Lazard Ltd [LAZ] Filings

10-Q 1 laz-10q_20220930.htm 10-Q laz-10q_20220930.htm

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)


☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2022


☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

001-32492

(Commission File Number)

LAZARD LTD

(Exact name of registrant as specified in its charter)

Bermuda	98-0437848
(State or Other Jurisdiction of Incorporation	(I.R.S. Employer Identification No.)
or Organization)

Clarendon House

2 Church Street

Hamilton HM11, Bermuda

(Address of principal executive offices)

Registrant’s telephone number: (441) 295-1422

Securities registered pursuant to Section 12(b) of the Act:


Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Class A Common Stock	LAZ	New York Stock Exchange

Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the Registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the Registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the Registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer	☒	Accelerated filer	☐
Non-accelerated filer	☐	Smaller reporting company	☐
		Emerging growth company	☐

If the Registrant is an emerging growth company, indicate by check mark if the Registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

As of October 21, 2022, there were 112,766,091 shares of the Registrant’s common stock outstanding (including 26,850,692 shares held by subsidiaries).

TABLE OF CONTENTS

When we use the terms “Lazard”, “we”, “us”, “our” and “the Company”, we mean Lazard Ltd, a company incorporated under the laws of Bermuda, and its subsidiaries, including Lazard Group LLC, a Delaware limited liability company (“Lazard Group”), that is the current holding company for our businesses. Lazard Ltd’s primary operating asset is its indirect ownership as of September 30, 2022 of all of the common membership interests in Lazard Group and its controlling interest in Lazard Group. When we use the term “common stock”, we mean Class A common stock of Lazard Ltd, the only class of common stock of Lazard outstanding.

		Page
Part I. Financial Information

Item 1. Financial Statements (Unaudited)		1

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations		40

Item 3. Quantitative and Qualitative Disclosures About Market Risk		65

Item 4. Controls and Procedures		66

Part II. Other Information

Item 1. Legal Proceedings		67

Item 1A. Risk Factors		67

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds		67

Item 3. Defaults Upon Senior Securities		68

Item 4. Mine Safety Disclosures		68

Item 5. Other Information		68

Item 6. Exhibits		69

Signatures		72

PART I. FINANCIAL INFORMATION

Item 1.

Financial Statements (Unaudited)

		Page

Condensed Consolidated Statements of Financial Condition as of September 30, 2022 and December 31, 2021		2

Condensed Consolidated Statements of Operations for the three month and nine month periods ended September 30, 2022 and 2021		4

Condensed Consolidated Statements of Comprehensive Income for the three month and nine month periods ended September 30, 2022 and 2021		5

Condensed Consolidated Statements of Cash Flows for the nine month periods ended September 30, 2022 and 2021		6

Condensed Consolidated Statements of Changes in Stockholders’ Equity and Redeemable Noncontrolling Interests for the three month and nine month periods ended September 30, 2022 and 2021		7

Notes to Condensed Consolidated Financial Statements		11

LAZARD LTD

CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION

SEPTEMBER 30, 2022 AND DECEMBER 31, 2021

(UNAUDITED)

(dollars in thousands, except for per share data)

	September 30,		December 31,
	2022		2021
ASSETS
Cash and cash equivalents	$	1,000,102	$	1,465,022
Deposits with banks and short-term investments		1,341,514		1,347,544
Restricted cash		621,099		617,448
Receivables (net of allowance for doubtful accounts of $15,320 and $33,957 at September 30, 2022 and December 31, 2021, respectively):
Fees		571,127		669,464
Customers and other		169,268		136,345
		740,395		805,809
Investments		638,960		1,007,339
Property (net of accumulated amortization and depreciation of $370,453 and $367,507 at September 30, 2022 and December 31, 2021, respectively)		218,551		250,005
Operating lease right-of-use assets		420,013		466,054
Goodwill and other intangible assets (net of accumulated amortization of $70,065 and $70,221 at September 30, 2022 and December 31, 2021, respectively)		375,889		379,571
Deferred tax assets		390,543		435,308
Other assets		460,859		373,081
Total Assets	$	6,207,925	$	7,147,181

See notes to condensed consolidated financial statements.

LAZARD LTD

CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION

SEPTEMBER 30, 2022 AND DECEMBER 31, 2021

(UNAUDITED)

(dollars in thousands, except for per share data)

	September 30,			December 31,
	2022			2021
LIABILITIES, REDEEMABLE NONCONTROLLING INTERESTS AND STOCKHOLDERS’ EQUITY
Liabilities:
Deposits and other customer payables	$	1,499,812		$	1,442,701
Accrued compensation and benefits		531,496			972,303
Operating lease liabilities		502,206			552,522
Tax receivable agreement obligation		192,399			213,434
Senior debt		1,687,092			1,685,227
Deferred tax liabilities		8,964			1,827
Other liabilities		530,137			626,203
Total Liabilities		4,952,106			5,494,217
Commitments and contingencies
Redeemable noncontrolling interests		578,495			575,000
STOCKHOLDERS’ EQUITY
Preferred stock, par value $.01 per share; 15,000,000 shares authorized:
Series A - no shares issued and outstanding		-			-
Series B - no shares issued and outstanding		-			-
Common stock:
Class A, par value $.01 per share (500,000,000 shares authorized; 112,766,091 shares issued at September 30, 2022 and December 31, 2021, including shares held by subsidiaries as indicated below)		1,128			1,128
Additional paid-in-capital		126,746			144,729
Retained earnings		1,682,398			1,560,636
Accumulated other comprehensive loss, net of tax		(334,382	)		(223,847	)
		1,475,890			1,482,646
Class A common stock held by subsidiaries, at cost (24,434,236 and 12,046,140 shares at September 30, 2022 and December 31, 2021, respectively)		(915,254	)		(507,426	)
Total Lazard Ltd Stockholders’ Equity		560,636			975,220
Noncontrolling interests		116,688			102,744
Total Stockholders’ Equity		677,324			1,077,964
Total Liabilities, Redeemable Noncontrolling Interests and Stockholders’ Equity	$	6,207,925		$	7,147,181

See notes to condensed consolidated financial statements.

LAZARD LTD

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

FOR THE THREE MONTH AND NINE MONTH PERIODS ENDED SEPTEMBER 30, 2022 AND 2021

(UNAUDITED)

(dollars in thousands, except for per share data)

	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2022		2021		2022			2021
REVENUE
Investment banking and other advisory fees	$	454,255	$	384,821	$	1,249,085		$	1,177,813
Asset management fees		279,040		323,747		863,103			997,162
Interest income		8,148		1,276		13,971			3,910
Other		4,988		27,963		(2,926	)		82,090
Total revenue		746,431		737,807		2,123,233			2,260,975
Interest expense		19,687		20,378		62,051			60,302
Net revenue		726,744		717,429		2,061,182			2,200,673
OPERATING EXPENSES
Compensation and benefits		420,937		419,627		1,181,608			1,336,091
Occupancy and equipment		30,696		31,015		91,344			95,638
Marketing and business development		19,633		9,922		56,429			25,905
Technology and information services		44,579		37,559		124,577			107,003
Professional services		15,665		16,698		48,243			51,642
Fund administration and outsourced services		27,110		34,137		85,364			94,718
Amortization of intangible assets related to acquisitions		15		15		45			45
Other		9,967		13,497		29,864			34,121
Total operating expenses		568,602		562,470		1,617,474			1,745,163
OPERATING INCOME		158,142		154,959		443,708			455,510
Provision for income taxes		35,350		39,446		108,290			124,255
NET INCOME		122,792		115,513		335,418			331,255
LESS - NET INCOME ATTRIBUTABLE TO NONCONTROLLING INTERESTS		16,995		8,304		20,265			13,568
NET INCOME ATTRIBUTABLE TO LAZARD LTD	$	105,797	$	107,209	$	315,153		$	317,687
ATTRIBUTABLE TO LAZARD LTD CLASS A COMMON STOCKHOLDERS:
WEIGHTED AVERAGE SHARES OF COMMON STOCK OUTSTANDING:
Basic		93,275,631		105,415,743		98,161,027			106,484,652
Diluted		98,865,156		112,994,037		103,268,378			114,139,936
NET INCOME PER SHARE OF COMMON STOCK:
Basic	$	1.11	$	1.00	$	3.16		$	2.94
Diluted	$	1.06	$	0.94	$	3.03		$	2.78

See notes to condensed consolidated financial statements.

LAZARD LTD

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

FOR THE THREE MONTH AND NINE MONTH PERIODS ENDED SEPTEMBER 30, 2022 AND 2021

(UNAUDITED)

(dollars in thousands)

	Three Months Ended						Nine Months Ended
	September 30,						September 30,
	2022			2021			2022			2021
NET INCOME	$	122,792		$	115,513		$	335,418		$	331,255
OTHER COMPREHENSIVE INCOME (LOSS), NET OF TAX:
Currency translation adjustments:
Currency translation adjustments before reclassification		(54,439	)		(25,861	)		(134,129	)		(40,102	)
Adjustment for items reclassified to earnings		138			51			265			23,630
Employee benefit plans:
Actuarial gain (net of tax expense of $1,832 and $1,107 for the three months ended September 30, 2022 and 2021, respectively, and $4,436 and $1,496 for the nine months ended September 30, 2022 and 2021, respectively)		8,786			4,442			20,512			4,030
Adjustment for items reclassified to earnings (net of tax expense of $233 and $422 for the three months ended September 30, 2022 and 2021, respectively, and $748 and $1,286 for the nine months ended September 30, 2022 and 2021, respectively)		1,162			1,481			2,816			4,275
OTHER COMPREHENSIVE LOSS, NET OF TAX		(44,353	)		(19,887	)		(110,536	)		(8,167	)
COMPREHENSIVE INCOME		78,439			95,626			224,882			323,088
LESS - COMPREHENSIVE INCOME ATTRIBUTABLE TO NONCONTROLLING INTERESTS		16,995			8,303			20,264			13,567
COMPREHENSIVE INCOME ATTRIBUTABLE TO LAZARD LTD	$	61,444		$	87,323		$	204,618		$	309,521

See notes to condensed consolidated financial statements.

LAZARD LTD

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

FOR THE NINE MONTH PERIODS ENDED SEPTEMBER 30, 2022 AND 2021

(UNAUDITED)

(dollars in thousands)

	Nine Months Ended
	September 30,
	2022			2021
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income	$	335,418		$	331,255
Adjustments to reconcile net income to net cash provided by (used in) operating activities:
Depreciation and amortization of property		31,895			28,315
Noncash lease expense		46,046			52,509
Currency translation adjustment reclassification		265			23,630
Amortization of deferred expenses and share-based incentive compensation		333,100			325,645
Amortization of intangible assets related to acquisitions		45			45
Deferred tax provision		55,725			53,766
(Increase) decrease in operating assets and increase (decrease) in operating liabilities:
Receivables-net		43,233			26,453
Investments		236,275			(360,959	)
Other assets		(72,312	)		(33,946	)
Accrued compensation and benefits and other liabilities		(490,029	)		(33,489	)
Net cash provided by operating activities		519,661			413,224
CASH FLOWS FROM INVESTING ACTIVITIES:
Additions to property		(24,986	)		(25,290	)
Disposals of property		272			699
Other investing activities		(7,500	)		-
Net cash used in investing activities		(32,214	)		(24,591	)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from:
Contributions from noncontrolling interests		388			413
LGAC IPO		-			575,000
Customer deposits, net		281,360			295,837
Payments for:
Distributions to noncontrolling interests		(27,062	)		(7,731	)
Payments under tax receivable agreement		(21,035	)		(10,215	)
Payments of LGAC IPO underwriting fees and other offering costs		-			(9,352	)
Purchase of Class A common stock		(612,175	)		(286,193	)
Class A common stock dividends		(138,914	)		(147,593	)
Settlement of share-based incentive compensation in satisfaction of tax withholding requirements		(61,257

Lazard Ltd [LAZ] Filings
10-Q	[2022-10-31]
10-Q	[2022-08-01]
10-Q	[2022-05-02]
10-K	[2022-02-28]
10-Q	[2021-11-01]
10-Q	[2021-08-03]
10-Q	[2021-05-04]
10-K	[2021-02-26]
10-Q	[2020-11-02]
10-Q	[2020-08-04]
10-Q	[2020-05-04]
10-K	[2020-02-25]
10-Q	[2019-11-05]
10-Q	[2019-07-29]
10-Q	[2019-04-30]
10-K	[2019-02-26]
10-Q	[2018-10-29]
10-Q	[2018-07-31]
10-Q	[2018-04-30]
10-K	[2018-02-27]
10-Q	[2017-10-31]
10-Q	[2017-08-01]
10-Q	[2017-05-01]
10-K	[2017-02-24]
10-Q	[2016-10-28]
10-Q	[2016-08-01]
10-Q	[2016-04-27]
10-K	[2016-02-25]
10-Q	[2015-10-28]
10-Q	[2015-07-27]
10-Q	[2015-04-28]
10-K	[2015-02-27]
10-Q	[2014-10-28]
10-Q	[2014-07-28]
10-Q	[2014-05-06]
10-K	[2014-02-27]
10-Q	[2013-10-29]
10-Q	[2013-07-30]
10-Q	[2013-05-01]
10-K	[2013-02-28]
10-Q	[2012-11-01]
10-Q	[2012-08-01]
10-Q	[2012-05-03]
10-K	[2012-02-29]