Lazard: Wasserstein stock leads to $86.5M charge

Lazard posts 3rd-qtr profit; to book big 4Q charge as stock units vest after Wasserstein death

• On 11:21 am EDT, Wednesday October 28, 2009

NEW YORK (AP) -- Two weeks after the sudden death of its CEO Bruce Wasserstein, Lazard Inc. said it will record an $86.5 million charge in the fourth quarter to cover restricted stock units granted to him that will vest posthumously.

The boutique investment bank announced the charge Wednesday at the same time it reported a third-quarter profit, buoyed by a surge in restructuring deals. In the year-ago quarter, Lazard posted a big loss amid the market turmoil.

Wasserstein, who died suddenly Oct. 14 at 61, joined Lazard in 2002 after making his name as one of Wall Street's dealmakers.

"Under his leadership, we transformed the firm," said interim CEO Steven J. Golub in a statement. No permanent replacement has been named.

For the quarter ended Sept. 30, Lazard posted net income of $37.4 million, or 41 cents per share, compared with a net loss of $77 million, or $1.17 per share, in the year-ago quarter. The per-share results reflect a doubling of the company's outstanding shares year over year.

Revenue edged up to $411.7 million from $405.8 million.

Analysts polled by Thomson Reuters, on average, expected profit of 37 cents per share, on revenue of $400 million.

Lazard said assets under management in the third quarter rose 6 percent to $120.19 billion, reflecting net inflows of $7.7 billion. In the year-ago quarter, assets under management were $113.29 billion.

M&A and Strategic Advisory operating revenue fell 46 percent to $124.7 million from $230.9 million. The firm has handled or is working on deals for GlaxoSmithKline, BHP Billiton, Kraft Foods, Barclay's, Cisco, Anheuser-Busch InBev, Nortel, Amazon.com and Pfizer, among others.

Restructuring operating revenue nearly quadrupled to $119.1 million from $23.9 million for the 2008 quarter. The company said it hit the quarterly record handling bankruptcies for companies like Lehman Brothers, Eddie Bauer, Trump Entertainment Resorts, Charter Communications, Citadel Broadcasting Group, Pilgrim's Pride, Smurfit-Stone Container and Spectrum Brands.

The company has also handled a host of restructuring and debt advisory deals, including working with the United Auto Workers union in negotiating health benefits restructuring with GM, Ford and Chrysler.

"The economy is beginning to stabilize and CEO confidence is returning," Golub said. The firm expects a gradual increase in traditional M&A activity, but that it will be about four years before prior highs are reached. "We also believe that corporate defaults will remain at high levels, on a more global scale than during the last cycle," he said. "And therefore, we expect that our restructuring business will continue to be very active."

Lazard shares slipped 51 cents to $38.19 Wednesday morning.

(This version CORRECTS to say restricted stock units granted to Wasserstein sted stock options.)

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