Lazard Management Discusses Q2 2012 Results - Earnings Call Transcript

| About: Lazard Ltd. (LAZ)

Lazard (NYSE:LAZ)

Q2 2012 Earnings Call

July 26, 2012 8:00 am ET


Judi Frost Mackey - Spokeswoman

Kenneth M. Jacobs - Chief Executive Officer and Director

Matthieu Bucaille - Chief Financial Officer


Howard Chen - Crédit Suisse AG, Research Division

Joel Jeffrey - Keefe, Bruyette, & Woods, Inc., Research Division

Devin Ryan - Sandler O'Neill + Partners, L.P., Research Division

Christoph M. Kotowski - Oppenheimer & Co. Inc., Research Division


Good morning, and welcome to Lazard's Second Quarter and Half-Year 2012 Earnings Conference Call. This call is being recorded. [Operator Instructions] At this time, I would turn the call over to Judi Frost Mackey, Lazard's Director of Global Communications. Please go ahead.

Judi Frost Mackey

Good morning, and thank you for joining our conference call to review Lazard's results for the second quarter and first half of 2012. Hosting the call today are Kenneth Jacobs, Lazard's Chairman and Chief Executive Officer; and Matthieu Bucaille, Chief Financial Officer. A replay of this call will be available on our website beginning today after 1 p.m.

Today's call may contain forward-looking statements. These statements are based on our current expectations about future events and are subject to known and unknown risks, uncertainties and assumptions. There are important factors that could cause our actual results, level of activity, performance or achievements to differ materially from those expressed or implied by the forward-looking statements. These factors include, but are not limited to, those discussed in Lazard's filings with the Securities and Exchange Commission, including our annual report on Form 10-K, quarterly reports on Form 10-Q and current reports on Form 8-K. Lazard assumes no responsibility for the accuracy or completeness of any of these forward-looking statements.

Investors should not rely upon forward-looking statements as predictions of future events. Lazard is under no duty to update any of these forward-looking statements after the date on which they are made. Today's discussion may also include certain non-GAAP financial measures. A description of these non-GAAP financial measures and their reconciliation to the comparable gap measures are contained in our earnings release, which has been issued this morning.

For today's call, we will focus on highlights of our performance. Details of our earnings can be found in our press release issued this morning and in our investor presentation of supplemental information, both of which are posted on our website at Ken and Matthieu will be happy to answer your questions following their remarks. Before we start, I would like to announce that Lazard will begin holding a quarterly earnings calls expanding our current schedule of half-year and year-end calls. I will now turn the call over to our Chairman and Chief Executive Officer, Ken Jacobs.

Kenneth M. Jacobs

Good morning. Thank you for joining our call. I'll start with an overview, before Matthieu discusses our financial results. Then I'll return with some perspective on our outlook, and we'll open it up for questions.

6 months into the year, Lazard's revenue performance underscores the strength and stability of our low-risk advice-driven business model.

Our operating revenue in the first half of the year is at a record, despite the weak macroenvironment and slight decline in second quarter revenue.

We remain cautious but are encouraged by trends in both our business. In Financial Advisory, our M&A and Strategic Advisory operating revenue rose 15% in the quarter, 16% in the first half. This is another notable achievement that industry-wide global M&A completions declined significantly in the quarter and first half of the year. We are clearly gaining wallet share.

In Asset Management operating revenue was down 2% sequentially from the first quarter, yet we had $1.1 billion of net inflows in a turbulent market. Our revenue performance reflects 2 primary strengths of Lazard's franchise, our breadth and our global scale.

In Financial Advisory, the breadth of our business means, we don't rely on any one geography or trend. Our results reflect contributions from Sovereign Advisory, Restructuring, Capital Structure Advisory, Debt Advisory and Lazard Middle Market. These all overlap with our traditional M&A business. Relationships formed in one of these areas open lead to transactions in another.

Our global scale was on full display in the second quarter and first half of the year. We advised a Spanish company on the sale of its state in the European satellite company to a Chinese buyer requiring the approvals of governments in France and the U.S. and involving our offices in Beijing, Madrid, Paris and New York.

We advised on the sale of the Chilean toll road owned by a German entity to a Canadian entity involving our offices in New York, Madrid, Santiago and Frankfurt and we advised a European, U.S., Brazilian beer company on its purchase of a Mexican company involving our offices in New York, Monterey, and Sao Paulo. And we are currently advising a Middle Eastern Sovereign wealth fund on a shareholding in an English company in connection with a proposed merger with a Swiss company. This is what sets Lazard apart from our competition.

We're the only independent advisor with a global scale that handles large cross-border transactions covering all industries involving complex balance sheet considerations.

In Asset Management, our breadth in global scale is also a competitive advantage. We have diversified platforms that provide investment solutions to clients of all types around the world.

Asset Management continues to see good RFP activity. We have won significant new mandates this quarter from investors in global, regional and local strategies across asset classes and from all parts of the globe. Despite our strong revenue story, the firm's net income was impacted in the second quarter by legacy compensation costs and by lower 2011 second quarter accruals compared to full year results.

Now I will turn over the call to Matthieu, who will provide more detail on our financial performance.

Matthieu Bucaille

Thank you, Ken, and good morning, everyone. Let me offer some color on our revenue and expenses.

As Ken mentioned, M&A and Strategic Advisory was the biggest contributor to Financial Advisory revenue, with second quarter operating revenue of $195 million, up 15% versus the second quarter of 2011.

Our fees were earned across a growing variety of transactions, including the completion of several major mergers and acquisitions. Medical Health Solutions in its merger with Express Scripts, Northeast Utilities' merger with NSTAR and Google acquisition of Motorola Mobility.

We've also been active in winning new assignments. We're advising on 3 of the top 10 largest global M&A transaction announced in the second quarter 2012.

Anheuser-Busch InBev’s acquisition of the remaining stake in Grupo Modelo, Walgreens’ acquisitions of a 45% stake in Alliance Boots, and Sara Lee's spin off of D.E Master Blenders 1753.

You will find full length of completed transaction and launched transaction on Page 7 through 9 of our earnings press release.

Our Sovereign Advisory business maintained a leading position advising government and sovereign institutions in Europe and throughout the developing world.

Revenue from Capital Markets and Other Advisory declined in the second quarter, primarily due to lower corporate finance activity in challenging markets conditions. Restructuring revenue also declined in the quarter consistent with the industry-wide decline of corporate restructuring activities.

But we continue to be active in many of the most notable restructuring, such as Allied

Pilots Association with respect to American Airlines,Eastman Kodak, Hostess Brands, and the National Association of Letter Carriers in connection with the U.S. Postal Service restructuring.

In Asset Management, as Ken pointed out, we currently have good momentum. We ended the quarter with Assets Under Management of $148 billion, up 5% since the start of the year.

Average AUM for the second quarter was essentially unchanged from the full year average of 2011. This positions us well for fee growth going forward.

On a sequential basis, our management fees decreased 2% in line with the change in the U.S. Compared to the second quarter of 2011, the decrease was 12% and reflects both the decline in capital market over the period, as well as to a lesser extent a slight shift in the mix of our Asset Under Management. Our solid investment performance contributed to the $1.1 billion of net inflows for the second quarter. This was primarily derived from new mandates in global equities, international equities and emerging markets debts of clients worldwide.

Moving on to expenses. First, on compensation. As we have said, we focus on award compensation in managing our business. Award compensation reflects the cost of all pay including deferrals for the year with respect to which it is awarded to the employee.

Our goal is to achieve a compensation ratio over the cycle in the mid-to high-50s percentage range. We are making progress and are confident in our ability to achieve it both on an awarded and adjusted GAAP basis.

For the full year 2012, we are assuming an awarded compensation ratio of approximately 60% compared to approximately 62% in 2011.

For the second quarter 2012, our adjusted GAAP compensation ratio was 62.7%, compared to 62.0% for the full year of 2011 and compared to 58.1% for the second quarter of 2011. This relatively low ratio of 58.1% in last year's second quarter, has impacted the quarterly earnings comparison. Also our second quarter adjusted GAAP compensation ratio reflects deferred compensation awards from 2008.

In the first half of 2012, the amortization expense related to the 2008 grant was $23 million. To give you an idea of its impact, this expense represented 2.4 percentage points of our 62.7% first half 2012 adjusted GAAP compensation ratio.

The 2008 grant is the only one with a vesting period in excess of 3 years. We expect our amortization expense to revert to a lower level after the first quarter of 2013.

The cumulative cost of our legacy compensation issues negatively impacted our earnings in the first half of this year. Although our first half revenue was essentially unchanged, 500 -- $954 million, compared to $949 million, 1 year ago. Our earnings from operations declined by approximately $57 million. This difference was primarily due to the compensation expense I just described. The impact of the 2008 grant on amortization expense was approximately $23 million in the half. The impact of the lower 2011 first-half accruals was approximately 3.5% of our 2011 first-half revenues or $33 million. In aggregate, this equals $56 million or almost all of the $57 million decline in earnings from operations.

Now onto non-compensation expense. Our non-compensation costs in the second quarter were essentially unchanged sequentially from the first quarter. However, they increased approximately $6 million compared to the prior-year period based primarily on higher occupancy costs.

Non-compensation costs, other than occupancy, in aggregate, were essentially unchanged in the second quarter of 2012 compared to the prior year period.

As most of you know, we announced margin target in our shareholder letter last April. To reach this target, we are aggressively pursuing cost initiatives across compensation and non-compensation expenses. We will tell you more about this later in the year. We expect you will see the positive impact reflected in our 2013 results and beyond.

I will now turn the call over to Ken for concluding remarks.

Kenneth M. Jacobs

Thank you, Matthieu. Here is a summary of our outlook. Certainty continues to weigh on the economic recovery. We are encouraged by the trends in both our businesses but we remain cautious. As we've discussed in the past, M&A activity depends on 3 factors: valuations, availability of financing, and confidence.

The first 2 remain relatively strong. Valuations remain attractive, financing and especially relative to organic growth opportunities, financing is generally available to multinational corporations, most of whom have strong balance sheets with ample cash. But confidence continues to be uneven due to chronic uncertainty around Europe and potentially around the U.S. fiscal situation.

However, in a subpar economic environment, many of the multinationals that we work closely with, have limited opportunities for organic growth in developed markets. Growing through acquisitions make sense and it's feasible. We think the M&A cycle will improve in fits and starts but it's generally headed in the right direction.

In the meantime, we're encouraged by our recent activity. We feel we're in an excellent position to weather a choppy M&A market with the breadth of our advisory platform. Our Sovereign Advisory business continues to be active in worldwide assignments especially in Europe and Africa. We see growing opportunities for Restructuring and Debt Advisory in Europe.

Our U.S. Middle Market business had a great first half, reflecting the improved financing environment in the U.S. and global demand for tactical acquisitions. We have leveraged this business through our global network and we've seen significant growth quarter activity here [ph].

In Asset Management, we remain confident that we're well-positioned to benefit from the secular growth of the global Asset Management industry. Our business model emphasize strong local presence around the world, is institutionally oriented and we expect it to benefit from continuing demand for high-quality investment solutions.

New Asset Management activity is reasonable. We see investor interest across all our investment platforms, including local, international, global and emerging market equities, emerging market cap, [ph] as well as fixed income.

In both Financial Advisory and Asset Management, we are built out globally, when macroenvironments improves. We have capacity across industry platforms, industry groups across geographies and across advisory platforms and investment platforms.

But we are not waiting for economic recovery. Lazard is well-positioned for revenue growth. We are outperforming by virtually every measure on the revenue side in a weakened -- in a weak market. Our challenge now is to make the same progress on the cost side. We announced financial targets in our shareholder letter last April, including an operating margin of at least 25% by the year 2014. We have significant cost initiatives under way, which should positively impact 2013 results. We are committed to reaching our targets even at current activity levels.

Meanwhile, we are delivering on our commitment to return cash to shareholders. Since April 2010, dividends have increased 60%. 2010, 2011 and 2012, we have offset all dilution from new RSU grants. 2012, we've returned, already, $243 million in cash to shareholders. And since April of this year, when we announced our target of returning $200 million in surplus cash to shareholders, we have returned approximately of $50 million.

We still have work to do on the expense side. We're confident the expected initiatives we have underway will bear fruit on 2013 and the results will increase shareholder value. In the meantime, we are returning significant cash to shareholders. We have considerable operating leverage in both our businesses as a macroeconomic environment improves. On the revenue side, Lazard is better-positioned than it's ever been with a broad and deep platform, the best people and an unrivaled network of relationships with key decision-makers, corporations, governments and investing institutions around the world. This concludes our remarks. We are now happy to take your questions.

Question-and-Answer Session


[Operator Instructions] And we'll take our first question from Howard Chen with Credit Suisse.

Howard Chen - Crédit Suisse AG, Research Division

Ken, on the Advisory side of the business, you touched a lot on the international breadth of Lazard. Could you speak a little bit more about what you're seeing by region? And your expectations for cross-border outbound M&A?

Kenneth M. Jacobs

Sure. Starting with the U.S., U.S. market has been pretty good for us so far this year, across the breadth of activity, both the large-cap, in recent announcements as well as, particularly, the mid-cap or our Middle Market business. And so I think that's the -- without question, the best market right now for us. But we are seeing a fair amount of cross-border activity interests at least, as you'd expect from multinationals in Europe into the U.S. In part, because of the ability to do deals here. In part because it's the way to enter a large -- get growth -- get activity -- have activity in the market that is potentially growing faster than their home market, and also it's a good entry point oftentimes into the emerging markets. So that's one trend. In the developing world, it's episodic. I mean, it's probably a little bit slower from the macro endpoint as it was a year ago. But for us, we think we've been doing reasonably well. We obviously, have seen a little bit of activity out of China, as I described earlier. And we've also seen a pickup in interest into some of the markets like Africa, Latin America and such. And Europe on the M&A front, for large caps estimate hasn't been horrible but it's a challenging market, because I think it's in Europe where confidence is most at -- is most challenged.

Howard Chen - Crédit Suisse AG, Research Division

Great. That's helpful. And then shifting over to Asset Management. You noted, Matthieu, the return to positive flows and where those came from. But looking forward, I was hoping you could characterize the Asset Management pipeline today and are we seeing any meaningful contribution from some of the newer product complexes, such as emerging market debt or the real estate business?

Matthieu Bucaille

Yes. So the inflows that you've seen during the quarter was apparently we have $1.1 billion net inflows. We have a very -- a broad platform and this is reflective of, in fact, important growth inflows during the quarter across a broad range of products solutions. Among them, I think, you're right, there were some global products such as developing market equities. There were, also in the fixed income side, the emerging market debt. But we also have some good inflows in international legacies.

Howard Chen - Crédit Suisse AG, Research Division

Great. And the final question for me. The 25% operating margin target's fairly strong statement for you and the board. Matthieu, I know you want to leave some of this conversation for later in the year. But I was just hoping you and Ken, could provide a bit more detail on just how you think about the pathway to that 25%? Now how much of that is revenue driven? How much of that is non-comp driven? And how much of that is driven from the fall away from prior year's awards?

Kenneth M. Jacobs

Okay. Look, I think gave a fair amount of detail on our shareholders letter and the Q&A we published in the end of April, about our targets and margins and such. We are -- we've got a whole bunch of initiatives underway on the cost, both on comp and non-comp, to achieve that objective. And I think we'll defer on speaking about it till later this year. The impacts start to be felt in 2013 and we're pretty confident we'll get there.


And we'll take our next question from Joel Jeffrey with KBW.

Joel Jeffrey - Keefe, Bruyette, & Woods, Inc., Research Division

In terms of the contribution from the Sovereign Advisory, can you just talk how much that was during the quarter and do you see this being a bigger piece of your business going forward just given what's going on in the world?

Kenneth M. Jacobs

Look, I think we've never really broken out the specific piece on the Sovereign Advisory. It's mixed into the M&A and strategic advice line. But it's an important part of our business. I think we have a leading market position there. It is a business which historically was a developing world business: Africa, Asia, Latin America. Obviously, over the last few years it's becoming unimportant business for us in Europe and I think as the crisis continues, it will remain an important business for us.

Joel Jeffrey - Keefe, Bruyette, & Woods, Inc., Research Division

Okay, great. And then, touching on the point that Howard had brought up. In terms of the inflows, I mean, you rebounded nicely this quarter and you'd mentioned that RFP activity was up. Is this sort of a turning point for you guys, again, just be back to more consistent inflows in your opinion?

Kenneth M. Jacobs

I think, Joel, look, we have a couple of things going for us in our Asset Management business. First is our performance is good across most of our platforms. Second, is that we have a mix of products which are particularly relevant to the investing universe today, the strength of our platform internationally, the strength of our platform in the emerging markets. So those are 2 good starting points for us. The RFPs -- the increase in RFPs reflect, I think, the strength of our platform and really, the funding of those RFPs and our success on those RFPs in the large part of our function of the macroenvironment and decision making at larger institutions. And I think generally speaking, were pretty confident on the things we control, which are our performance and the relevance of our platforms and really the key here is the funding. But generally, yes, we feel pretty good about where we stand at the moment in terms of the building of the pipeline here.

Joel Jeffrey - Keefe, Bruyette, & Woods, Inc., Research Division

Okay, great. And then just lastly for me, I just want to make sure, I think I heard you correctly. Matthieu, when you talk about the amortization expense rolling off from the 2008 issuance, you said that would occur after the first quarter of 2013?

Matthieu Bucaille

Yes. Because this is when the -- all the vesting of our RFUs takes place during the first quarter. So the addition in amortization that we have from, in particular the 2008 grant, has a full impact of course in 2012. But we'll still have a little bit of an impact in the first months of 2013, which is the reason why we are saying that the overall amortization expense will start decreasing after that time.

Joel Jeffrey - Keefe, Bruyette, & Woods, Inc., Research Division

So that 54 -- or 50 some-odd million dollars worth of difference of amortization costs will be spread over the last 3 quarters of 2013?

Matthieu Bucaille

No, no. The increase in the amortization is mainly related to 2008 grants. The 2008 grants impact on our first half is $23 million. For the full year of 2012, it should be around $40 million. And then in 2013, if you look at the full year of 2013, that would start disappearing. And so, we should see our amortization expense decrease in 2013 versus 2012.

Kenneth M. Jacobs

Matthieu, the first quarter amortization should be about 1/4 of what it is this year, about $10 million next year. Is that correct?

Matthieu Bucaille

Yes, it's probably a little bit lower than that, because it is only 2 months.


And we'll take our next question from Devin Ryan with Sandler O'Neill.

Devin Ryan - Sandler O'Neill + Partners, L.P., Research Division

The advisory revenues looked like they're up about 9% in the first half of this year over last year and it looks like you have a pretty good shot to see Advisory revenues up in 2012 over last year, despite what I think will likely be a down year for Advisory fees and could be the double-digits for the industry. So obviously, that would imply some market share gains. So just want to get some thoughts about how you guys think about your advisory market share? How much do you feel like gaining market share is going to be a function of a shift away from the bullish brackets more broadly? Or do you think it's going to come more just from something more Lazard-specific?

Kenneth M. Jacobs

Okay. A couple of things. First, it's difficult to measure market share in our business. We tend to look at wallet share, as you probably know from our slides, which is what people publish as advisory revenue quarter-by-quarter and over the year. It's imperfect because it's little bit of apples and oranges in terms of what people put in the advisory revenue. This, for us, is probably the best measure that's out there. And you can really see the gain in our wallet share by looking over the past several quarters, last couple of quarters. And you can see the difference between us and the first player, or the second or third players, has really narrowed over the course of the last several periods. So that's a great sign. Second, look, I think this is a function really of a couple of things, our share gains. One is I think we've got an unparalleled network of relationships, which we really make available to our clients, with corporations and governments and investing institutions around the world. And that's really the competitive advantage that Lazard brings, compared to anyone else. I mean, that network is probably equal to or as good or better than any of the large firms and clearly much larger and much more developed than some of the smaller -- than the smaller firms. So that's #1. Number two is the demand for independent advice -- great independent advice is probably higher today than it's ever been. I think that's evident, particularly, in more complex situations, which we have. We are obviously -- there are many today. And that's something that we excel at. And then third is that sheer focus that comes from the stability of a platform like Lazard, and I think the inherent strength of our business model compared to some of the large firms. So you add those 3 things up and I think you really -- that is why we appear to be doing so well on the market share gains.

Devin Ryan - Sandler O'Neill + Partners, L.P., Research Division

Okay, great. And then just secondly within Asset Management. I know that looking at an average field doesn't tell the whole story. But just looking where AUM end of the quarter and even on an average basis relative to the management fees in the quarter. Management fees were a bit softer than I would have thought just given that level of assets so my question is, am I reading too much into that or are you guys seeing maybe some fee pressure on some of your products or is it more of a change in fee structure?

Kenneth M. Jacobs

I think it's probably -- I wouldn't read too much into it but if there's anything to read into it, it's like mix issues which is if you have our larger -- our higher fee products losing a little bit of AUM, and relatively speaking it's going to have a little bit more impact on revenue than if the lower fee products lose AUM, and that's essentially the difference for the quarter.

Devin Ryan - Sandler O'Neill + Partners, L.P., Research Division

Okay, great. And, actually, just lastly, just like to get just a quick thought on the hiring outlook, what are you guys seeing today? What's your appetite? And what is the environment currently look like?

Kenneth M. Jacobs

Yes. We're very comfortable with it -- I mean, we view ourselves at scale at this point. We don't really need to add any additional headcount to really take advantage of any upturn in the macroeconomic environment. I mean, I think if you look at Lazard, we're essentially -- I mean, on the Financial Advisory side, we feel we've got a reasonably built out platform across all important geographies, industry groups and really capabilities. And so for us, it's really -- if we see something that allows us to upgrade on a basis which is economic, we'll consider it. But otherwise, we're pretty cautious on hiring right now. On the Asset Management side, if we see the right opportunity in platform, we'll execute on it. But again, I think we're pretty comfortable with being able to grow both businesses organically and take advantage of the improvement in the macroenvironment, to really grow the revenue line.


[Operator Instructions] And we'll go next to Chris Kotowski with Oppenheimer.

Christoph M. Kotowski - Oppenheimer & Co. Inc., Research Division

You have a lot of feet on the ground in Europe, so I'm just curious on your perspective. I mean, this has been going on for 2 years now. And if we assume there is no easy fix in that, we're on unsettled environment for another 2 or 3 years. I guess first of all, is there a cumulative toll on the large corporates there? Or is this a process where, what doesn't kill them makes them stronger, and that they're rationalizing more and more? That's the first question. And then secondly, I mean, if we do assume this goes on for another 2 or 3 years, what kind of activity should we be seeing? Should we be seeing in-market mergers of equal, should we be seeing sales to private equity firms? Or would it just lead to a dearth of activity?

Kenneth M. Jacobs

It's a broad question. So let me -- it's just a sort of a macro question not a Lazard-specific question. So let me kind of go at it and try to narrow it a little bit. In terms of the large multinationals in Europe, they're not so different from the large multinationals in the U.S. and that large portion of their businesses are located in the United States or the developing world. And so -- and their home market in many instances are less important to them than they are, there business outside of their home markets. So I think you have to think of many of these companies in the same perspective you would think about U.S. multinationals. So in some respect, they may not be all -- the impact of the global crisis to the financial crisis in Europe is -- may not be all that different from the way it affects a multinational in the U.S. So that's one observation. I think the acquisition activity you're going to see in Europe by these multinationals will probably also -- will probably be a bit more geared towards the U.S. and the developing world as opposed to other acquisitions in Europe. That's probably a trend, which will unfold and has actually started already. I think the challenge in Europe is that the midsize, smaller companies who don't have access to the financing that the larger companies do and that also don't have as much of the global footprint. There, I think you'll see, more consolidation perhaps in market and perhaps even some consolidation coming from outside of Europe. That is in particular on the consumer branded area you could see activity coming from Asia to Europe. And you've seen actually some activity from the U.S. gear up on midsized companies because of a specific position or needs they get in a product or in another geographies. So it's hard to generalize, but I think the multinationals in Europe will probably behave very similar to multinationals in the U.S. The small or midsize companies will probably a little bit more challenged.

Christoph M. Kotowski - Oppenheimer & Co. Inc., Research Division

Okay. And then a Lazard-specific question. You had the shareholder returns of $243 million in the first 6 months against net income of $78 million. And your cash position had historically run roughly 1:1 with your debt position and now it's like $750 million against a debt of about $1 billion. So what -- how do you look at the balance sheet? And where do you think the limitations on returns to shareholders are from here? Or what kind of balance sheet ratios should we be looking at and that you'd like to maintain?

Kenneth M. Jacobs

Okay. So just a couple of quick comments on that. First, again, looking in our balance sheet is always tough because it's a bit seasonal. The first quarter of the year, first half of the year reflects the payment of compensation, related to last year. And then it builds up, and then cash builds up over the course of the year, so I'm not sure the $700 million is a good reflection of the average of the outcome for the year. That's one observation. The second is we're committed -- we've already returned the $243 million of capital, part of that is the offset of the RSU dilution, part of it is dividend and a part of it is additional return of capital to shareholders for repurchases. As we stated in our shareholder letter, we're committed to -- there's probably about $200 million we identified of surplus cash on the balance sheet, which we felt we should return to shareholders by 2013. And we've -- we've already done $50 million of that and we're committed to getting the next $150 million done over the next period of time.


And at this time, I'm showing no additional questions in queue.

Kenneth M. Jacobs

Great. Thank you.

Matthieu Bucaille

Thank you very much.


And ladies and gentlemen, that does conclude today's Lazard conference call. Thank you for your participation.

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