Lazard: Second-Quarter And First-Half 2019 Results

The following excerpt is from the company's SEC filing.

$630 million

operating revenue for

second quarter

$237 billion in average

assets under management,

up 4% from first quarter

$603 million of capital

returned to shareholders

in first half of 2019

NEW YORK, July 25, 2019 – Lazard Ltd (NYSE: LAZ) today reported operating revenue

of $630 million for the quarter ended June 30, 2019. Net income, as adjusted

, was $86 million, or $0.73 per share (diluted) for the quarter. On a U.S. GAAP basis, second-quarter 2019 net income was $66 million, or $0.55 per share (diluted).

First-half 2019 net income, as adjusted, was $191 million, or $1.61 per share (diluted). On a U.S. GAAP basis, first-half net income was $163 million, or $1.36 per share (diluted).

“With growing momentum in Financial Advisory and increased average assets under management, we are well positioned for the second half of the year,” said Kenneth M. Jacobs, Chairman and Chief Executive Officer of Lazard. “We are making significant investments in our technology infrastructure to create new and differentiated capabilities and insights for our clients, building a foundation for enhanced growth.”

($ in millions, except

per share data and AUM)

Quarter Ended

Six Months Ended

%’19-’18

Net Income

Per share, diluted

Adjusted

Operating Revenue

Total operating revenue

Asset Management

AUM ($ in billions)

Period End

Average

Media Contact: Judi Frost Mackey

+1 212 632 1428

judi.mackey@lazard.com

Investor Contact: Alexandra Deignan

+1 212 632 6886

alexandra.deignan@lazard.com

Note: Endnotes are on page 6 of this release. A reconciliation of adjusted GAAP to U.S. GAAP begins on page 13.

OPERATING REVENUE

Operating revenue

was $630 million for the second quarter of 2019, and $1,250 million for the first half of 2019, down 15% and 15% for both periods from the respective 2018 periods.

Our Financial Advisory results include M&A Advisory, Capital Advisory, Capital Raising, Restructuring, Shareholder Advisory, Sovereign Advisory, and other strategic advisory work for clients.

For the second quarter of 2019, Financial Advisory operating revenue was $329 million, 21% lower than the second quarter of 2018. The decrease reflected softness in European M&A and global Restructurings.

For the first half of 2019, Financial Advisory operating revenue was $659 million, 18% lower than the first half of 2018.

During and since the second quarter of 2019, Lazard has been engaged in significant and complex M&A transactions and other advisory assignments globally, including:

IBM’s

$34 billion acquisition of Red Hat;

Ingersoll-Rand

in the $15 billion combination of its Industrial segment with Gardner Denver;

Anheuser-Busch InBev’s

AUD 16 billion sale of Carlton & United Breweries to Asahi Group Holdings;

a consortium consisting of KIRKBI, Blackstone and CPPIB

, in its recommended acquisition of Merlin Entertainments, valuing Merlin at £5.9 billion;

MassMutual

in the $5.7 billion strategic combination of Invesco and OppenheimerFunds;

Capgemini’s

€5.0 billion acquisition of Altran;

Gilead’s

R&D collaboration with Galapagos, including $5.1 billion in an upfront payment and an equity investment;

El Paso Electric’s

$4.3 billion sale to Infrastructure Investments Fund; and

Carrefour’s

sale of an 80% interest in Carrefour China to Suning.com, based on an enterprise value of €1.4 billion.

During and since the second quarter of 2019 we have been engaged in a broad range of highly visible and complex restructuring and debt advisory assignments for debtors and creditors, including roles involving: Abengoa; Debenhams; FirstEnergy Solutions; Insys Therapeutics; Neiman Marcus; PG&E; Sears Holdings; Westmoreland Resource Partners; and Weatherford International.

Our Capital and Shareholder Advisory practices remain active globally, advising on a broad range of public and private assignments. Our Sovereign Advisory practice continues to be active advising governments, sovereign and

sub-sovereign

entities across developed and emerging markets.

For a list of publicly announced Financial Advisory transactions on which Lazard advised in the second quarter of 2019, or continued to advise or completed since June 30, 2019, please visit our website at www.lazard.com/businesses/transactions.

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.

For the second quarter of 2019, Asset Management operating revenue was $291 million, 12% lower than the second quarter of 2018. For the first half of 2019, Asset Management operating revenue was $575 million, 13% lower than the first half of 2018.

For the second quarter of 2019, management fees and other revenue was $286 million, 10% lower than the second quarter of 2018, and 1% higher than the first quarter of 2019. For the first half of 2019, management fees and other revenue was $569 million, 11% lower than the first half of 2018.

Average assets under management (AUM) for the second quarter of 2019 was $237 billion, 3% lower than the second quarter of 2018, and 4% higher than the first quarter of 2019. Average AUM for the first half of 2019 was $233 billion, 7% lower than the first half of 2018.

AUM as of June 30, 2019, was $237 billion, approximately even with June 30, 2018, and up 1% from March 31, 2019. The sequential increase was primarily driven by market appreciation and foreign exchange movement, offset by net outflows of $5.2 billion.

For the second quarter of 2019, incentive fees were $5 million, compared to $12 million for the second quarter of 2018. For the first half of 2019, incentive fees were $6 million, compared to $18 million for the first half of 2018.

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 2019, we accrued compensation and benefits expense

at an adjusted compensation

ratio of 57.5%. This resulted in $362 million of adjusted compensation and benefits expense, compared to $413 million for the second quarter of 2018.

For the first half of 2019, adjusted compensation and benefits expense

was $719 million, compared to $817 million for the first half of 2018.

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

high-50s

percentage range on both an awarded and adjusted basis, with consistent deferral policies.

Non-Compensation

Expense

Adjusted

non-compensation

for the second quarter of 2019 was $128 million, 8% higher than the second quarter of 2018. The increase includes our accelerating investments in technology infrastructure. The ratio of adjusted

expense to operating revenue for the second quarter of 2019 was 20.3%, compared to 16.0% for the second quarter of 2018.

Adjusted

for the first half of 2019 was $244 million, 5% higher than the first half of 2018. The ratio of adjusted

expense to operating revenue for the first half of 2019 was 19.5%, compared to 15.9% for the first half of 2018.

Our goal remains to achieve an adjusted

expense-to-operating

revenue ratio over the cycle of 16% to 20%.

TAXES

The provision for taxes, on an adjusted basis

, was $35 million for the second quarter of 2019 and $60 million for the first half of 2019. The effective tax rate on the same basis was 28.8% for the second quarter and 23.9% for the first half of 2019, compared to 26.9% and 20.4% for the respective 2018 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 2019, Lazard returned $217 million to shareholders, which included: $52 million in dividends; $160 million in share repurchases of our Class A common stock; and $5 million in satisfaction of employee tax obligations in lieu of share issuances upon vesting of equity grants.

For the first half of 2019, Lazard returned $603 million to shareholders, which included: $155 million in dividends; $352 million in share repurchases of our Class A common stock; and $96 million in satisfaction of employee tax obligations in lieu of share issuances upon vesting of equity grants.

During the first half of 2019, we repurchased 9.7 million shares at an average price of $36.20 per share, which included 4.5 million shares repurchased in the second quarter at an average price of $35.18 per share. In line with our objectives, these repurchases have more than offset the potential dilution from our 2018

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 $37.69 per share. As of June 30, 2019, our remaining share repurchase authorization was $244 million.

On July 24, 2019, Lazard declared a quarterly dividend of $0.47 per share on its outstanding common stock. The dividend is payable on August 16, 2019, to stockholders of record on August 5, 2019.

Lazard’s financial position remains strong. As of June 30, 2019, our cash and cash equivalents were $919 million, and stockholders’ equity related to Lazard’s interests was $619 million.

CONFERENCE CALL

Lazard will host a conference call at 8:00 a.m. EDT on July 25, 2019, to discuss the company’s financial results for the second quarter and first half of 2019. The conference call can be accessed via a live audio webcast available through Lazard’s Investor Relations website at

, or by dialing 1 (800)

289-0438

(U.S. and Canada) or +1 (323)

794-2423

(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 25, 2019, 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 7242427.

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

. 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

under Item 1A “Risk Factors,” and also discussed from time to time in our reports on Forms

including the following:

A decline in general economic conditions or the global or regional financial markets;

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);

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; and

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

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.

Second-quarter and first-half 2019 adjusted results

exclude

pre-tax

charges of (i) $7.6 million and $10.8 million, respectively, of costs associated with the implementation of a new Enterprise Resource Planning (ERP) system, (ii) $2.3 million and $6.8 million, respectively, relating to a first quarter debt refinancing by Lazard Ltd’s subsidiary Lazard Group LLC; (iii) $4.6 million and $7.7 million, respectively, of acquisition-related costs, primarily reflecting changes in fair value of contingent consideration associated with certain business acquisitions; and (iv) $11.9 million of private equity investment adjustments in the second quarter. On a U.S. GAAP basis, these items resulted in a net charge of $20 million, or $0.17 (diluted) per share, for the second quarter, and a net charge of $28 million, or $0.24 (diluted) per share, for the first half of 2019.

LAZ-EPE

LAZARD LTD

UNAUDITED CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS

(U.S. GAAP)

Three Months Ended

% Change From

($ in thousands, except per share data)

Total revenue

650,801

661,678

771,528

Interest expense

(20,111

(18,004

(13,590

Net revenue

630,690

643,674

757,938

Operating expenses:

Compensation and benefits

372,470

372,254

416,159

Occupancy and equipment

30,953

28,295

29,240

Marketing and business development

28,784

27,984

28,228

Technology and information services

38,825

32,055

32,527

Professional services

19,144

14,217

16,714

Fund administration and outsourced services

28,493

28,930

33,227

Amortization and other acquisition-related (benefits) costs

(8,483

16,806

10,386

Subtotal

156,535

151,757

141,839

529,005

524,011

557,998

Operating income

101,685

119,663

199,940

Provision for income taxes

28,172

23,187

51,561

73,513

96,476

148,379

Net income (loss) attributable to noncontrolling interests

Net income attributable to Lazard Ltd

65,777

97,042

146,963

Attributable to Lazard Ltd Common Stockholders:

Weighted average shares outstanding:

111,981,204

111,944,255

120,306,257

Diluted

116,175,349

120,820,084

130,249,054

Net income per share:

% Change

1,312,479

1,539,733

(38,115

(27,097

1,274,364

1,512,636

744,724

821,206

59,248

59,478

56,768

53,887

70,880

65,779

33,361

29,145

57,423

68,411

(7,617

22,100

36,579

308,292

305,662

1,053,016

1,126,868

221,348

385,768

51,359

75,728

169,989

310,040

Net income attributable to noncontrolling interests

162,819

306,655

111,962,729

120,118,182

118,497,717

131,195,725

STATEMENT OF FINANCIAL CONDITION

December 31,

($ in thousands)

ASSETS

Cash and cash equivalents

919,221

1,246,537

Deposits with banks and short-term investments

1,301,520

1,006,969

Cash deposited with clearing organizations and other segregated cash

39,761

38,379

Receivables

705,114

685,534

575,424

575,148

Goodwill and other intangible assets

374,436

375,318

Operating lease

right-of-use

477,432

Deferred tax assets

589,076

597,776

Other assets

525,489

471,580

Total Assets

5,507,473

4,997,241

LIABILITIES & STOCKHOLDERS’ EQUITY

Liabilities

Deposits and other customer payables

1,480,684

1,154,207

Accrued compensation and benefits

331,636

585,484

Senior debt

1,678,131

1,434,260

Tax receivable agreement obligation

246,953

270,640

Operating lease liabilities

555,324

Other liabilities

496,867

582,557

Total liabilities

4,789,595

4,027,148

Commitments and contingencies

Stockholders’ equity

Preferred stock, par value $.01 per share

Common stock, par value $.01 per share

Additional

paid-in

582,342

750,692

Retained earnings

1,179,901

1,195,563

Accumulated other comprehensive loss, net of tax

(271,984

(273,818

1,491,557

1,673,735

Class A common stock held by subsidiaries, at cost

(872,755

(756,884

Total Lazard Ltd stockholders’ equity

618,802

916,851

Noncontrolling interests

99,076

53,242

Total stockholders’ equity

717,878

970,093

Total liabilities and stockholders’ equity

SELECTED SUMMARY FINANCIAL INFORMATION (a)

(Non-GAAP

- unaudited)

Revenues:

328,814

329,994

415,006

291,269

283,734

329,409

Corporate

(3,713

Operating revenue (b)

629,700

619,990

740,702

Expenses:

Adjusted compensation and benefits expense (c)

362,078

356,494

413,312

Ratio of adjusted compensation to operating revenue

Non-compensation

expense (d)

128,014

115,737

118,481

Earnings:

Earnings from operations (e)

139,608

147,759

208,909

Operating margin (f)

Adjusted net income (g)

85,746

105,537

143,020

Diluted adjusted net income per share

Diluted weighted average shares (h)

117,422,884

120,934,661

Effective tax rate (i)

This presentation includes

non-GAAP

measures. Our

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.

658,808

803,862

575,003

659,264

15,879

1,249,690

1,464,637

718,572

817,268

243,751

232,562

287,367

414,807

191,283

308,935

119,178,774

GAAP

(“non-GAAP”)

measures. Our

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.

ASSETS UNDER MANAGEMENT (“AUM”)

(unaudited)

($ in millions)

Variance

Qtr to Qtr

Equity:

Emerging Markets

42,836

45,112

41,899

Global

47,559

46,788

41,490

40,575

40,083

36,020

Multi-Regional

64,888

63,112

57,589

Total Equity

195,858

195,095

176,998

Fixed Income:

15,692

15,308

14,980

Total Fixed Income

36,589

35,008

32,938

Alternative Investments

Private Equity

Cash Management

Total AUM

237,466

234,979

214,734

Three Months Ended June 30,

Six Months Ended June 30,

AUM - Beginning of Period

251,680

249,459

Net Flows

(5,246

(3,846

(5,208

(1,439

Market and foreign exchange appreciation (depreciation)

(9,958

27,940

(10,144

AUM - End of Period

237,876

236,978

245,127

232,740

250,614

% Change in average AUM

Note: Average AUM generally represents the average of the monthly ending AUM balances for the period.

RECONCILIATION OF U.S. GAAP TO SELECTED SUMMARY FINANCIAL INFORMATION (a)

Net revenue - U.S. GAAP Basis

Adjustments:

Revenue related to noncontrolling interests (j)

(11,819

(2,271

(5,622

(14,090

(10,839

(Gains) losses related to Lazard Fund Interests (“LFI”) and other similar arrangements

(6,484

(13,870

(20,354

Distribution fees, reimbursable deal costs and bad debt expense (k)

(13,357

(24,332

(24,718

(37,689

(64,232

Private Equity investment adjustment (l)

11,948

18,722

16,789

12,605

35,511

25,137

Operating revenue, as adjusted (b)

Compensation and Benefits Expense

Compensation and benefits expense - U.S. GAAP Basis

(Charges) credits pertaining to LFI and other similar arrangements

Compensation related to noncontrolling interests (j)

(3,908

(1,890

(3,346

(5,798

(5,873

Compensation and benefits expense, as adjusted (c)

expense - Subtotal - U.S. GAAP Basis

Expenses associated with ERP system implementation (m)

(7,626

(3,205

(5,404

(10,831

(12,830

Expenses related to office space reorganization (n)

(1,036

(2,425

Amortization and other acquisition-related benefits (costs) (o)

(5,042

(3,470

(8,512

Charges pertaining to Senior Debt refinancing (p)

(2,262

(4,243

(6,505

expense related to noncontrolling interests (j)

(1,004

(1,230

expense, as adjusted (d)

Pre-Tax

Income and Earnings From Operations

Operating Income - U.S. GAAP Basis

Acquisition-related (benefits) costs (o)

(9,346

(9,313

Net (income) loss related to noncontrolling

(7,736

(1,416

(7,170

(3,385

Pre-tax

120,483

130,930

195,618

251,413

388,325

18,636

16,575

35,211

Amortization (LAZ only)

Earnings from operations, as adjusted (e)

Net Income (loss) attributable to Lazard Ltd

Net income attributable to Lazard Ltd - U.S. GAAP Basis

Tax benefit allocated to adjustments

(6,565

(2,206

(1,037

(8,771

(3,662

Net income, as adjusted (g)

Diluted Weighted Average Shares Outstanding

Diluted Weighted Average Shares Outstanding - U.S. GAAP Basis

Adjustment: participating securities

1,247,535

114,577

681,057

Diluted Weighted Average Shares Outstanding, as

adjusted (h)

Diluted net income per share:

Basis, as adjusted

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.

See Notes to Financial Schedules

NON-COMPENSATION

U.S. GAAP TO ADJUSTED (a)

expense - U.S. GAAP Basis:

expense - Adjustments:

Occupancy and equipment (j) (n)

Marketing and business development (j) (k) (m)

(6,493

(3,404

(4,621

(9,897

(8,730

Technology and information services (j) (k) (m)

(7,427

(3,276

(5,258

(10,703

(12,315

Professional services (j) (k) (m)

(2,091

(1,364

(1,898

(3,455

(2,593

Fund administration and outsourced services (k)

(12,549

(15,909

(17,606

(28,458

(36,855

Amortization and other acquisition-related (benefits) costs (o)

Other (j) (k) (m) (p)

(8,564

(1,352

(3,458

(17,659

28,521

23,358

64,541

73,100

expense, as adjusted:

30,928

28,262

28,134

59,190

56,913

22,291

24,580

23,607

46,871

45,157

31,398

28,779

27,269

60,177

53,464

17,053

12,853

14,816

29,906

26,552

15,944

13,021

15,621

28,965

31,556

Amortization and other acquisition-related costs

10,400

18,642

18,920

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.

A non-GAAP measure which excludes (i) revenue related to noncontrolling interests (see (j) 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) revenue related to distribution fees and reimbursable deal costs in accordance with the revenue recognition guidance and bad debt expense (see (k) below), (iv) for the three and six month periods ended June 30, 2019, private equity investment adjustment (see (l) below), (v) interest expense primarily related to corporate financing activities, and (vi) for the three and six month periods ended June 30, 2019 and for the three month period ended March 31, 2019, excess interest expense pertaining to Senior Debt refinancing (see (p) below).

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 (j) below).

A non-GAAP measure which excludes (i) expenses associated with ERP system implementation (see (m) below), (ii) for the three and six month periods ended June 30, 2018, expenses related to office space reorganization (see (n) below), (iii) expenses related to distribution fees and reimbursable deal costs in accordance with the revenue recognition guidance and bad debt expense (see (k) below), (iv) amortization and other acquisition-related benefits (costs) (see (o) below), (v) for the three and six month periods ended June 30, 2019 and for the three month period ended March 31, 2019, charges pertaining to Senior Debt refinancing (see (p) below), and (vi) expenses related to noncontrolling interests (see (j) below).

A non-GAAP measure which excludes (i) expenses associated with ERP system implementation (see (m) below), (ii) for the three and six month periods ended June 30, 2018, expenses related to office space reorganization (see (n) below), (iii) amortization and other acquisition-related (benefits) costs (see (o) below), (iv) for the three and six month periods ended June 30, 2019, private equity investment adjustment (see (l) below), (v) for the three and six month periods ended June 30, 2019 and for the three month period ended March 31, 2019, charges pertaining to Senior Debt refinancing (see (p) below), (vi) net revenue and expenses related to noncontrolling interests (see (j) below), and (vii) interest expense primarily related to corporate financing activities.

Represents earnings from operations as a percentage of operating revenue, and is a non-GAAP measure.

A non-GAAP measure which excludes (i) expenses associated with ERP system implementation (see (m) below), (ii) for the three and six month periods ended June 30, 2018, expenses related to office space reorganization (see (n) below), (iii) amortization and other acquisition-related (benefits) costs (see (o) below), (iv) for the three and six month periods ended June 30, 2019, private equity investment adjustment, (see (l) below), and (v) for the three and six month periods ended June 30, 2019 and for the three month period ended March 31, 2019, charges pertaining to Senior Debt refinancing (see (p) below), net of tax benefits.

A non-GAAP measure which includes for the three and six month periods ended June 30, 2019 and for the three month period ended March 31, 2019, units of the newly established long-term incentive compensation program consisting of profits interest participation rights, which are equity incentive awards that, subject to certain conditions, may be exchanged for shares of our Class A common stock. Profits interest participation rights and other participating securities are excluded from the computation of outstanding stock equivalents for U.S. GAAP net income per share.

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 $34,737, $25,393, and $52,599 for the three month periods ended June 30, 2019, March 31, 2019, and June 30, 2018, respectively, $60,130 and $79,391 for the six month periods ended June 30, 2019 and 2018 and the denominator of which is pre-tax income of $120,483, $130,930, and $195,618 for the three month periods ended June 30, 2019, March 31, 2019, and June 30, 2018, respectively, $251,413 and $388,325 for the six month periods ended June 30, 2019 and 2018.

Noncontrolling interests include revenue and expenses principally related to Edgewater, and is a non-GAAP measure.

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.

Represents write-down of private equity investment to potential transaction value.

Represents expenses associated with Enterprise Resource Planning (ERP) system implementation.

Represents incremental rent expense and lease abandonment costs related to office space reorganization and an onerous lease provision.

Primarily represents the change in fair value of the contingent consideration associated with certain business acquisitions.

The company incurred charges related to the extinguishment of the remaining 4.25% Senior Notes maturing in November 2020. $168 million of the 2020 Notes were redeemed in March 2019 and the remaining $82 million have been redeemed in April 2019. The charges include a pre-tax loss on the extinguishment of $6.5 million and excess interest expense of $0.3 million (due to the period of time between the issuance of the 2029 notes and the settlement of the 2020 notes).

NM Not meaningful

The above information was disclosed in a filing to the SEC. To see the filing, click here.

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Other recent filings from the company include the following:

Lazard Ltd.'s Exec Human Capital & Workplace was just granted 1,380 restricted shares - Nov. 26, 2019
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Lazard Ltd.'s President was just granted 2,528 restricted shares - Nov. 26, 2019

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