Lazard Group LLC | 2013 | FY | 3


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  

Tax distributions:

        

LAZ-MD Holdings

   $ 80       $       $ 699   

Subsidiaries of Lazard Ltd

     2,896                 16,800   
  

 

 

    

 

 

    

 

 

 
   $ 2,976       $       $ 17,499   
  

 

 

    

 

 

    

 

 

 

Other distributions:

        

LAZ-MD Holdings

   $ 920       $ 5,170       $ 4,383   

Subsidiaries of Lazard Ltd

     121,620         135,108         70,572   
  

 

 

    

 

 

    

 

 

 
   $ 122,540       $ 140,278       $ 74,955   
  

 

 

    

 

 

    

 

 

 

 

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.

 

Date

   Share
Repurchase
Authorization
     Expiration  

February, 2011

   $ 250,000         December 31, 2012   

October, 2011

   $ 125,000         December 31, 2013   

April, 2012

   $ 125,000         December 31, 2013   

October, 2012

   $ 200,000         December 31, 2014   

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
 

Years Ending December 31:

     

2011

     6,135,189       $ 33.39   

2012

     12,817,196       $ 27.66   

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
 

Balance, January 1, 2013

  $ 38,657      $ (2,502   $ (128,536   $ (92,381   $ 12      $ (92,393
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Activity January 1 to December 31, 2013:

           

Other comprehensive loss before reclassifications

    (3,421            (13,500     (16,921     (11     (16,910

Adjustments for items reclassified to earnings, net of tax

           2,502        4,605        7,107               7,107   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net other comprehensive
income (loss)

    (3,421     2,502        (8,895     (9,814     (11     (9,803
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Balance, December 31, 2013

  $ 35,236      $      $ (137,431   $ (102,195   $ 1      $ (102,196
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

The table below reflects adjustments for items reclassified out of AOCI, by component, for the year ended December 31, 2013:

 

Amortization of interest rate hedge

   $ 2,502 (a) 
  

 

 

 

Amortization relating to employee benefit plans

     6,534 (b) 

Less – related income taxes

     1,929   
  

 

 

 

Net of tax

     4,605   
  

 

 

 

Total reclassifications, net of tax

   $ 7,107   
  

 

 

 

 

(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,
 
          2013               2012          2011  

Edgewater

   $ 3,913      $ 3,491      $ 4,130   

Other

     (209     (129     (452
  

 

 

   

 

 

   

 

 

 

Total

   $ 3,704      $ 3,362      $ 3,678   
  

 

 

   

 

 

   

 

 

 

 

     Noncontrolling Interests
As Of December 31,
 
     2013      2012  

Edgewater

   $ 66,641       $
75,262
  

Other

     13        
646
  
  

 

 

    

 

 

 

Total

   $ 66,654       $
75,908
  
  

 

 

    

 

 

 

 


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