| 13. | MEMBERS’ EQUITY |
Issuance of Class A Common Shares—During the year ended December 31, 2011, the Company issued an aggregate of 2,434,561 shares of Class A common stock and delivered 3,515,362 shares from Class A common stock held by its subsidiaries in connection with the LAM Merger (as described in Note 12 of Notes to Consolidated Financial Statements) and certain prior year business acquisitions.
Lazard Group Distributions—As previously described, Lazard Group’s common membership interests are held by subsidiaries of Lazard Ltd and by LAZ-MD Holdings. Pursuant to provisions of the Operating Agreement, Lazard Group distributions in respect of its common membership interests are allocated to the holders of such interests on a pro rata basis. Such distributions represent amounts necessary to fund (i) any dividends Lazard Ltd may declare on its Class A common stock and (ii) tax distributions in respect of income taxes that Lazard Ltd’s subsidiaries and the members of LAZ-MD Holdings incur as a result of holding Lazard Group common membership interests.
During the years ended December 31, 2013, 2012 and 2011, Lazard Group distributed the following amounts to LAZ-MD Holdings and the subsidiaries of Lazard Ltd:
| Year Ended December 31, | ||||||||||||
| 2013 | 2012 | 2011 | ||||||||||
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Tax distributions: |
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LAZ-MD Holdings |
$ | 80 | $ | – | $ | 699 | ||||||
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Subsidiaries of Lazard Ltd |
2,896 | – | 16,800 | |||||||||
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| $ | 2,976 | $ | – | $ | 17,499 | |||||||
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Other distributions: |
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LAZ-MD Holdings |
$ | 920 | $ | 5,170 | $ | 4,383 | ||||||
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Subsidiaries of Lazard Ltd |
121,620 | 135,108 | 70,572 | |||||||||
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| $ | 122,540 | $ | 140,278 | $ | 74,955 | |||||||
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Pursuant to Lazard Group’s Operating Agreement, Lazard Group allocates and distributes to its members a substantial portion of its distributable profits in installments, as soon as practicable after the end of each fiscal year. Such installment distributions usually begin in February.
Exchange of Lazard Group Common Membership Interests—During the years ended December 31, 2013, 2012 and 2011, Lazard Ltd issued 839,658, 5,207,112 and 876,814 shares of Class A common stock, respectively, in connection with the exchange of a like number of Lazard Group common membership interests (received from members of LAZ-MD Holdings in exchange for a like number of LAZ-MD Holdings exchangeable interests).
Share Repurchase Program—During the years ended December 31, 2013, 2012 and 2011, the Board of Directors of Lazard Ltd authorized the repurchase of Class A common stock and Lazard Group common membership interests as set forth in the table below.
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Date |
Share Repurchase Authorization |
Expiration | ||||||
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February, 2011 |
$ | 250,000 | December 31, 2012 | |||||
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October, 2011 |
$ | 125,000 | December 31, 2013 | |||||
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April, 2012 |
$ | 125,000 | December 31, 2013 | |||||
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October, 2012 |
$ | 200,000 | December 31, 2014 | |||||
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October, 2013 |
$ | 100,000 | December 31, 2015 | |||||
The Company expects that the share repurchase program, with respect to the Class A common stock, will primarily be used to offset a portion of the shares that have been or will be issued under the Lazard Ltd 2005 Equity Incentive Plan (the “2005 Plan”) and the Lazard Ltd 2008 Incentive Compensation Plan (the “2008 Plan”). Pursuant to such authorizations, purchases have been made in the open market or through privately negotiated transactions. Purchases with respect to such program are set forth in the table below:
| Number of Shares/Common Membership Interests Purchased |
Average Price Per Share/Common Membership Interest |
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Years Ending December 31: |
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2011 |
6,135,189 | $ | 33.39 | |||||
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2012 |
12,817,196 | $ | 27.66 | |||||
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2013 |
3,488,101 | $ | 37.98 | |||||
As a result of the delivery of shares of Class A common stock through December 31, 2013 relating to (i) the settlement of vested restricted stock units (“RSUs”) and deferred stock units (“DSUs”), (ii) the incentive plan share awards of shares of restricted Class A common stock, (iii) the delivery of shares of restricted Class A common stock in exchange for RSUs and (iv) the delivery of shares of Class A common stock in connection with business acquisitions and the LAM Merger, there were 5,744,856 and 10,230,729 shares of Class A common stock held by Lazard Group at December 31, 2013 and 2012, respectively. Such shares of Class A common stock are reported, at cost, as a reduction of members’ equity within the accompanying consolidated statements of financial condition.
As of December 31, 2013, a total of $121,589 of share repurchase capacity remained available under the Company’s share repurchase authorizations, of which $21,589 and $100,000 will expire on December 31, 2014 and 2015, respectively.
Accumulated Other Comprehensive Income (Loss), Net of Tax—The table below reflects the components of AOCI at December 31, 2013 and activity during the year then ended:
| Currency Translation Adjustments |
Interest Rate Hedge |
Employee Benefit Plans |
Total AOCI |
Amount Attributable to Noncontrolling Interests |
Total Lazard Group LLC AOCI |
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Balance, January 1, 2013 |
$ | 38,657 | $ | (2,502 | ) | $ | (128,536 | ) | $ | (92,381 | ) | $ | 12 | $ | (92,393 | ) | ||||||||
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Activity January 1 to December 31, 2013: |
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Other comprehensive loss before reclassifications |
(3,421 | ) | – | (13,500 | ) | (16,921 | ) | (11 | ) | (16,910 | ) | |||||||||||||
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Adjustments for items reclassified to earnings, net of tax |
– | 2,502 | 4,605 | 7,107 | – | 7,107 | ||||||||||||||||||
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Net other
comprehensive |
(3,421 | ) | 2,502 | (8,895 | ) | (9,814 | ) | (11 | ) | (9,803 | ) | |||||||||||||
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Balance, December 31, 2013 |
$ | 35,236 | $ | – | $ | (137,431 | ) | $ | (102,195 | ) | $ | 1 | $ | (102,196 | ) | |||||||||
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The table below reflects adjustments for items reclassified out of AOCI, by component, for the year ended December 31, 2013:
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Amortization of interest rate hedge |
$ | 2,502 | (a) | |
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Amortization relating to employee benefit plans |
6,534 | (b) | ||
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Less – related income taxes |
1,929 | |||
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Net of tax |
4,605 | |||
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Total reclassifications, net of tax |
$ | 7,107 | ||
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| (a) | Included in “interest expense” and “operating expenses—other” in the amounts of $939 and $1,563, respectively, on the consolidated statements of operations. |
| (b) | Included in the computation of net periodic benefit cost (see Note 15 of Notes to Consolidated Financial Statements). Such amount is included in “compensation and benefits” expense on the consolidated statement of operations. |
Noncontrolling Interests—Noncontrolling interests principally represent interests held in Edgewater’s management vehicles that the Company is deemed to control, but does not own.
The tables below summarize net income (loss) attributable to noncontrolling interests for the years ended December 31, 2013, 2012 and 2011 and noncontrolling interests as of December 31, 2013 and 2012 in the Company’s consolidated financial statements:
| Net
Income (Loss) Attributable to Noncontrolling Interests Year Ended December 31, |
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| 2013 | 2012 | 2011 | ||||||||||
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Edgewater |
$ | 3,913 | $ | 3,491 | $ | 4,130 | ||||||
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Other |
(209 | ) | (129 | ) | (452 | ) | ||||||
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Total |
$ | 3,704 | $ | 3,362 | $ | 3,678 | ||||||
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| Noncontrolling Interests As Of December 31, |
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| 2013 | 2012 | |||||||
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Edgewater |
$ | 66,641 | $ |
75,262 |
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Other |
13 | |
646 |
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Total |
$ | 66,654 | $ |
75,908 |
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