EXHIBIT 12.1
LAZARD LTD
COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES (a)
The following table sets forth the ratio of earnings to fixed charges for Lazard Ltd and its subsidiaries on a consolidated basis.
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| Three Months |
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| Ended |
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| Year Ended December 31, | ||||||||||||||||||||
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| March 31, 2018 |
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| 2017 |
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| 2016 |
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| 2015 |
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| 2014 |
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| 2013 |
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| (dollars in thousands) |
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Operating income (loss) |
| $ | 185,828 |
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| $ | 825,446 |
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| $ | 517,461 |
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| $ | (16,620 | ) |
| $ | 519,465 |
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| $ | 216,807 |
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Add—Fixed charges |
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| 20,154 |
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| 77,716 |
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| 73,654 |
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| 75,109 |
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| 86,066 |
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| 103,668 |
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Operating income before fixed charges |
| $ | 205,982 |
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| $ | 903,162 |
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| $ | 591,115 |
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| $ | 58,489 |
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| $ | 605,531 |
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| $ | 320,475 |
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Fixed Charges: |
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Interest (b) |
| $ | 13,507 |
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| $ | 53,518 |
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| $ | 50,292 |
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| $ | 51,159 |
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| $ | 62,570 |
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| $ | 79,381 |
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Other (c) |
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| 6,647 |
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| 24,198 |
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| 23,362 |
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| 23,950 |
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| 23,496 |
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| 24,287 |
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Total fixed charges |
| $ | 20,154 |
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| $ | 77,716 |
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| $ | 73,654 |
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| $ | 75,109 |
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| $ | 86,066 |
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| $ | 103,668 |
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Ratio of earnings to fixed charges |
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| 10.22 |
| (d) |
| 11.62 |
| (e) |
| 8.03 |
| (f) |
| - |
| (g) |
| 7.04 |
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| 3.09 |
| (h) | |
Deficiency in the coverage of operating income before fixed charges to total fixed charges |
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| $ | 16,620 |
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Notes (dollars in thousands):
(a) | For purposes of computing the ratio of earnings to fixed charges: |
| • | earnings for the periods presented represent income before income taxes and fixed charges, and |
| • | fixed charges represent the interest expense and the portion of rental expense which represents an appropriate interest factor. |
(b) | The Company’s policy is to include interest expense on unrecognized tax benefits in income tax expense. Accordingly, such interest expense is not included in the computations of the ratio of earnings to fixed charges. |
(c) | Other fixed charges consist of the interest factor in rentals. |
(d) | Operating income for the three months ended March 31, 2018 is presented after giving effect to a charge of (i) $33 of acquisition-related costs, (ii) $7,426 of expenses associated with the ERP system implementation and (iii) $1,389 of expenses related to office space reorganization. Excluding the impact of such charges, the ratio of earnings to fixed charges would have been 10.84. |
(e) | Operating income for the year ended December 31, 2017 is presented after giving effect to (i) $6,582 of acquisition-related costs, (ii) $25,308 of expenses associated with the ERP system implementation, (iii) $11,354 of expenses related to office space reorganization and (iv) $202,546 relating to the benefit pursuant to the tax receivable agreement. Excluding the impact of such items, the ratio of earnings to fixed charges would have been 9.56. |
(f) | Operating income for the year ended December 31, 2016 is presented after giving effect to a charge of (i) $3,148 associated with the redemption of the remaining portion of the 6.85% senior notes due June 2017 (the “2017 Notes”), (ii) $599 excess interest expense due to the period of time between the issuance of the 2027 Notes and the settlement of the redemption of the 2017 Notes, (iii) $34,092 of acquisition-related costs and (iv) $12,668 gain on the acquisition of MBA Lazard (which resulted from the increase in the fair value of the Company’s investment in MBA Lazard prior to the acquisition). Excluding the impact of such charges, the ratio of earnings to fixed charges would have been 8.43. |
(g) | Operating income for the year ended December 31, 2015 is presented after giving effect to a charge of (i) $60,219 associated with the redemption of $450 million of the 2017 Notes, (ii) $2,655 excess interest expense due to the period of time between the issuance of the 2025 Notes and the settlement of the redemption of the 2017 Notes, (iii) $12,203 relating to a private equity revenue adjustment and (iv) $542,270 relating to the provision pursuant to the tax receivable agreement. Excluding the impact of such items, the ratio of earnings to fixed charges would have been 8.95. The Company’s net income for the year ended December 31, 2015, which was affected by a significant income tax benefit during such period, was $992,932. |