|
|
|
|
|
Compensation and benefits
|
|
|
|
821,206
|
|
|
|
|
776,413
|
|
|
|
6
|
%
|
|
|
|
|
|
|
|
|
|
|
Occupancy and equipment
|
|
|
|
59,478
|
|
|
|
|
58,312
|
|
|
|
|
Marketing and business development
|
|
|
|
53,887
|
|
|
|
|
43,779
|
|
|
|
|
Technology and information services
|
|
|
|
65,779
|
|
|
|
|
56,056
|
|
|
|
|
Professional services
|
|
|
|
29,145
|
|
|
|
|
22,696
|
|
|
|
|
Fund administration and outsourced services
|
|
|
|
68,411
|
|
|
|
|
34,251
|
|
|
|
|
Amortization and other acquisition-related (benefits) costs
|
|
|
|
(7,617
|
)
|
|
|
|
4,831
|
|
|
|
|
Other
|
|
|
|
36,579
|
|
|
|
|
21,608
|
|
|
|
|
Subtotal
|
|
|
|
305,662
|
|
|
|
|
241,533
|
|
|
|
27
|
%
|
Operating expenses
|
|
|
|
1,126,868
|
|
|
|
|
1,017,946
|
|
|
|
11
|
%
|
|
|
|
|
|
|
|
|
|
|
Operating income
|
|
|
|
385,768
|
|
|
|
|
322,698
|
|
|
|
20
|
%
|
|
|
|
|
|
|
|
|
|
|
Provision for income taxes
|
|
|
|
75,728
|
|
|
|
|
91,367
|
|
|
|
(17
|
%)
|
Net income
|
|
|
|
310,040
|
|
|
|
|
231,331
|
|
|
|
34
|
%
|
Net income attributable to noncontrolling interests
|
|
|
|
3,385
|
|
|
|
|
3,400
|
|
|
|
|
Net income attributable to Lazard Ltd
|
|
|
$
|
306,655
|
|
|
|
$
|
227,931
|
|
|
|
35
|
%
|
|
|
|
|
|
|
|
|
|
|
Attributable to Lazard Ltd Common Stockholders:
|
|
|
|
|
|
|
|
|
|
Weighted average shares outstanding:
|
|
|
|
|
|
|
|
|
|
Basic
|
|
|
|
120,118,182
|
|
|
|
|
122,591,656
|
|
|
|
(2
|
%)
|
Diluted
|
|
|
|
131,195,725
|
|
|
|
|
132,414,496
|
|
|
|
(1
|
%)
|
|
|
|
|
|
|
|
|
|
|
Net income per share:
|
|
|
|
|
|
|
|
|
|
Basic
|
|
|
$
|
2.55
|
|
|
|
$
|
1.86
|
|
|
|
37
|
%
|
Diluted
|
|
|
$
|
2.34
|
|
|
|
$
|
1.72
|
|
|
|
36
|
%
|
|
LAZARD LTD
|
UNAUDITED CONDENSED CONSOLIDATED
|
STATEMENT OF FINANCIAL CONDITION
|
(U.S. GAAP)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
June 30,
|
|
|
December 31,
|
($ in thousands)
|
|
|
|
|
|
2018
|
|
|
|
|
2017
|
|
|
|
|
|
|
|
|
|
|
ASSETS
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
|
|
$
|
845,167
|
|
|
|
$
|
1,483,836
|
|
Deposits with banks and short-term investments
|
|
|
|
1,000,662
|
|
|
|
|
935,431
|
|
Cash deposited with clearing organizations and other segregated cash
|
|
|
|
37,089
|
|
|
|
|
35,539
|
|
Receivables
|
|
|
|
|
|
714,397
|
|
|
|
|
571,616
|
|
Investments
|
|
|
|
|
|
505,194
|
|
|
|
|
427,186
|
|
Goodwill and other intangible assets
|
|
|
|
|
382,360
|
|
|
|
|
391,364
|
|
Deferred tax assets
|
|
|
|
|
|
618,455
|
|
|
|
|
650,260
|
|
Other assets
|
|
|
|
|
|
524,668
|
|
|
|
|
433,445
|
|
|
|
|
|
|
|
|
|
|
Total Assets
|
|
|
|
|
$
|
4,627,992
|
|
|
|
$
|
4,928,677
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES & STOCKHOLDERS' EQUITY
|
|
|
|
|
|
|
|
|
|
Liabilities
|
|
|
|
|
|
|
|
|
Deposits and other customer payables
|
|
|
|
$
|
1,055,244
|
|
|
|
$
|
992,338
|
|
Accrued compensation and benefits
|
|
|
|
|
403,495
|
|
|
|
|
593,781
|
|
Senior debt
|
|
|
|
|
|
1,191,277
|
|
|
|
|
1,190,383
|
|
Tax receivable agreement obligation
|
|
|
|
|
277,163
|
|
|
|
|
310,275
|
|
Other liabilities
|
|
|
|
|
|
587,709
|
|
|
|
|
582,995
|
|
Total liabilities
|
|
|
|
|
|
3,514,888
|
|
|
|
|
3,669,772
|
|
|
|
|
|
|
|
|
|
|
Commitments and contingencies
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stockholders' equity
|
|
|
|
|
|
|
|
|
Preferred stock, par value $.01 per share
|
|
|
|
|
-
|
|
|
|
|
-
|
|
Common stock, par value $.01 per share
|
|
|
|
|
1,298
|
|
|
|
|
1,298
|
|
Additional paid-in capital
|
|
|
|
|
|
652,013
|
|
|
|
|
788,140
|
|
Retained earnings
|
|
|
|
|
|
1,092,381
|
|
|
|
|
1,080,413
|
|
Accumulated other comprehensive loss, net of tax
|
|
|
|
(253,499
|
)
|
|
|
|
(232,518
|
)
|
Subtotal
|
|
|
|
|
|
1,492,193
|
|
|
|
|
1,637,333
|
|
Class A common stock held by subsidiaries, at cost
|
|
|
|
(437,031
|
)
|
|
|
|
(437,530
|
)
|
Total Lazard Ltd stockholders' equity
|
|
|
|
|
1,055,162
|
|
|
|
|
1,199,803
|
|
Noncontrolling interests
|
|
|
|
|
|
57,942
|
|
|
|
|
59,102
|
|
Total stockholders' equity
|
|
|
|
|
|
1,113,104
|
|
|
|
|
1,258,905
|
|
|
|
|
|
|
|
|
|
|
Total liabilities and stockholders' equity
|
|
|
|
$
|
4,627,992
|
|
|
|
$
|
4,928,677
|
|
|
|
|
|
|
|
|
|
|
LAZARD LTD
|
SELECTED SUMMARY FINANCIAL INFORMATION (a)
|
(Non-GAAP - unaudited)
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
|
|
|
% Change From
|
|
|
|
June 30,
|
|
|
March 31,
|
|
|
June 30,
|
|
|
March 31,
|
|
|
June 30,
|
($ in thousands, except per share data)
|
|
|
|
2018
|
|
|
|
|
2018
|
|
|
|
|
2017
|
|
|
|
2018
|
|
|
|
2017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenues:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Financial Advisory
|
|
|
$
|
415,006
|
|
|
|
$
|
388,856
|
|
|
|
$
|
410,882
|
|
|
|
7
|
%
|
|
|
1
|
%
|
Asset Management
|
|
|
|
329,409
|
|
|
|
|
329,855
|
|
|
|
|
306,796
|
|
|
|
(0
|
%)
|
|
|
7
|
%
|
Corporate
|
|
|
|
(3,713
|
)
|
|
|
|
5,224
|
|
|
|
|
2,483
|
|
|
|
NM
|
|
|
|
NM
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating revenue (b)
|
|
|
$
|
740,702
|
|
|
|
$
|
723,935
|
|
|
|
$
|
720,161
|
|
|
|
2
|
%
|
|
|
3
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted compensation and benefits expense (c)
|
|
|
$
|
413,312
|
|
|
|
$
|
403,956
|
|
|
|
$
|
406,891
|
|
|
|
2
|
%
|
|
|
2
|
%
|
Ratio of adjusted compensation to operating revenue
|
|
|
|
55.8
|
%
|
|
|
|
55.8
|
%
|
|
|
|
56.5
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-compensation expense (d)
|
|
|
$
|
118,481
|
|
|
|
$
|
114,081
|
|
|
|
$
|
116,111
|
|
|
|
4
|
%
|
|
|
2
|
%
|
Ratio of non-compensation to operating revenue
|
|
|
|
16.0
|
%
|
|
|
|
15.8
|
%
|
|
|
|
16.1
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings from operations (e)
|
|
|
$
|
208,909
|
|
|
|
$
|
205,898
|
|
|
|
$
|
197,159
|
|
|
|
1
|
%
|
|
|
6
|
%
|
Operating margin (f)
|
|
|
|
28.2
|
%
|
|
|
|
28.4
|
%
|
|
|
|
27.4
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted net income (g)
|
|
|
$
|
143,020
|
|
|
|
$
|
165,915
|
|
|
|
$
|
129,840
|
|
|
|
(14
|
%)
|
|
|
10
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted adjusted net income per share
|
|
|
$
|
1.10
|
|
|
|
$
|
1.26
|
|
|
|
$
|
0.98
|
|
|
|
(13
|
%)
|
|
|
12
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted weighted average shares
|
|
|
|
130,249,054
|
|
|
|
|
132,142,394
|
|
|
|
|
132,139,616
|
|
|
|
(1
|
%)
|
|
|
(1
|
%)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Effective tax rate (h)
|
|
|
|
26.9
|
%
|
|
|
|
13.9
|
%
|
|
|
|
29.6
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
This presentation includes 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.
|
|
LAZARD LTD
|
SELECTED SUMMARY FINANCIAL INFORMATION (a)
|
(Non-GAAP - unaudited)
|
|
|
|
|
|
|
|
Six Months Ended
|
|
|
|
June 30,
|
|
|
June 30,
|
|
|
|
($ in thousands, except per share data)
|
|
|
|
2018
|
|
|
|
|
2017
|
|
|
|
% Change
|
|
|
|
|
|
|
|
|
|
|
|
Revenues:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Financial Advisory
|
|
|
$
|
803,862
|
|
|
|
$
|
746,694
|
|
|
|
8
|
%
|
Asset Management
|
|
|
|
659,264
|
|
|
|
|
585,224
|
|
|
|
13
|
%
|
Corporate
|
|
|
|
1,511
|
|
|
|
|
12,677
|
|
|
|
(88
|
%)
|
|
|
|
|
|
|
|
|
|
|
Operating revenue (b)
|
|
|
$
|
1,464,637
|
|
|
|
$
|
1,344,595
|
|
|
|
9
|
%
|
|
|
|
|
|
|
|
|
|
|
Expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted compensation and benefits expense (c)
|
|
|
$
|
817,268
|
|
|
|
$
|
759,696
|
|
|
|
8
|
%
|
Ratio of adjusted compensation to operating revenue
|
|
|
|
55.8
|
%
|
|
|
|
56.5
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-compensation expense (d)
|
|
|
$
|
232,562
|
|
|
|
$
|
223,581
|
|
|
|
4
|
%
|
Ratio of non-compensation to operating revenue
|
|
|
|
15.9
|
%
|
|
|
|
16.6
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings from operations (e)
|
|
|
$
|
414,807
|
|
|
|
$
|
361,318
|
|
|
|
15
|
%
|
Operating margin (f)
|
|
|
|
28.3
|
%
|
|
|
|
26.9
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted net income (g)
|
|
|
$
|
308,935
|
|
|
|
$
|
239,981
|
|
|
|
29
|
%
|
|
|
|
|
|
|
|
|
|
|
Diluted adjusted net income per share
|
|
|
$
|
2.35
|
|
|
|
$
|
1.81
|
|
|
|
30
|
%
|
|
|
|
|
|
|
|
|
|
|
Diluted weighted average shares
|
|
|
|
131,195,725
|
|
|
|
|
132,414,496
|
|
|
|
(1
|
%)
|
|
|
|
|
|
|
|
|
|
|
Effective tax rate (h)
|
|
|
|
20.4
|
%
|
|
|
|
28.3
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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.
|
|
LAZARD LTD
|
ASSETS UNDER MANAGEMENT ("AUM")
|
(unaudited)
|
($ in millions)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As of
|
|
|
Variance
|
|
|
|
June 30,
|
|
|
March 31,
|
|
|
December 31,
|
|
|
|
|
|
|
|
|
|
|
2018
|
|
|
|
|
2018
|
|
|
|
|
2017
|
|
|
Qtr to Qtr
|
|
|
YTD
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Emerging Markets
|
|
|
$
|
47,207
|
|
|
|
$
|
53,862
|
|
|
|
$
|
52,349
|
|
|
|
(12.4
|
%)
|
|
|
|
(9.8
|
%)
|
Global
|
|
|
|
43,932
|
|
|
|
|
44,403
|
|
|
|
|
43,663
|
|
|
|
(1.1
|
%)
|
|
|
|
0.6
|
%
|
Local
|
|
|
|
40,688
|
|
|
|
|
41,407
|
|
|
|
|
42,650
|
|
|
|
(1.7
|
%)
|
|
|
|
(4.6
|
%)
|
Multi-Regional
|
|
|
|
67,014
|
|
|
|
|
70,405
|
|
|
|
|
70,696
|
|
|
|
(4.8
|
%)
|
|
|
|
(5.2
|
%)
|
Total Equity
|
|
|
|
198,841
|
|
|
|
|
210,077
|
|
|
|
|
209,358
|
|
|
|
(5.3
|
%)
|
|
|
|
(5.0
|
%)
|
Fixed Income:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Emerging Markets
|
|
|
|
16,453
|
|
|
|
|
18,191
|
|
|
|
|
17,320
|
|
|
|
(9.6
|
%)
|
|
|
|
(5.0
|
%)
|
Global
|
|
|
|
4,155
|
|
|
|
|
4,418
|
|
|
|
|
4,109
|
|
|
|
(6.0
|
%)
|
|
|
|
1.1
|
%
|
Local
|
|
|
|
5,306
|
|
|
|
|
5,176
|
|
|
|
|
4,497
|
|
|
|
2.5
|
%
|
|
|
|
18.0
|
%
|
Multi-Regional
|
|
|
|
8,151
|
|
|
|
|
8,871
|
|
|
|
|
9,154
|
|
|
|
(8.1
|
%)
|
|
|
|
(11.0
|
%)
|
Total Fixed Income
|
|
|
|
34,065
|
|
|
|
|
36,656
|
|
|
|
|
35,080
|
|
|
|
(7.1
|
%)
|
|
|
|
(2.9
|
%)
|
Alternative Investments
|
|
|
|
2,764
|
|
|
|
|
2,884
|
|
|
|
|
2,846
|
|
|
|
(4.2
|
%)
|
|
|
|
(2.9
|
%)
|
Private Equity
|
|
|
|
1,458
|
|
|
|
|
1,455
|
|
|
|
|
1,478
|
|
|
|
0.2
|
%
|
|
|
|
(1.4
|
%)
|
Cash Management
|
|
|
|
748
|
|
|
|
|
608
|
|
|
|
|
697
|
|
|
|
23.0
|
%
|
|
|
|
7.3
|
%
|
Total AUM
|
|
|
$
|
237,876
|
|
|
|
$
|
251,680
|
|
|
|
$
|
249,459
|
|
|
|
(5.5
|
%)
|
|
|
|
(4.6
|
%)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended June 30,
|
|
|
|
|
|
Six Months Ended June 30,
|
|
|
|
|
2018
|
|
|
|
|
2017
|
|
|
|
|
|
|
|
2018
|
|
|
|
|
2017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
AUM - Beginning of Period
|
|
|
$
|
251,680
|
|
|
|
$
|
215,178
|
|
|
|
|
|
|
$
|
249,459
|
|
|
|
$
|
197,910
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Flows
|
|
|
|
(3,846
|
)
|
|
|
|
(365
|
)
|
|
|
|
|
|
|
(1,439
|
)
|
|
|
|
2,938
|
|
Market and foreign exchange
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
appreciation (depreciation)
|
|
|
|
(9,958
|
)
|
|
|
|
10,948
|
|
|
|
|
|
|
|
(10,144
|
)
|
|
|
|
24,913
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
AUM - End of Period
|
|
|
$
|
237,876
|
|
|
|
$
|
225,761
|
|
|
|
|
|
|
$
|
237,876
|
|
|
|
$
|
225,761
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Average AUM
|
|
|
$
|
245,127
|
|
|
|
$
|
222,208
|
|
|
|
|
|
|
$
|
250,614
|
|
|
|
$
|
214,495
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
% Change in average AUM
|
|
|
|
10.3
|
%
|
|
|
|
|
|
|
|
|
|
16.8
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Note: Average AUM generally represents the average of the monthly
ending AUM balances for the period.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
LAZARD LTD
|
RECONCILIATION OF U.S. GAAP TO SELECTED SUMMARY FINANCIAL
INFORMATION (a)
|
(unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
|
|
|
|
|
|
Six Months Ended
|
|
|
|
June 30,
|
|
|
March 31,
|
|
|
June 30,
|
|
|
June 30,
|
|
|
June 30,
|
($ in thousands, except per share data)
|
|
|
|
2018
|
|
|
|
|
2018
|
|
|
|
|
2017
|
|
|
|
|
2018
|
|
|
|
|
2017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating Revenue
|
Net revenue - U.S. GAAP Basis
|
|
|
$
|
757,938
|
|
|
|
$
|
754,698
|
|
|
|
$
|
717,180
|
|
|
|
$
|
1,512,636
|
|
|
|
$
|
1,340,644
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjustments:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue related to noncontrolling interests (i)
|
|
|
|
(5,622
|
)
|
|
|
|
(5,217
|
)
|
|
|
|
(3,098
|
)
|
|
|
|
(10,839
|
)
|
|
|
|
(8,040
|
)
|
(Gains) losses related to Lazard Fund Interests ("LFI") and other
similar arrangements
|
|
|
|
499
|
|
|
|
|
1,436
|
|
|
|
|
(5,753
|
)
|
|
|
|
1,935
|
|
|
|
|
(13,106
|
)
|
Distribution fees, reimbursable deal costs and bad debt expense (j)
|
|
|
|
(24,718
|
)
|
|
|
|
(39,514
|
)
|
|
|
|
-
|
|
|
|
|
(64,232
|
)
|
|
|
|
-
|
|
Interest expense
|
|
|
|
12,605
|
|
|
|
|
12,532
|
|
|
|
|
11,832
|
|
|
|
|
25,137
|
|
|
|
|
25,097
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating revenue, as adjusted (b)
|
|
|
$
|
740,702
|
|
|
|
$
|
723,935
|
|
|
|
$
|
720,161
|
|
|
|
$
|
1,464,637
|
|
|
|
$
|
1,344,595
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Compensation and Benefits Expense
|
Compensation and benefits expense - U.S. GAAP Basis
|
|
|
$
|
416,159
|
|
|
|
$
|
405,047
|
|
|
|
$
|
414,612
|
|
|
|
$
|
821,206
|
|
|
|
$
|
776,413
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjustments:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(Charges) credits pertaining to LFI and other similar arrangements
|
|
|
|
499
|
|
|
|
|
1,436
|
|
|
|
|
(5,753
|
)
|
|
|
|
1,935
|
|
|
|
|
(13,106
|
)
|
Compensation related to noncontrolling interests (i)
|
|
|
|
(3,346
|
)
|
|
|
|
(2,527
|
)
|
|
|
|
(1,968
|
)
|
|
|
|
(5,873
|
)
|
|
|
|
(3,611
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Compensation and benefits expense, as adjusted (c)
|
|
|
$
|
413,312
|
|
|
|
$
|
403,956
|
|
|
|
$
|
406,891
|
|
|
|
$
|
817,268
|
|
|
|
$
|
759,696
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-Compensation Expense
|
Non-compensation expense - Subtotal - U.S. GAAP Basis
|
|
|
$
|
141,839
|
|
|
|
$
|
163,823
|
|
|
|
$
|
130,067
|
|
|
|
$
|
305,662
|
|
|
|
$
|
241,533
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjustments:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Expenses associated with ERP system implementation (k)
|
|
|
|
(5,404
|
)
|
|
|
|
(7,426
|
)
|
|
|
|
(8,861
|
)
|
|
|
|
(12,830
|
)
|
|
|
|
(8,861
|
)
|
Expenses related to office space reorganization (l)
|
|
|
|
(1,036
|
)
|
|
|
|
(1,389
|
)
|
|
|
|
(3,161
|
)
|
|
|
|
(2,425
|
)
|
|
|
|
(3,161
|
)
|
Distribution fees, reimbursable deal costs and bad debt expense (j)
|
|
|
|
(24,718
|
)
|
|
|
|
(39,514
|
)
|
|
|
|
-
|
|
|
|
|
(64,232
|
)
|
|
|
|
-
|
|
Amortization and other acquisition-related benefits (costs) (m)
|
|
|
|
8,483
|
|
|
|
|
(866
|
)
|
|
|
|
(1,257
|
)
|
|
|
|
7,617
|
|
|
|
|
(4,831
|
)
|
Non-compensation expense related to noncontrolling interests (i)
|
|
|
|
(683
|
)
|
|
|
|
(547
|
)
|
|
|
|
(677
|
)
|
|
|
|
(1,230
|
)
|
|
|
|
(1,099
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-compensation expense, as adjusted (d)
|
|
|
$
|
118,481
|
|
|
|
$
|
114,081
|
|
|
|
$
|
116,111
|
|
|
|
$
|
232,562
|
|
|
|
$
|
223,581
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pre-Tax Income and Earnings From Operations
|
Operating Income - U.S. GAAP Basis
|
|
|
$
|
199,940
|
|
|
|
$
|
185,828
|
|
|
|
$
|
172,501
|
|
|
|
$
|
385,768
|
|
|
|
$
|
322,698
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjustments:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Expenses associated with ERP system implementation (k)
|
|
|
|
5,404
|
|
|
|
|
7,426
|
|
|
|
|
8,861
|
|
|
|
|
12,830
|
|
|
|
|
8,861
|
|
Expenses related to office space reorganization (l)
|
|
|
|
1,036
|
|
|
|
|
1,389
|
|
|
|
|
3,161
|
|
|
|
|
2,425
|
|
|
|
|
3,161
|
|
Acquisition-related (benefits) costs (m)
|
|
|
|
(9,346
|
)
|
|
|
|
33
|
|
|
|
|
435
|
|
|
|
|
(9,313
|
)
|
|
|
|
3,180
|
|
Net income related to noncontrolling interests (i)
|
|
|
|
(1,416
|
)
|
|
|
|
(1,969
|
)
|
|
|
|
(454
|
)
|
|
|
|
(3,385
|
)
|
|
|
|
(3,331
|
)
|
Pre-tax income, as adjusted
|
|
|
|
195,618
|
|
|
|
|
192,707
|
|
|
|
|
184,504
|
|
|
|
|
388,325
|
|
|
|
|
334,569
|
|
Interest expense
|
|
|
|
12,605
|
|
|
|
|
12,532
|
|
|
|
|
11,832
|
|
|
|
|
25,137
|
|
|
|
|
25,097
|
|
Amortization (LAZ only)
|
|
|
|
686
|
|
|
|
|
659
|
|
|
|
|
823
|
|
|
|
|
1,345
|
|
|
|
|
1,652
|
|
Earnings from operations, as adjusted (e)
|
|
|
$
|
208,909
|
|
|
|
$
|
205,898
|
|
|
|
$
|
197,159
|
|
|
|
$
|
414,807
|
|
|
|
$
|
361,318
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Income (loss) attributable to Lazard Ltd
|
Net income attributable to Lazard Ltd - U.S. GAAP Basis
|
|
|
$
|
146,963
|
|
|
|
$
|
159,692
|
|
|
|
$
|
120,378
|
|
|
|
$
|
306,655
|
|
|
|
$
|
227,931
|
|
Adjustments:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Expenses associated with ERP system implementation (k)
|
|
|
|
5,404
|
|
|
|
|
7,426
|
|
|
|
|
8,861
|
|
|
|
|
12,830
|
|
|
|
|
8,861
|
|
Expenses related to office space reorganization (l)
|
|
|
|
1,036
|
|
|
|
|
1,389
|
|
|
|
|
3,161
|
|
|
|
|
2,425
|
|
|
|
|
3,161
|
|
Acquisition-related (benefits) costs (m)
|
|
|
|
(9,346
|
)
|
|
|
|
33
|
|
|
|
|
435
|
|
|
|
|
(9,313
|
)
|
|
|
|
3,180
|
|
Tax benefit allocated to adjustments
|
|
|
|
(1,037
|
)
|
|
|
|
(2,625
|
)
|
|
|
|
(2,995
|
)
|
|
|
|
(3,662
|
)
|
|
|
|
(3,152
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income, as adjusted (g)
|
|
|
$
|
143,020
|
|
|
|
$
|
165,915
|
|
|
|
$
|
129,840
|
|
|
|
$
|
308,935
|
|
|
|
$
|
239,981
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted net income per share:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
U.S. GAAP Basis
|
|
|
$
|
1.13
|
|
|
|
$
|
1.21
|
|
|
|
$
|
0.91
|
|
|
|
$
|
2.34
|
|
|
|
$
|
1.72
|
|
Non-GAAP Basis, as adjusted
|
|
|
$
|
1.10
|
|
|
|
$
|
1.26
|
|
|
|
$
|
0.98
|
|
|
|
$
|
2.35
|
|
|
|
$
|
1.81
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
This presentation includes 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.
|
|
LAZARD LTD
|
|
|
|
|
Notes to Financial Schedules
|
|
|
|
|
(a)
|
|
Selected Summary Financial Information are non-GAAP measures. Lazard
believes that presenting results and measures on an adjusted basis
in conjunction with U.S. GAAP measures provides the most meaningful
basis for comparison of its operating results across periods.
|
(b)
|
|
A non-GAAP measure which excludes (i) revenue related to
non-controlling interests (see (i) below), (ii) (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, (iii) for the three
and six month periods ended June 30, 2018 and for the three month
period ended March 31, 2018, revenue related to distribution fees
and reimbursable deal costs in accordance with the newly adopted
revenue recognition guidance and bad debt expense (see (j) below),
and (iv) interest expense primarily related to corporate financing
activities.
|
(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, and (ii) compensation and benefits
related to noncontrolling interests (see (i) below).
|
(d)
|
|
A non-GAAP measure which excludes (i) expenses associated with ERP
system implementation (see (k) below), (ii) expenses related to
office space reorganization (see (l) below), (iii) for the three and
six month periods ended June 30, 2018 and for the three month period
ended March 31, 2018, expenses related to distribution fees and
reimbursable deal costs in accordance with the newly adopted revenue
recognition guidance and bad debt expense (see (j) below), (iv)
amortization and other acquisition-related benefits (costs) (see (m)
below), and (v) expenses related to noncontrolling interests (see
(i) below).
|
(e)
|
|
A non-GAAP measure which excludes (i) expenses associated with ERP
system implementation (see (k) below), (ii) expenses related to
office space reorganization (see (l) below), (iii)
acquisition-related (benefits) costs (see (m) below), (iv) net
revenue and expenses related to noncontrolling interests (see (i)
below), and (v) interest expense primarily related to corporate
financing activities.
|
(f)
|
|
Represents earnings from operations as a percentage of operating
revenue, and is a non-GAAP measure.
|
(g)
|
|
A non-GAAP measure which excludes (i) expenses associated with ERP
system implementation (see (k) below), (ii) expenses related to
office space reorganization (see (l) below), and (iii) amortization
and other acquisition-related (benefits) costs, net of tax benefits
(see (m) below).
|
(h)
|
|
Effective tax rate is a non-GAAP measure based upon the U.S. GAAP
rate with adjustments for the tax applicable to the non-GAAP
adjustments to operating income, generally based upon the effective
marginal tax rate in the applicable jurisdiction of the adjustments.
The computation is based on a quotient, the numerator of which is
the provision for income taxes of $52,599, $26,792, and $54,664 for
the three month periods ended June 30, 2018, March 31, 2018, and
June 30, 2017, respectively, $79,391 and $94,588 for the six month
periods ended June 30, 2018 and 2017 and the denominator of which is
pre-tax income of $195,618, $192,707, and $184,504 for the three
month periods ended June 30, 2018, March 31, 2018, and June 30,
2017, respectively, $388,325 and $334,569 for the six month periods
ended June 30, 2018 and 2017.
|
(i)
|
|
Noncontrolling interests include revenue and expenses principally
related to Edgewater, and is a non-GAAP measure.
|
(j)
|
|
Represents certain distribution fees and reimbursable deal costs
paid to third parties for which an equal amount is excluded from
both non-GAAP operating revenue and non-compensation expense,
respectively, and excludes bad debt expense, which represents fees
that are deemed uncollectible.
|
(k)
|
|
Represents expenses associated with Enterprise Resource Planning
(ERP) system implementation.
|
(l)
|
|
Represents incremental rent expense and lease abandonment costs
related to office space reorganization and an onerous lease
provision.
|
(m)
|
|
Primarily represents the change in fair value of the contingent
consideration associated with certain business acquisitions.
|
NM
|
|
Not meaningful
|
|
View source version on businesswire.com: https://www.businesswire.com/news/home/20180726005391/en/
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