Judi Frost Mackey - Spokeswoman Kenneth M. Jacobs - Chairman of the Board and Chief Executive Officer Matthieu Bucaille - Chief Financial Officer.

Ashley N. Serrao - Crédit Suisse AG, Research Division Alexander Blostein - Goldman Sachs Group Inc., Research Division Brennan Hawken - UBS Investment Bank, Research Division Devin P. Ryan - JMP Securities LLC, Research Division Joel Jeffrey - Keefe, Bruyette, & Woods, Inc., Research Division Steven J. Chubak - Nomura Securities Co.

Ltd., Research Division James F. Mitchell - The Buckingham Research Group Incorporated Vincent Hung - Autonomous Research LLP.

Good morning, and welcome to Lazard's Full Year and Fourth Quarter 2014 Earnings Conference Call. This call is being recorded. [Operator Instructions] At this time, I'll turn the call over to Judi Frost Mackey, Lazard's Director of Global Communications. Please go ahead..

Good morning, and thank you for joining our conference call to review Lazard's results for the full year and fourth quarter of 2014. 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 the Lazard website beginning today by 10 a.m. Eastern Time. 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 report on Form 10-Q and current report 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 include certain non-GAAP financial measures.

A description of those non-GAAP financial measures and the reconciliation to the comparable GAAP measure are contained in our earnings release, which has been issued this morning. For today's call, we'll focus on highlights of our performance.

The details of our earnings can be found in our press release issued this morning and in our investor presentation, both of which are posted on our website. Following their remarks, Ken and Matthieu will be happy to answer your questions. I will now turn the call over to our Chairman and Chief Executive Officer, Ken Jacobs..

Good morning. Lazard's 2014 results reflect continued strong performance across both our businesses. Operating revenue reached a record level of 15% over last year. We generated record earnings with 59% increase in earnings per share. We achieved our financial goals, including an operating margin of 25%.

In the 3 years since we announced our financial goals, we have delivered strong revenue growth, we have strengthened Lazard's market position, we have enhanced profitability even as we continued to invest in the business, and we have continued to return capital to shareholders.

These accomplishments underscore the power of our business model, the strength of Lazard's global franchise, and the value we are creating for clients and shareholders. Both our businesses have been building momentum.

In Financial Advisory, we continue to gain market share in 2014 and reinforced our status as the preeminent independent advisory firm in the world. M&A and Other Advisory achieved record annual operating revenue of more than $1 billion.

Notably, M&A and Other Advisory revenue has surpassed its prior peak year of 2007 even as the global M&A market remains 22% lower. This outperformance reflects the breadth and depth of our global advisory business and our distinct competitive advantage.

Lazard is the leader in the large, strategic, complex and cross-border transactions that characterize the current M&A cycle. In 2014, our number of global announced transactions valued over $500 million increased 38% compared to 11% for the market. Lazard advised on more than 1/3 of all global announced transactions valued at $10 billion and over.

Approximately half of our announced transactions were cross-border. Our M&A revenue growth was especially strong in the U.S. and in Europe. We gained substantial market share in Europe, and strategic activity increased during the year.

Our Sovereign and Capital Advisory services continue to be in high demand globally, advising governments and corporations on balance sheet matters, capital raising and privatizations. And Lazard Middle Market achieved excellent results in 2014 as it continues to successfully lever the Lazard franchise and our global network of relationships.

In Asset Management, we achieved another year of record annual operating revenue. Our investment platforms had strong gross and net inflows in every quarter of 2014 with $3 billion of net inflows for the fourth quarter and $11 billion for the year.

These flows reflected mandates from large institutional investors around the world and were diversified across investment platforms in equity and fixed income. We have nearly doubled our fixed income assets under management in the last 3 years.

This growth has been driven primarily by flows into our emerging market debt strategies as well as our local and global debt strategies.

The global markets remain volatile but our Asset Management business has solid fundamentals with leadership in growing asset classes across equities and fixed income, a strong pattern of long-term performance, broadly diversified strategies with significant capacity for organic growth, and an ability to provide solutions to our clients for their evolving investment needs.

We continue to launch new strategies to meet ongoing client demand. In 2014, we expanded our capabilities in global equities, multiregional equities, liquid alternatives and multi-asset strategies. We also continued to expand our investment coverage and distribution in selected regions, including the Middle East, Europe and the U.S.

Matthieu will now provide color on our financial results and capital management..

Thank you, Ken. Lazard's 2014 net income and diluted net income per share on an adjusted basis increased 59% over 2013. Operating revenue increased 15% for the year on both a reported and constant currency basis. In the fourth quarter, operating revenue increased 4% on a reported basis and 7% on a constant currency basis.

Quarterly operating revenue increased sequentially throughout the year. Financial Advisory operating revenue increased 23% for the year and 14% for the fourth quarter driven primarily by M&A and Other Advisory operating revenue, which increased 31% for the year and 17% over last year's strong fourth quarter.

In Asset Management, operating revenue increased 9% for the year to a new record level driven by record management fees, which were up 13% for the year. Asset Management fourth quarter operating revenue was 3% less than last year's record fourth quarter, primarily due to lower performance fees in our alternative investment strategies.

Management fees for the quarter were 9% higher than last year. AUM ended the year at $197 billion. Average AUM for 2014 was a record $196 billion. As of January 30, 2015, AUM was approximately $193 billion, reflecting $2.9 billion of market and foreign exchange depreciation and $0.8 billion of net outflows since December 31.

Fourth quarter net inflows of $3.1 billion were primarily driven by new mandates in our multiregional and fixed income platforms. Annual net inflows were $11.3 billion, reflecting broadly diversified inflows across our major platforms. Turning to expenses. Our 2014 awarded compensation ratio was 55.8%, down from 58.3% for 2013.

Corresponding adjusted GAAP compensation ratio was 55.6%, down from 58.8% for 2013. Both ratios were at the lower end of our targeted range of 55% to 59% over the cycle.

Awarded compensation expense for 2014 increased 10% even as operating revenue grew 15%, in line with our goal of growing awarded compensation expense at a slower rate than operating revenue growth. We continue to be disciplined with deferred compensation, maintaining a consistent rate of deferrals each year and consistent best in case [ph].

This highlights the quality of ROE. Adjusted noncompensation expense for 2014 increased 8% compared to the 15% increase in operating revenue and was primarily driven by increased activity and investment in our business.

Ken said we achieved our financial targets for 2014 with annual operating margins of 25.5% on an adjusted GAAP basis and 25.4% on an awarded basis. Our annual tax rate in 2014 was 20%, down from 22% last year due to changes in the mix, profitability and geography of our revenue.

As we have said before, in 2015, assuming a continued high level of profitability and all else being the same, we will expect our tax rate to be in the mid to high 20s. Regarding capital management. During 2014, we returned $425 million to shareholders, primarily through dividends and share repurchases.

With increased profitability, we are generating substantial cash flow, and this benefits shareholders. Yesterday, in addition to our quarterly dividend of $0.30 per share, we declared a special dividend of $1 per share. Ken will now conclude our remarks..

Thank you, Matthieu. I'll provide some perspective on our outlook, then we'll open the call to questions. Regarding outlook. We remain cautiously optimistic. The U.S. macroeconomic environment has improved, but Europe and many of the developing markets remain unsettled, and the capital markets have been volatile recently.

However, longer-term trends remain favorable for both our businesses. In Financial Advisory, the fundamentals are in place for continued growth of a strategic M&A cycle that played to Lazard's strengths. Companies are looking across borders to grow through acquisitions.

Demand is strong for expert strategic advice that can be levered across geographies and industry groups. There are high barriers to entry for competitors on our global scale, and few, if any, firms have Lazard's breadth and depth of senior bankers focused exclusively on strategic advice.

In Asset Management, we are well positioned as institutions around the world continue to expand their investments beyond local markets. Demand grows for sophisticated multi-asset investment solutions, and defined contribution plans increasingly seek institutional quality investment managers, such as Lazard.

To conclude, Lazard is in an excellent position.

We have a business model that has proven its strength and resilience through cycles; one of the premier brands in financial services, which adds value to both our businesses; increased market share in growing markets; momentum in revenue and earnings growth even as we invest in the business and return capital to shareholders; substantial capacity for increased activity and organic growth; operating leverage in both our businesses; and a proven ability to create shareholder value.

Before we go to questions, I want to take this opportunity to thank all my partners and colleagues at Lazard for their hard work and tremendous effort over the past 3 years in achieving our financial targets, all while continuing to provide world-class service to our clients. Now let's open the call to questions. Thank you..

[Operator Instructions] Our first question comes from Ashley Serrao with Credit Suisse..

So Ken, I heard your concluding remarks, but I just wanted to drill down.

And as we think about the future margin trajectory for Lazard, what message do you want to leave us with? So more specifically, I'm just curious about how you're thinking about balancing investment in the franchise and just letting revenue growth drop to the bottom line?.

intense focus on clients, which will drive revenue growth; continued investment in the business as we've done over the last several years; and intense focus on our ability to create operating leverage because we're able to grow our revenues at a faster rate -- or I should say we're able to control comp and noncomp expenses, that is grow them at a slower rate than revenues.

That will drive operating margin, that will drive operating results and that will drive, hopefully, shareholder value..

Okay.

And as we think -- sit here and think about the dollar getting stronger as the day goes by, how should we think about the impact on your franchise?.

Well, we're actually a very global business. So more than, I think, 57% of our revenue are booked in the U.S. So we have some international exposure to foreign exchange, but remember, we have also a very large cost base also in local currencies. So we have a natural hedge. The impact is relatively limited.

We -- just if you look at the euro exposure, about 20% of our revenues are booked in euros. So even a 5% to 10% drop in the euro would only impact operating income by 1% to 2%..

Our next question comes from Alex Blostein with Goldman Sachs..

Question, Ken, for you, as far as you guys are thinking about capital management and just the strategy, I guess, of the advisory business and the Asset Management business, when you kind of take a step back, in your 2012 letter, I think you guys talked about the value that Lazard is trading at relative to a number of your peers, whether it's the advisory firms or the Asset Management firms.

And today, clearly, when you look at where the stock is trading, the multiple probably still doesn't even get to where either one of those subsectors trade.

So as you guys are kind of sitting here today, anything you're contemplating that's different when it comes to capital returns with maybe bigger buyback or any other strategic options that could potentially unlock shareholder value?.

Well, I think it's -- from our standpoint, the first thing we're focused on is driving results, and over time, we expect the market will value them appropriately. We've been a consistent generator of capital, and I think we've been aggressively returning it to shareholders.

I think we've returned more or less half our market capital over the last 3 years or so, and we continue to be aggressive about finding ways to return capital to shareholders..

And then when we -- a specific question, I guess, on the Asset Management business. Very nice gross flows, continues to be pretty solid progress you guys continue to make there.

When we think about the headwinds that you're still facing from some of the legacy products that have been outflowing, any sense to give us a sense of how much more in terms of outflows there's left to kind of get us a better sense of what the net picture for flows could look like over the next 12 months?.

Look, overall, we're -- we've been pretty pleased with the gross flows and the net flows over the course of the last year, the last quarter. We had net inflows across a range of products, including EM products. Thematics, as you know, has been a challenge in terms of flows for the last year or so.

Performance in the short term has improved, and the longer term -- it's a long-term strategy, and we continue to be optimistic about the range of strategies right now..

Our next question comes from Brennan Hawken with UBS..

Starting out, I guess, in Asset Management, how much -- I apologize if you guys disclosed this and I missed it.

How much did FX impact AUM? And generally, how does the largely institutional client base view currency risk?.

Yes. So the -- in the third quarter -- in the -- sorry, in the fourth quarter, the market and foreign exchange depreciation were $3.6 billion. $5.6 billion of this was foreign exchange depreciation. That's to answer your first question. On your second question, we have about 70% of our assets denominated in foreign currency..

Okay. And then flows were -- has remained pretty solid.

RFP activity, has that continued to be robust, too, even in some of the recent volatile quarters?.

I think a little fall off in the fourth quarter, and we're kind of at levels probably 1.5 years ago, not 1 year ago but generally speaking, still okay..

Okay, great. That's helpful. And then as we think about the target -- the margin target, I get it that you guys wanted to sort of focus on operating leverage, which makes a lot of sense given the nature of the business and the cyclical component.

When you think about, though, the operating margin -- or, excuse me, the margin headwind from the corporate segment at Lazard, which is a little bit uniquely higher than some of your competitors, how should we think about grinding that lower over time? Does that remain a priority for you guys?.

Sure. So a couple of comments. First, on margin expansion, as revenue grows, there are really 2 fundamental sources. The first is, we continue to believe that on the margin, we're able to grow our comp expenses at a lower rate than revenues.

So that's one source of likely margin improvement in the future, and then the second comes from the fact that with regard to the noncomp expenses, about 1/3 are variable and 2/3 are fixed. And so assuming a low inflation rate, which I think is the world we live in, we should continue to see margin improvement coming from noncomp expenses.

With regard to corporate, I think we said from the outset, this is a long-term opportunity for us. Some of it comes just from scaling the business, and some of it comes from redesign of processes and operations, and we remain intensely focused on that..

Okay, great. And then the last one from me. Have you guys given any thoughts -- or is there any potential to shift around the legal structure? You guys are currently a PTP, kick off K-1, and that does present an issue and does somewhat limit the investor base a bit.

And do you think that, that might impact and put a discount on your valuation? And as we've seen the delta between your basic and adjusted diluted share count sort of narrow here over the last several years, is this something that's more feasible now than before?.

It's something that requires a lot of thought, and I don't think we're ready to talk about that on a conference call..

Our next question comes from Devin Ryan with JMP Securities..

I appreciate the detail on the operating margins. Just a couple of quick follow-ups here. So just with respect to the compensation element, you're already moving close to that kind of mid to bottom end of the range that you guys have put out there, kind of the mid-50%.

So does it get to be a point where the incremental returns or incremental margins decline, especially if advisory revenues were continuing to grow on the current infrastructure? I'm just trying to get a sense of -- could you actually move below that mid-50% range if advisory revenues are expanding without big investments into the company?.

Look, there's always a balance between investment and what that does in terms of growing the business and margin improvements, and I think we've done a pretty good job of modulating that over the last few years or so. Yes, I think by just sheer math, at some point, your benefits get diminished.

It was, obviously, a lot easier to do 5 years ago than it is today, but we still see opportunity that, as revenues grow, we will continue to be able to grow the compensation expenses at a slower rate. I mean, there may be some day where that's not possible, and obviously, that, to some extent, gets offset by the investment we do in the business.

We also continue to see opportunity on the noncomp side. But look, for us, the key thing is being able to serve clients, and we do that by making sure we have the best people here, retaining and attracting them by continuing to invest in the business.

But at the same time, I think as we've seen over the -- as we've demonstrated over the last few years, we're also intensely focused on making sure that we execute well on behalf of our shareholders, and we're going to continue to do that..

Okay. And then just with respect to Europe, with the rally in the dollar, are you guys seeing any signs yet of maybe a pickup in cross-border activity into Europe? And then also in Europe, you've been named on some pretty high-profile restructuring assignments recently.

So I know those are specific issues, but it'd be great to get your outlook on that business in Europe and then just maybe more broadly as well..

Sure. Generally speaking, last year was a pretty active year for the kind of big, complicated cross-border stuff both inside and outside of Europe and within Europe, at least for us.

And we would expect that -- there was some volatility in the markets, obviously, in the fourth quarter, but we expect to see that activity to continue this year and into next year. And I think that overall, this environment, hopefully, plays to our strengths and will continue to play to our strengths in that regard..

Got it.

And with respect to restructuring?.

Well, look, the Sovereign Advisory business kind of speaks for itself at the moment, and on the restructuring side, I think that there -- assuming a continued improvement in the macro environment, that probably remains quiet. The one exception to that, perhaps, is the oil industry, but that depends in part on what happens with the oil price.

If it stays at the kind of lower levels that we've seen over the last several weeks or so, then that's likely to drive some restructuring activity in that industry..

Okay, great.

And then just lastly, apologize if I missed this, but can you give me detail on where AUM currently stand? I know we get that in the Q or K, but how much are the negative marks on FX? Or have there been negative FX marks this quarter? And if there have been, can you give that detail?.

Right. So I said that the AUM as of January was approximately $194 billion. The foreign exchange impact and the drop was $3.6 billion..

Our next question comes from Joel Jeffrey with Keefe, Bruyette, Woods..

Just thinking a bit more about the -- your capital return strategies and sort of the timing of the special dividend, I know you've, in the past, done them in December. I'm just wondering if there was anything behind the sort of issuance in the first quarter. And then how we should be thinking about the timing of buybacks in 2015..

Sure. So first, I think the last one was somewhat impacted by changes in tax laws. So this seems to be a natural time to do it. We see our results -- obviously, this can be a cyclical business. You tend to want to see -- in the fourth quarter, it's important to see -- you tend to want to see your results.

Once you have them, then it allows us to have a much better view on cash and, obviously, profitability and cash flow. And therefore, this seemed to be an appropriate time to consider it. With regard to repurchase, we are as committed as always to offsetting any dilution associated with deferred stock awards.

We'll continue to do that, and then depending on the opportunity for share buybacks, we'll be opportunistic based on share price and so on as we've been in the past..

Okay, great.

And then just lastly from me, I mean, when you think about European M&A, and we saw some sort of modest improvements last year coming off of a relatively small base, is there anything in the macro environment there that gives you a lot of concern that you could actually see a pullback in there if things worsen?.

Well, first, I think last year, while the environment wasn't outstanding, I think that, in fact, on deals over $500 million, the market in Europe was down. At least, our completion is probably about 2%. I think we were up about 21%. And we're particularly strong in the larger deals.

So for us, I think we saw pretty important improvement in the marketplace last year. Look, there's been 3 stimulative effects in Europe in the last couple of months.

The first is the sharp drop in the currencies over the summer and into the fall, which is, obviously, impacts euro but also makes the euro much -- euro exports much more competitive, which is probably good, macroeconomically, for Europe. The second, a drop in the oil price, obviously, helps the consumer in Europe and many industries.

And then third, there's been an enormous stimulus on the monetary side through the quantitative easing announced by the ECB recently.

So all 3 of those things, probably, assuming they pull their weight, the economy should be pretty good for the environment over the long -- over the medium or long term, and that generally drives people's -- CEO confidence, and that generally drives activity.

So I think these things are more likely to be positive effects on activity than negative, but -- then there's the politics, and we have to see how that plays out..

Our next question comes from Steven Chubak with Nomura..

So just a quick question on Asset Management, and digging into some of the numbers, it looks like the revenue yield has remained quite resilient and pretty steady, actually, over the last few years, in fact, despite, at least in the most recent quarter, seeing a decline in the higher-fee emerging market channel.

And I was just wondering whether you could shed any light as to how that fee rate might evolve given where you're seeing the strongest product demand..

I think we continue to see pretty level fees for ourselves. You're right. You noticed, it's improved over the last few years.

It's pretty steady right now, and as I think I said in the fourth quarter, we continue to see inflows across the board in Asset Management and -- particularly in the EM product, where net inflows were positive for the quarter and for the year..

Okay. And then just one more follow-up on the operating margin commentary.

And I appreciated, Ken, all the detail that you provided, but just thinking about the advisory revenue trajectory, is it fair to assume, if we see revenue growth in this coming year, all else equal, that given the embedded operating leverage in the model that the margin should expand?.

I would expect so. I think that what we've seen over time is, number one, as revenue grows, we've been able to grow comp at a lower rate than revenue. We expect that should be able to continue for a while more. Number two is we continue to have leverage on our noncomp expenses just given the fact that a large portion of them are fixed.

That is especially the case on the advisory side of the business, a little less on the asset side of the business. So I think we should continue to see margin improvement in that business as revenue grows. Needless to say, we continue to see opportunities for investment.

We've done that in the past, and we're going to modulate between the 2 because, again, for our business, the key is serving clients. When we do that well, we get growth.

When we get growth, we get all the other good things that happen from that, and it's going to be this balance between the investments and the -- and margin growth, but that said, I think we're still pretty confident there's improvements in margin ahead of us if we get revenue growth..

Our next question comes from Jim Mitchell with Buckingham Research..

Maybe we could just talk a little bit about the bigger picture around M&A. We've seen a little bit of a slowdown over the last 3 to 4 months with the volatility.

How are you sensing -- is this just a little bit of a pause as your clients think about the volatility? Or is there something -- a bigger concern here? What's your sense of conversations and how you're looking at the next 12 months in terms of activity levels?.

Sure. I mean, look, generally speaking, we remain constructive. A lot of it -- we think that a big part of the M&A cycle is driven by people's use of the macro environment. The U.S. is -- obviously, the macro environment is improved. U.S. economy is the largest economy in the world. It's now the biggest contributor to world growth.

You could probably argue that a lot of the volatility in the markets over the last -- the latter part of last year is really a function of the world adjusting to the U.S.

economy growing, the movement in the dollar, the strength -- the drop in the oil price reflecting this huge amount of production coming online in the U.S., the ECB able to ease once the U.S. reduced its easing. I mean, all these things are more -- seem to us to be -- to impart a function of the U.S. growth kicking in.

Now whether or not the markets can come down is important. They have to -- all this has to be factored in, and if they do come down, that should aid confidence even more. We continue to see financing costs low. We continue -- depending on your view on the macro environment, you can be constructive about valuations.

And as always, it's a function of the 3. When you have CEO confidence or improving confidence, you have reasonable views on valuation and you have available financing, then you probably have the factors that continue to support an M&A cycle..

And conversation levels remain active?.

They seem reasonable at the moment..

Okay. Maybe a question on the special dividend. How do you guys think about that versus a buyback? Your net share count hasn't really moved much. You opted for a special dividend with the incremental cash.

Do you -- what would change your mind to go more with a more aggressive buyback versus a special dividend?.

Look, this is all a balance. Special dividend is a very efficient way for us to get cash back to shareholders in a very short period of time, especially when we're in or around blackout periods and things like that.

And it also tends to reward long-term holders of the stock well, and that's something we're very focused on because those are the people that are, ultimately, our shareholders. And also, those happen -- our employees happen to be long-term shareholders as well. So it's a pretty efficient way to get capital back.

That said, as you know, we've been an aggressive purchaser of shares at different points in time. We're always in the market repurchasing any of the deferred compensation. We will continue to do that and then continue to be opportunistic between the 2, but we're a cyclical business.

We don't know our results oftentimes until the fourth quarter and the results in the fourth quarter. When we do a little better in the fourth quarter, then sometimes, this becomes a very efficient way to deliver value back to shareholders..

Right, fair enough. And then maybe one last question, maybe for Matthieu, on the tax rate. You guys have been talking about a high 20s tax rate for a while. I think the tax rate went down in '14. What makes it jump? You had a pretty big jump in profitability in '14 and the tax rate went down.

What triggers the 25% to 30% tax rate going forward? Is it a gradual ramp? Or should we be thinking that this happens as early as 1Q?.

So in 2014, our tax rate decreased primarily because of the geographical mix of our earnings, right, and we ended up -- the year ended up at 20%. We have said low 20s. This is pretty much in line with what we had said. With respect to 2015, we said that as we become more profitable, our tax rate should go up.

In my introductory comments, I said that our tax rate for 2015 should be mid to high 20s. This is primarily linked to assuming same profitability. This is primarily linked to a reduction of our NOLs, and yes, this should impact our tax rate as soon as the first quarter..

So a lot less NOLs in '15?.

Yes..

[Operator Instructions] Our next question comes from Vincent Hung with Autonomous..

You mentioned at the beginning that you saw $0.8 billion of outflows in January.

Can you give us a bit more detail about that?.

It's very early days to really try to derive any trends for the net outflow. As I said, yes, we're $0.8 billion from December 31 to January 30..

Okay, and thank you for the granularity on compensation that you give us every year.

When I look at the base salary and benefits line, how should I think about the growth of that going forward?.

Salaries and benefits line, well, it's a good question. Salaries are kind of reflective of market conditions, and I think those are -- and also just numbers of people and things like that. Benefits, we've seen pressure on benefits over the last few years.

As you can tell from that line, part of that is just the social costs of employment in Europe, some of the higher taxes in Europe primarily. And some of that gets alleviated this year.

You will see a little bit of it go off because of the drop in the 75% rate in France, but the trend, unfortunately, is, at least outside the United States, for those benefit costs to go up. It's been quite a few years now..

And we have a follow-up question from Devin Ryan with JMP Securities..

Just quick follow-up on the comp ratio and modeling that going forward. I know that historically, it's been based off of the prior year full level in terms of how you start the year, and then you do the fourth quarter true-up.

So how should we think about that heading into '15? Is that still reasonable? Or should we think about it in a different way?.

I think that's pretty reasonable..

Thank you. This now concludes the Lazard conference call..