(Source: Business Wire)Lazard Ltd (NYSE: LAZ) today announced financial results for the first quarter ended March 31, 2009. Net loss(c) on a fully exchanged basis was $(29.7) million, or $(0.26) per share (diluted), for the first quarter of 2009, excluding a previously announced $62.6 million pre-tax charge ($56.1 million after-tax) as a result of costs related to staff reductions and realignments, compared to net income of $16.0 million, or $0.14 per share (diluted), for the first quarter of 2008. Including the above charge, net loss on a fully exchanged basis was $(85.8) million, or $(0.74) per share (diluted), for the first quarter of 2009.

On a U.S. GAAP basis, which is before exchange of exchangeable interests and includes the first-quarter pre-tax charge, the net loss was $(53.5) million, or $(0.77) per share (diluted), for the first quarter of 2009, compared to net income of $7.8 million or $0.14 per share (diluted) for the first quarter of 2008.

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

Comments

"This obviously continues to be a tumultuous environment which impacts the timing and level of our revenue," said Bruce Wasserstein, Chairman and Chief Executive Officer of Lazard. "However, we believe that this is a time of great opportunity for Lazard. We have accelerated our major global hiring initiative at the senior level. We are reinforcing our areas of strength, investing in areas of growth, developing new products, containing costs and maintaining liquidity, in order to take advantage of current and future opportunities. Our planning is to have significantly improved revenues during the second half of the year."

"Our restructuring practice holds a clear leadership position and assignments are accelerating. Restructuring assignments normally are executed over a six- to eighteen-month period, which will affect the timing of the recognition of restructuring revenues," said Mr. Wasserstein. "We also have maintained a strong market presence in M&A and complex strategic advisory transactions. Our Asset Management business has continued to offer many superior and diverse investment strategies. Although revenues from assets under management necessarily reflect market circumstances, products with superior performance should attract additional assets in the future," said Mr. Wasserstein.

"We have maintained our approach of taking the long view with a focus on our client relationships, as we have for over 160 years," said Mr. Wasserstein. "Our growth drivers for the long term will be the resurgence of M&A, the continual and accelerating need for restructuring, capital structure advisory and capital raising, and the performance of our Asset Management business. I remain confident in the strength of our business model."

"Lazard's financial position remains strong with more than $900 million of cash and marketable equity securities at the end of the quarter, and our businesses generate positive cash flow," said Michael J. Castellano, Chief Financial Officer of Lazard. "Lazard has neither sought nor received any funds under TARP. We do not use our balance sheet to generate business."

"Our backlog for completed transactions seems to be weighted toward the second half of 2009, which has an impact on the timing of our revenue recognition. Our Restructuring practice is well positioned for the growth of corporate defaults, which is expected to be at a record high level by the end of 2009, " added Mr. Castellano. "We are continuing to invest in our businesses for future growth and to focus on containing discretionary spending, as demonstrated by the 24% and 12% reduction in non-compensation costs in this year's first quarter compared to the first and fourth quarters, respectively, of last year."

"We expect that Financial Advisory revenue and operating income will continue to fluctuate from quarter to quarter and that quarterly patterns may differ from year to year. This is why it is always best to measure our results on an annual basis, particularly in uncertain markets like this," said Mr. Castellano. "We remain confident that our intellectual capital approach and the operating leverage of our business model will continue to yield positive long-term results."

"We are asserting our leadership as the world's largest global independent financial advisory firm and are increasing the pace of senior hires," said Steven J. Golub, Vice Chairman of Lazard. "We continued to advise on complex, global M&A and other strategic transactions during and since the first quarter, such as Haas Family Trusts in Rohm and Haas' $18.8 billion sale to Dow Chemical, which closed on April 1," said Mr. Golub. "We also are working on such recently announced assignments as Barclays' $4.4 billion sale of its iShares business, GlaxoSmithKline's up to $3.6 billion acquisition of Stiefel Laboratories, Exelon's $13.7 billion exchange offer for NRG Energy, Caisse Nationale des Caisse d'Epargne's planned merger with Banque Fédérale des Banques Populaires, Pfizer's agreement with GlaxoSmithKline to create a world-leading, specialist HIV company; and Anheuser-Busch InBev's $667 million sale of a 19.9% stake in Tsingtao to Asahi."

"Restructuring continues to accelerate significantly as the default levels and the need for in-court Chapter 11 and out-of-court restructurings continue to grow. Our market-leading restructuring business grew over the past year, as a result of having the industry's largest and most experienced group of restructuring and debt advisory professionals, teamed with our senior industry sector investment bankers across the U.S. and Europe, and in all the major markets around the world," said Mr. Golub. "We expect to see restructuring and capital structure advisory activity continue to grow."

"During and since the first quarter, we have been actively advising on more than 80 restructuring and debt advisory assignments worldwide, advising on 13 of the top 25 US Chapter 11 bankruptcies that were filed since January 2008, and advising the debtors or creditors on nine out of the ten largest North American bankruptcies filed in 2009," said Mr. Golub. "These include advising on such bankruptcies as Lehman Brothers, Charter Communications and Nortel Networks. We also are advising Cemex in its negotiations with creditors and the UAW in negotiating VEBA restructurings with GM, Ford and Chrysler, among other assignments."

"In addition, we are advising governments, governmental agencies or state-owned entities on the impact of the current economic situation on financial institutions in a number of European countries, including, among others, Austria, Belgium, Germany and Sweden," said Mr. Golub. "Our Sovereign Advisory Group is currently advising a number of countries on the restructuring of sovereign debt, including Ecuador, the Ivory Coast and Gabon, and we are advising the German Ministry of Finance on the handling of impaired German bank assets."

Operating Revenue and Operating Income

Operating revenue was $272.9 million for the 2009 first quarter, compared to $341.2 million for the first quarter of 2008. Operating revenue for the first quarter of 2009 includes Corporate revenue of $6.5 million, compared to a negative $39.7 million for the first quarter of 2008.

Operating loss, excluding the previously announced $62.6 million pre-tax charge, was $(28.2) million for the 2009 first quarter, compared to operating income of $18.0 million for the first quarter of 2008. The decrease was primarily attributable to the reduction in operating revenue offset by lower non-compensation expenses.

The Company's quarterly revenue and profits can fluctuate materially depending on the number, size and timing of completed transactions on which it advised, as well as seasonality and other factors. Accordingly, the revenue and profits in any particular quarter may not be indicative of future results. As such, Lazard management believes that annual results are the most meaningful.

Core Operating Business

Lazard's core operating business includes its Financial Advisory and Asset Management businesses. Core operating business revenue was $266.4 million for the first quarter of 2009, compared to $380.9 million for the first quarter of 2008, reflecting lower M&A and Corporate Finance revenues and the effects of market depreciation on asset management fees, offset by increased Restructuring revenue.

Financial Advisory

Financial Advisory operating revenue was $163.5 million for the first quarter of 2009, compared to $212.4 million for the first quarter of 2008.

Lazard's Financial Advisory business of M&A and Strategic Advisory, Restructuring and Corporate Finance encompasses general strategic and transaction-specific advice to public and private companies, governments and other parties, and includes various corporate finance services. Some of our assignments and, therefore, related revenue, are not reflected in publicly available statistical information. Restructuring assignments normally are executed over a six- to eighteen-month period, which will also have an impact on the timing of the recognition of restructuring revenue.

M&A and Strategic Advisory

M&A and Strategic Advisory operating revenue was $96.5 million for the first quarter of 2009, compared to $166.0 million for the first quarter of 2008.

Among the transactions completed during the first quarter of 2009 on which Lazard advised were the following:

Nuclear Liabilities Fund in British Energy's £12.5 billion sale to EDF

Hapag-Lloyd's €4.45 billion sale to a Hamburg-led consortium

Banco Santander's $1.9 billion acquisition of Sovereign Bancorp

Saint-Gobain's €1.5 billion rights issue

Hammerson's £584 million rights issue

Caisse Nationale des Caisses d'Epargne's €540 million acquisition of 23% stake in Crédit Foncier de France from Nexity

Tower Group's Special Committee on the $490 million acquisition of CastlePoint Holdings

Air France-KLM ˜s €323 million strategic partnership with Alitalia

Société Nationale d'Investissement in Zain and KIA fund's MAD2.85 billion investment in Wana

Polaris Acquisition Corp.'s merger with HUGHES Telematics

Otsuka Pharmaceutical's acquisition of Nutrition & Santé

Among the pending, announced M&A transactions on which Lazard advised in the first quarter, continued to advise, or completed since March 31, 2009, are:

Haas Family Trusts in Rohm and Haas' $18.8 billion sale to Dow Chemical

Independent directors of KKR Private Equity Investors, L.P. in its combination with KKR

Acciona's €11.1 billion sale of its 25% stake in Endesa to ENEL

Exelon's $13.7 billion exchange offer for NRG Energy

Shareholders of Essent on the €9.3 billion offer by RWE

Ciba's CHF 6.1 billion sale to BASF

Barclays' $4.4 billion sale of its iShares business

GlaxoSmithKline's up to $3.6 billion acquisition of Stiefel Laboratories

TM International's INR72.9 billion acquisition of a 14.99% stake in Idea Cellular, and Idea Cellular's subsequent merger with Spice Communications

Natixis' €595 million sale of 35% of CACEIS capital to Crédit Agricole

Anheuser-Busch InBev's $667 million sale of a 19.9% stake in Tsingtao to Asahi

PaperlinX's A$790 million sale of Australian Paper to Nippon Paper Group

France Telecom's €238 million acquisition of an additional 9.87% stake in Sonatel from the Senegalese government

Swedish National Debt Office's SEK2,275 million sale of both Carnegie Investment Bank and Max Matthiessen

Pfizer's agreement with GlaxoSmithKline to create a world-leading, specialist HIV company

Kingdom of Belgium in its agreement with BNP Paribas on ownership structure of Fortis Bank Belgium and Fortis Insurance Belgium

Caisse Nationale des Caisses d'Epargne's planned merger with Banque Fédérale des Banques Populaires

Conflicts Committee of the Board of Directors of Magellan Midstream Holdings GP, LLC in Magellan Midstream's capital structure simplification

Clickair's merger with Vueling

Restructuring

Restructuring operating revenue was $60.9 million for the first quarter of 2009, compared to $15.5 million for the first quarter of 2008 and compared to $47.1 million for the fourth quarter of 2008. Restructuring assignments normally are executed over a six- to eighteen-month period, which will affect the timing of the recognition of restructuring revenues.

Restructuring and debt advisory assignments completed during the first quarter of 2009 on which Lazard advised include in-court Chapter 11 bankruptcies for Wellman Inc. and Heartland Automotive, as well as financial restructuring for CIFG, among others.

Among ongoing in-court Chapter 11 bankruptcies, on which Lazard has advised debtors or creditors during or since the first quarter of 2009, are:

Chemicals: Chemtura, Lyondell Chemical Company

Gaming, Entertainment and Hospitality: Midway Games, Tropicana Casino and Resort, Trump Entertainment and Resorts

Professional/Financial Services: BearingPoint, Lehman Brothers

Real Estate/Property Development: LandSource, Tarragon Corp., TOUSA, WCI Communities

Technology/Media/Telecom: Charter Communications, Hawaiian Telcom, Journal Register, Nortel, Tribune Co.

Other industries: Masonite, Pilgrim's Pride, Smurfit-Stone Container, Spectrum Brands

Among other publicly announced restructuring and debt advisory assignments on which Lazard has advised during or since the first quarter of 2009, or were completed after March 31, 2009, are:

Alliance Bank (Kazakhstan) in the restructuring of its existing debt obligations

Belvédère -- advising the FRN noteholder committee

Trustee for the Liquidation of Bernard L. Madoff Investment Securities LLC in connection with the sale of the market making business

BLB Worldwide Holdings in the restructuring of its existing capital structure

Capmark Financial on its debt and capital structure matters

Cemex on its debt restructuring

Countrywide (Apollo) -- advising senior secured noteholders and senior noteholders in the company's restructuring

Ferretti -- advising senior and second lien creditor coordinating committee in Ferretti's restructuring

The Hellenic Republic on the sale of assets of Olympic Airlines and Olympic Airways Services to Marfin Investment Group

Honsel -- advisor to senior creditor's committee in the company's restructuring

INEOS Group on its covenant negotiations

Lehman Brothers Holdings on the sale of Lehman Brothers Banque France to Nomura

Metrovacesa on its restructuring

Morris Publishing in evaluating on strategic options regarding the company's existing capital structure

RH Donnelley in evaluating strategic options regarding the company's existing capital structure

True Temper on exploring alternatives regarding its capital structure

UAW in negotiating VEBA restructurings with GM, Ford and Chrysler

Verenium Corp. in evaluating alternatives with respect to its existing debt structure

Vita Group on its restructuring

Corporate Finance and Other

Corporate Finance and Other operating revenue was $6.1 million for the 2009 first quarter, compared to $30.9 million for the first quarter of 2008. These results were due to declines during the quarter in the value of fund closings by our Private Fund Advisory Group, as well as declines in Equity Capital Markets transactions and private placements by our Capital Markets Group.

Our Equity Capital Markets assignments in the first quarter of 2009 included Mead Johnson Nutrition's initial public offering, and advising Geron and Progress Energy on their follow-on capital raising transactions. We advised CommScope on the issuance of new convertible debentures and the redemption of outstanding convertible debentures. We also advised Pier 1 Imports on the repurchase of its convertible senior notes and Oscient Pharmaceuticals on a maturity date extension for its convertible debt.

Our Alternative Capital Finance Group recently served as placement agent on a Registered Direct Offering (RD) during the first quarter of 2009 for Ariad Pharmaceuticals.

Asset Management

Asset Management operating revenue was $102.9 million for the first quarter of 2009 compared to $168.4 million for the 2008 first quarter.

Management fees were $93.5 million for the first quarter of 2009, compared to $158.0 million for the 2008 first quarter. Revenues in the first quarter of 2009 were primarily impacted by the effect that the declining equity markets had on assets under management.

Incentive fees were $5.4 million for the first quarter of 2009, all of which are attributed to traditional long-only investment strategies. There were no incentive fees in the first quarter of 2008.

Other Asset Management revenue was $4.0 million for the first quarter of 2009 compared to $10.4 million for the 2008 first quarter. The decrease was due primarily to lower interest and commission revenue during the first quarter of 2009.

Assets under management at the end of the first quarter of 2009 were $81.1 billion, representing an 11.0% decrease from the level of assets under management at year-end 2008. The results primarily reflect $2.4 billion of net outflows during the 2009 first quarter, $7.6 billion of market depreciation and the impact of the strengthening U.S. dollar during the first quarter. Average assets under management decreased 37.5% for the first quarter of 2009 to $86.1 billion from $137.8 billion for the first quarter of 2008.

Corporate

Corporate operating revenue was a positive $6.5 million for the first quarter of 2009, compared to a negative $39.7 million during the first quarter of 2008. Revenue in the 2009 first quarter represents primarily investment gains and returns on average cash balances. In the 2008 first quarter, the negative revenue was due to markdowns in our portfolios of debt and equity securities, which offset other investment gains.

Expenses

Compensation and Benefits

Compensation and benefits expense increased 5.2% to $203.5 million for the first quarter of 2009 compared to $193.6 million for the first quarter of 2008. The ratio of compensation and benefits expense to operating revenue was 74.6% for the first quarter of 2009, compared to 56.7% in the first quarter of 2008. Our compensation ratio for the first quarter of 2009 is not necessarily representative of the ratio for the full year. For example, the compensation ratio and expense for each quarter will be impacted by the timing of our actual operating revenue during the year. In addition, the ratio may be impacted by our accelerated global senior-level hiring initiative and competitive considerations to meet our employee retention objectives.

Compensation and benefits expense includes the amortization of restricted stock unit and deferred cash awards. This amortization is determined on a straight-line basis over the vesting periods and not on the basis of revenue recognition, and amounted to $82.8 million and $55.6 million in the first quarter of 2009 and 2008, respectively.

Non-Compensation

Non-compensation expense decreased 24.3% to $73.1 million for the first quarter of 2009, compared to $96.5 million for the first quarter of 2008. The ratio of non-compensation expense to operating revenue was 26.8% for the first quarter of 2009, compared to 28.3% for the first quarter of 2008. Factors contributing to the decrease include lower spending for travel and other business development expenses, consulting and recruiting fees as well as the strengthening of the U. S. dollar versus foreign currencies. In addition, the 2008 period included a $6.0 million provision for costs related to leases on abandoned space.

The percentage of non-compensation expenses to operating revenue can vary from quarter to quarter due to quarterly fluctuation in revenues, among other things. Accordingly, the results in a particular quarter may not be indicative of future results. Lazard management believes that annual results are the most meaningful basis for comparison.

Restructuring Expense

During the first quarter, as previously announced, we redeployed our banking professionals into growth areas and reduced staffing in other areas to further optimize our mix of personnel, create greater efficiency, productivity and shareholder value. As a result, we recorded a pre-tax charge of $62.6 million during the first quarter.