Lazard Ltd Reports Record Nine-Month and Third-Quarter 2007 Results

Business Wire,  Oct 31, 2007  

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Record nine-month and quarterly Net Income Per Share((a)) (diluted) of $1.72 and $0.73 respectively

Record Assets Under Management (AUM) of $142.1 billion

NEW YORK -- Highlights

* Record nine-month and third-quarter net income of $200.1 million and $83.6 million, respectively, both on a fully exchanged basis((a)), a 33% increase over nine-months 2006 and a 139% increase over third-quarter 2006

* Record nine-month and quarterly operating revenue((b)) of $1,397.2 million and $569.5 million, increases of 29% and 79% over the respective 2006 periods

* Increased Financial Advisory operating revenue by 26% to a record $847.5 million for the first nine months and by 103% to a record quarter of $379.8 million

* Record M&A nine-month and quarterly revenue of $655.8 million and $295.4 million, with 20% and 93% increases over the respective 2006 periods

* Asset Management operating revenue increased to record levels with $486.1 million, a 30% increase, for the first nine months and $177.5 million, a 42% increase, for the third quarter, including record management fees of $430.3 million and $157.4 million in the respective periods

* Achieved net inflows in AUM of $17.5 billion for the first nine months and $3.3 billion in the third quarter

* Completed Financial Advisory strategic acquisitions in Australia and the US middle market

Lazard Ltd (NYSE: LAZ) today announced financial results for the nine months and third quarter ended September 30, 2007. Net income on a fully exchanged basis(a) increased 33% to a record $200.1 million for the first nine months of 2007 from $150.4 million for the first nine months of 2006. Net income per common share (diluted) increased 19% to a record $1.72 for the first nine months of 2007 compared to $1.45 for the first nine months of 2006, reflecting the 13% increase in the weighted average number of shares for the 2007 nine-month period. The increase in shares is primarily due to the issuance of 8.1 million common shares in the December 2006 equity offering and the dilutive effects of the equity securities units and of a convertible note issued in May 2006. Operating income(c) increased 35% to a record $286.0 million for the first nine months of 2007, compared to $212.0 million for the same period in 2006.

Operating revenue(b)increased 29% to a record $1,397.2 million for the first nine months of 2007 compared to $1,079.6 million for the first nine months of 2006, resulting primarily from an increase in completed transactions and other advisory assignments in Financial Advisory in the third quarter, the inclusion of the strategic acquisitions in Australia and the US middle market, and continued growth in Lazard's Asset Management business. Financial Advisory operating revenue increased 26% to a record $847.5 million for the first nine months of 2007, compared to $671.3 million for the first nine months of 2006. This includes a 20% increase in M&A operating revenue to a record $655.8 million in the 2007 nine-month period. Asset Management operating revenue increased 30% during the first nine months of 2007 to a record of $486.1 million, compared to $373.9 million in the first nine months of 2006.

For the third quarter of 2007, net income on a fully exchanged basis increased 139% to $83.6 million, or $0.73 per common share (diluted), a record third quarter, compared to $35.0 million, or $0.34 per common share (diluted) for the third quarter of 2006. Operating income increased 141% to a quarterly record of $118.6 million for the third quarter of 2007, compared to $49.2 million for the third quarter of 2006. Operating revenue for the third quarter of 2007 increased 79% to a quarterly record of $569.5 million compared to $317.6 million for the third quarter of 2006, also resulting primarily from an increase in completed transactions in Financial Advisory and other advisory assignments in the third quarter, the inclusion of the firm's strategic acquisitions in Australia and the US middle market, and continued growth in Lazard's Asset Management business. Financial Advisory operating revenue in the third quarter of 2007 increased 103% to a quarterly record of $379.8 million, compared to $187.1 million in the third quarter of 2006. This includes a 93% increase in M&A operating revenue to a quarterly record of $295.4 million. Asset Management operating revenue increased 42% to a record quarter of $177.5 million, compared to $124.9 million in the third quarter of 2006.

Lazard believes that results assuming full exchange of outstanding exchangeable interests provide the most meaningful basis for comparison among present, historical and future periods.

Before exchange of exchangeable interests, net income increased 70% to a record $95.9 million, or $1.72 per common share (diluted) for the first nine months of 2007, compared to $56.4 million or $1.45 per common share (diluted) for the first nine months of 2006. The 70% increase exceeded the 33% increase in net income on a fully exchanged basis as the minority interest declined as a result of the secondary component of the December 2006 equity offering. Before exchange of exchangeable interests, net income increased 206% to a quarterly record of $40.3 million for the 2007 third quarter, or $0.73 per common share (diluted), compared to $13.2 million, or $0.34 per common share (diluted) for the 2006 third quarter.