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Lazard Ltd Reports Third-Quarter And Nine-Month 2012 Results

Stocks in this article: LAZ

Our goal remains to grow annual awarded compensation expense at a slower rate than revenue growth, and to achieve a compensation-to-revenue ratio over the cycle in the mid- to high-50s percentage range on both an awarded and adjusted GAAP basis 1, with discipline on deferrals.

Non-Compensation Expense

For the third quarter of 2012, non-compensation expense was $95 million, on an adjusted basis 1, 4% lower than the third quarter of 2011. The reduction in non-compensation expense was primarily driven by lower professional fees, as well as lower business development expenses, when compared to the prior-year period. The ratio of non-compensation expense to operating revenue was 21.5% in the quarter, compared to 21.1% in the third quarter of 2011

For the first nine months of 2012, non-compensation expense was $306 million, on an adjusted basis 1, 5% higher than the first nine months of 2011. The increase in non-compensation expense was primarily due to higher occupancy costs and deal-related third-party fees partially offset by lower professional fees. The ratio of non-compensation expense to operating revenue was 21.9%, compared to 20.6% for the first nine months of 2011.

Our goal remains to achieve a non-compensation expense-to-revenue ratio over the cycle of 16% to 20%.


The provision for taxes, on an adjusted basis 1, was $13 million for the third quarter and $38 million for the first nine months of 2012. The effective tax rate on such adjusted basis was 26.7% for the third quarter and 25.2% for the first nine months of 2012, compared to 23.8% and 21.3% for the respective 2011 periods.


Our primary capital management goals include reducing excess cash, managing debt, and increasing returns to shareholders through dividends and share repurchases.

Lazard has returned $432 million 3 to shareholders, year to date. This includes returning $200 million of surplus cash 4 to shareholders in advance of our year-end 2013 target.

We have paid $70 million to our shareholders for dividends declared in January, April and July; have repurchased, as of October 24, 2012, 11.6 million shares of our Class A common stock for $321 million, at an average price of $27.61 per share; and have satisfied employee tax obligations of $41 million in cash in lieu of share issuance upon vesting of equity grants. As announced earlier, approximately 4.5 million of these shares, repurchased at a cost of $120 million, served to directly offset the potential dilution from our 2011 year-end equity-based compensation awards, net of estimated forfeitures and tax withholding to be paid in cash by the Company in lieu of share issuances.

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