UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)


☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, ~~2020~~2021


☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

001-32492

(Commission File Number)

LAZARD LTD

(Exact name of registrant as specified in its charter)

Bermuda	98-0437848
(State or Other Jurisdiction of Incorporation	(I.R.S. Employer Identification No.)
or Organization)

Clarendon House

2 Church Street

Hamilton HM11, Bermuda

(Address of principal executive offices)

Registrant’s telephone number: (441) 295-1422

Securities registered pursuant to Section 12(b) of the Act:


Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Class A Common Stock	LAZ	New York Stock Exchange

Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the Registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the Registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the Registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer	☒	Accelerated filer	☐
Non-accelerated filer	☐	Smaller reporting company	☐
		Emerging growth company	☐

If the Registrant is an emerging growth company, indicate by check mark if the Registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

As of July ~~24, 2020,~~23, 2021, there were 112,766,091 shares of the Registrant’s common stock outstanding (including ~~7,784,710~~9,301,031 shares held by subsidiaries).

TABLE OF CONTENTS

When we use the terms “Lazard”, “we”, “us”, “our” and “the Company”, we mean Lazard Ltd, a company incorporated under the laws of Bermuda, and its subsidiaries, including Lazard Group LLC, a Delaware limited liability company (“Lazard Group”), that is the current holding company for our businesses. Lazard Ltd’s primary operating asset is its indirect ownership as of June 30, ~~2020~~2021 of all of the common membership interests in Lazard Group and its controlling interest in Lazard Group. When we use the term “common stock”, we mean Class A common stock of Lazard Ltd, the only class of common stock of Lazard outstanding.

		Page
Part I. Financial Information

Item 1. Financial Statements (Unaudited)		1

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations		4238

Item 3. Quantitative and Qualitative Disclosures About Market Risk		7065

Item 4. Controls and Procedures		7065

Part II. Other Information

Item 1. Legal Proceedings		7166

Item 1A. Risk Factors		7166

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds		7266

Item 3. Defaults Upon Senior Securities		7367

Item 4. Mine Safety Disclosures		7367

Item 5. Other Information		7367

Item 6. Exhibits		7468

Signatures		7771

PART I. FINANCIAL INFORMATION

Item 1.

Financial Statements (Unaudited)

		Page

Condensed Consolidated Statements of Financial Condition as of June 30, ~~2020~~2021 and December 31, ~~2019~~2020		2

Condensed Consolidated Statements of Operations for the three month and six month periods ended June 30, ~~2020~~2021 and ~~2019~~2020		4

Condensed Consolidated Statements of Comprehensive Income for the three month and six month periods ended June 30, ~~2020~~2021 and ~~2019~~2020		5

Condensed Consolidated Statements of Cash Flows for the six month periods ended June 30, ~~2020~~2021 and ~~2019~~2020		6

Condensed Consolidated Statements of Changes in Stockholders’ Equity and Redeemable Noncontrolling Interests for the three month and six month periods ended June 30, ~~2020~~2021 and ~~2019~~2020		7

Notes to Condensed Consolidated Financial Statements		11

LAZARD LTD

CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION

JUNE 30, ~~2020~~2021 AND DECEMBER 31, ~~2019~~2020

(UNAUDITED)

(dollars in thousands, except for per share data)

	June 30,		December 31,		June 30,		December 31,
	2020		2019		2021		2020
ASSETS
Cash and cash equivalents	$	896,843	$	1,231,593	$	979,899	$	1,389,876
Deposits with banks and short-term investments		1,155,539		1,180,686		1,111,347		1,134,463
Cash deposited with clearing organizations and other segregated cash		40,283		43,280
Receivables (net of allowance for doubtful accounts of $40,959 and $27,130 at June 30, 2020 and December 31, 2019, respectively):
Restricted cash						614,291		44,488
Receivables (net of allowance for doubtful accounts of $36,244 and $36,649 at June 30, 2021 and December 31, 2020, respectively):
Fees		519,496		537,442		649,222		621,880
Customers and other		132,616		125,696		169,578		121,261
		652,112		663,138		818,800		743,141
Investments		523,366		531,995		867,707		658,532
Property (net of accumulated amortization and depreciation of $381,540 and $367,545 at June 30, 2020 and December 31, 2019, respectively)		228,621		219,842
Property (net of accumulated amortization and depreciation of $408,935 and $402,471 at June 30, 2021 and December 31, 2020, respectively)						252,002		257,587
Operating lease right-of-use assets		525,193		551,504		479,238		513,923
Goodwill and other intangible assets (net of accumulated amortization of $69,078 and $68,305 at June 30, 2020 and December 31, 2019, respectively)		369,159		373,594
Goodwill and other intangible assets (net of accumulated amortization of $70,260 and $70,155 at June 30, 2021 and December 31, 2020, respectively)						380,867		384,071
Deferred tax assets		563,243		586,750		492,364		538,448
Other assets		357,759		257,199		410,285		307,332
Total Assets	$	5,312,118	$	5,639,581	$	6,406,800	$	5,971,861

See notes to condensed consolidated financial statements.

LAZARD LTD

CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION

JUNE 30, ~~2020~~2021 AND DECEMBER 31, ~~2019~~2020

(UNAUDITED)

(dollars in thousands, except for per share data)

	June 30,			December 31,			June 30,			December 31,
	2020			2019			2021			2020
LIABILITIES AND STOCKHOLDERS’ EQUITY
LIABILITIES, REDEEMABLE NONCONTROLLING INTERESTS AND STOCKHOLDERS’ EQUITY
Liabilities:
Deposits and other customer payables	$	1,230,920		$	1,246,200		$	1,228,248		$	1,201,150
Accrued compensation and benefits		365,989			602,777			644,777			734,544
Operating lease liabilities		618,362			644,345			567,726			606,963
Tax receivable agreement obligation		221,890			247,344			211,236			221,451
Senior debt		1,680,845			1,679,562			1,683,984			1,682,741
Deferred tax liabilities		2,921			3,511			1,335			1,041
Other liabilities		507,223			534,268			562,639			524,538
Total Liabilities		4,628,150			4,958,007			4,899,945			4,972,428
Commitments and contingencies
Redeemable noncontrolling interests								575,000			-
STOCKHOLDERS’ EQUITY
Preferred stock, par value $.01 per share; 15,000,000 shares authorized:
Series A - 0 shares issued and outstanding		-			-			-			-
Series B - 0 shares issued and outstanding		-			-			-			-
Common stock:
Class A, par value $.01 per share (500,000,000 shares authorized; 112,766,091 shares issued at June 30, 2020 and December 31, 2019, including shares held by subsidiaries as indicated below)		1,128			1,128
Class A, par value $.01 per share (500,000,000 shares authorized; 112,766,091 shares issued at June 30, 2021 and December 31, 2020, including shares held by subsidiaries as indicated below)								1,128			1,128
Additional paid-in-capital		52,274			41,020			58,000			135,439
Retained earnings		1,140,015			1,193,570			1,348,121			1,295,386
Accumulated other comprehensive loss, net of tax		(308,921	)		(293,648	)		(226,648	)		(238,368	)
		884,496			942,070			1,180,601			1,193,585
Class A common stock held by subsidiaries, at cost (7,785,103 and 8,513,493 shares at June 30, 2020 and December 31, 2019, respectively)		(283,899	)		(332,079	)
Class A common stock held by subsidiaries, at cost (8,705,297 and 7,728,387 shares at June 30, 2021 and December 31, 2020, respectively)								(353,718	)		(281,813	)
Total Lazard Ltd Stockholders’ Equity		600,597			609,991			826,883			911,772
Noncontrolling interests		83,371			71,583			104,972			87,661
Total Stockholders’ Equity		683,968			681,574			931,855			999,433
Total Liabilities and Stockholders’ Equity	$	5,312,118		$	5,639,581
Total Liabilities, Redeemable Noncontrolling Interests and Stockholders’ Equity							$	6,406,800		$	5,971,861

See notes to condensed consolidated financial statements.

LAZARD LTD

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

FOR THE THREE MONTH AND SIX MONTH PERIODS ENDED JUNE 30, ~~2020~~2021 AND ~~2019~~2020

(UNAUDITED)

(dollars in thousands, except for per share data)

	Three Months Ended					Six Months Ended					Three Months Ended					Six Months Ended
	June 30,					June 30,					June 30,					June 30,
	2020			2019		2020			2019		2021		2020			2021		2020
REVENUE
Investment banking and other advisory fees	$	304,259		$	328,974	$	601,928		$	664,778	$	475,161	$	304,259		$	792,992	$	601,928
Asset management fees		245,291			296,581		514,509			589,019		346,465		245,291			673,415		514,509
Interest income		1,340			4,013		3,752			7,813		1,280		1,340			2,634		3,752
Other		41,374			21,233		30,232			50,869		20,358		41,374			54,127		30,232
Total revenue		592,264			650,801		1,150,421			1,312,479		843,264		592,264			1,523,168		1,150,421
Interest expense		19,972			20,111		40,115			38,115		20,127		19,972			39,924		40,115
Net revenue		572,292			630,690		1,110,306			1,274,364		823,137		572,292			1,483,244		1,110,306
OPERATING EXPENSES
Compensation and benefits		351,568			372,470		671,323			744,724		514,918		351,568			916,464		671,323
Occupancy and equipment		30,574			30,953		62,772			59,248		29,875		30,574			64,623		62,772
Marketing and business development		6,517			28,784		26,703			56,768		9,332		6,517			15,983		26,703
Technology and information services		32,629			38,825		63,987			70,880		35,774		32,629			69,444		63,987
Professional services		16,728			19,144		31,273			33,361		19,996		16,728			34,944		31,273
Fund administration and outsourced services		24,053			28,493		50,443			57,423		31,302		24,053			60,581		50,443
Amortization and other acquisition-related costs		455			5,042		901			8,512
Amortization of intangible assets related to acquisitions												15		455			30		901
Other		13,903			5,294		22,942			22,100		15,664		13,903			20,624		22,942
Total operating expenses		476,427			529,005		930,344			1,053,016		656,876		476,427			1,182,693		930,344
OPERATING INCOME		95,865			101,685		179,962			221,348		166,261		95,865			300,551		179,962
Provision for income taxes		22,789			28,172		48,555			51,359		41,345		22,789			84,809		48,555
NET INCOME		73,076			73,513		131,407			169,989		124,916		73,076			215,742		131,407
LESS - NET INCOME (LOSS) ATTRIBUTABLE TO NONCONTROLLING INTERESTS		(382	)		7,736		(6,073	)		7,170		1,738		(382	)		5,264		(6,073	)
NET INCOME ATTRIBUTABLE TO LAZARD LTD	$	73,458		$	65,777	$	137,480		$	162,819	$	123,178	$	73,458		$	210,478	$	137,480
ATTRIBUTABLE TO LAZARD LTD CLASS A COMMON STOCKHOLDERS:
WEIGHTED AVERAGE SHARES OF COMMON STOCK OUTSTANDING:
Basic		106,662,064			111,981,204		106,483,013			111,962,729		106,746,654		106,662,064			107,019,107		106,483,013
Diluted		111,487,749			116,175,349		112,803,964			118,497,717		113,603,478		111,487,749			114,712,885		112,803,964
NET INCOME PER SHARE OF COMMON STOCK:
Basic	$	0.68		$	0.57	$	1.27		$	1.44	$	1.14	$	0.68		$	1.94	$	1.27
Diluted	$	0.66		$	0.55	$	1.22		$	1.36	$	1.08	$	0.66		$	1.83	$	1.22

See notes to condensed consolidated financial statements.

LAZARD LTD

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

FOR THE THREE MONTH AND SIX MONTH PERIODS ENDED JUNE 30, ~~2020~~2021 AND ~~2019~~2020

(UNAUDITED)

(dollars in thousands)

	Three Months Ended						Six Months Ended						Three Months Ended						Six Months Ended
	June 30,						June 30,						June 30,						June 30,
	2020			2019			2020			2019			2021			2020			2021			2020
NET INCOME	$	73,076		$	73,513		$	131,407		$	169,989		$	124,916		$	73,076		$	215,742		$	131,407
OTHER COMPREHENSIVE INCOME (LOSS), NET OF TAX:
Currency translation adjustments		22,384			(7,053	)		(28,362	)		(3,273	)
Currency translation adjustments:
Currency translation adjustments before reclassification														5,502			22,384			(14,241	)		(28,362	)
Adjustment for items reclassified to earnings														23,579			-			23,579			-
Employee benefit plans:
Prior service cost (net of tax expense of $2 for the three months ended June 30, 2020 and $38 for the six months ended June 30, 2020)		9			-			184			-
Actuarial gain (net of tax (benefit) expense of $(171) and $2,420 for the three months ended June 30, 2020 and 2019, respectively, and $1,619 and $2,720 for the six months ended June 30, 2020 and 2019, respectively)		482			2,812			9,395			2,861
Adjustment for items reclassified to earnings (net of tax expense of $338 and $174 for the three months ended June 30, 2020 and 2019, respectively, and $676 and $352 for the six months ended June 30, 2020 and 2019, respectively)		1,615			1,113			3,510			2,245
Actuarial gain (loss) (net of tax (benefit) expense of $(373) and $(169) for the three months ended June 30, 2021 and 2020, respectively, and $389 and $1,657 for the six months ended June 30, 2021 and 2020, respectively)														(1,477	)		491			(412	)		9,579
Adjustment for items reclassified to earnings (net of tax expense of $483 and $338 for the three months ended June 30, 2021 and 2020, respectively, and $864 and $676 for the six months ended June 30, 2021 and 2020, respectively)														1,458			1,615			2,794			3,510
OTHER COMPREHENSIVE INCOME (LOSS), NET OF TAX		24,490			(3,128	)		(15,273	)		1,833			29,062			24,490			11,720			(15,273	)
COMPREHENSIVE INCOME		97,566			70,385			116,134			171,822			153,978			97,566			227,462			116,134
LESS - COMPREHENSIVE INCOME (LOSS) ATTRIBUTABLE TO NONCONTROLLING INTERESTS		(383	)		7,734			(6,073	)		7,169			1,737			(383	)		5,264			(6,073	)
COMPREHENSIVE INCOME ATTRIBUTABLE TO LAZARD LTD	$	97,949		$	62,651		$	122,207		$	164,653		$	152,241		$	97,949		$	222,198		$	122,207

See notes to condensed consolidated financial statements.

LAZARD LTD

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

FOR THE SIX MONTH PERIODS ENDED JUNE 30, ~~2020~~2021 AND ~~2019~~2020

(UNAUDITED)

(dollars in thousands)

	Six Months Ended						Six Months Ended
	June 30,						June 30,
	2020			2019			2021			2020
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income	$	131,407		$	169,989		$	215,742		$	131,407
Adjustments to reconcile net income to net cash provided by (used in) operating activities:
Depreciation and amortization of property		17,314			16,247			18,938			17,314
Noncash lease expense		32,443			26,720			36,242			32,443
Currency translation adjustment reclassification								23,579			-
Amortization of deferred expenses and share-based incentive compensation		215,204			226,629			229,919			215,204
Amortization and other acquisition-related costs		901			8,512
Amortization of intangible assets related to acquisitions								30			901
Deferred tax provision		23,410			7,423			43,641			23,410
Loss on extinguishment of debt		-			6,505
(Increase) decrease in operating assets and increase (decrease) in operating liabilities:
Receivables-net		1,891			(19,520	)		(83,982	)		1,891
Investments		6,547			7,228			(290,595	)		6,547
Other assets		(167,985	)		(107,740	)		(22,527	)		(167,985	)
Accrued compensation and benefits and other liabilities		(261,436	)		(259,428	)		(155,910	)		(261,436	)
Net cash (used in) provided by operating activities		(304	)		82,565
Net cash provided by (used in) operating activities								15,077			(304	)
CASH FLOWS FROM INVESTING ACTIVITIES:
Additions to property		(24,897	)		(18,064	)		(17,370	)		(24,897	)
Disposals of property		135			85			602			135
Net cash used in investing activities		(24,762	)		(17,979	)		(16,768	)		(24,762	)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from:
Issuance of senior debt, net of expenses		-			491,875
Contributions from noncontrolling interests								316			25
LGAC IPO								575,000			-
Customer deposits		-			314,730			63,539			-
Contributions from noncontrolling interests		25			1,193
Payments for:
Senior debt		-			(255,746	)
Customer deposits		(18,958	)		-			-			(18,958	)
Distributions to noncontrolling interests		(1,819	)		(7,811	)		(2,737	)		(1,819	)
Payments under tax receivable agreement		(25,454	)		(23,687	)		(10,215	)		(25,454	)
Payments of LGAC IPO underwriting fees and other offering costs								(9,352	)		-
Purchase of Class A common stock		(95,227	)		(351,712	)		(233,745	)		(95,227	)
Class A common stock dividends		(97,892	)		(155,324	)		(98,964	)		(97,892	)
Settlement of share-based incentive compensation		(71,052	)		(96,089	)		(65,592	)		(71,052	)
Other financing activities		(3,580	)		(4,697	)		(17,435	)		(3,580	)
Net cash used in financing activities		(313,957	)		(87,268	)
Net cash provided by (used in) financing activities								200,815			(313,957	)
EFFECT OF EXCHANGE RATE CHANGES ON CASH AND CASH EQUIVALENTS AND RESTRICTED CASH		(23,871	)		(8,701	)		(62,414	)		(23,871	)
NET DECREASE IN CASH AND CASH EQUIVALENTS AND RESTRICTED CASH		(362,894	)		(31,383	)
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS AND RESTRICTED CASH								136,710			(362,894	)
CASH AND CASH EQUIVALENTS AND RESTRICTED CASH— January 1		2,455,559			2,291,885			2,568,827			2,455,559
CASH AND CASH EQUIVALENTS AND RESTRICTED CASH— June 30	$	2,092,665		$	2,260,502		$	2,705,537		$	2,092,665

RECONCILIATION OF CASH AND CASH EQUIVALENTS AND RESTRICTED CASH WITHIN THE CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION:
	June 30,			December 31,			June 30,			December 31,
	2020			2019			2021			2020
Cash and cash equivalents	$	896,843		$	1,231,593		$	979,899		$	1,389,876
Deposits with banks and short-term investments		1,155,539			1,180,686			1,111,347			1,134,463
Cash deposited with clearing organizations and other segregated cash		40,283			43,280
Restricted cash								614,291			44,488
TOTAL CASH AND CASH EQUIVALENTS AND RESTRICTED CASH	$	2,092,665		$	2,455,559		$	2,705,537		$	2,568,827

See notes to condensed consolidated financial statements.

LAZARD LTD

CONDENSED CONSOLIDATED ~~STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY~~

~~FOR THE THREE MONTH PERIOD ENDED JUNE 30, 2019~~

~~(UNAUDITED)~~

~~(dollars in thousands)~~

Additional

Accumulated
Other
Comprehensive

Class A
Common Stock

Total
Lazard Ltd

Total

Common Stock

Paid-In-

Retained

Income (Loss),

Held By Subsidiaries

Stockholders’

Noncontrolling

Stockholders’

Shares

$

Capital

Earnings

Net of Tax

Shares

$

Equity

Interests

Equity

Balance - April 1, 2019

129,766,091

$
1,298

$
535,926

$
1,171,754

$
(268,858
)

17,846,122

$
(738,899
)

$
701,221

$
70,151

$
771,372

Comprehensive income (loss):

Net income

65,777

65,777

7,736

73,513

Other comprehensive loss - net of tax

(3,126
)

(3,126
)

(2
)

(3,128
)
Amortization of share-based incentive
   compensation

58,989

58,989

17,413

76,402

Dividend equivalents

4,630

(5,574
)

(944
)

(687
)

(1,631
)
Class A common stock dividends
   ($0.47 per share)

(51,922
)

(51,922
)

(51,922
)
Purchase of Class A common stock

4,537,055

(159,615
)

(159,615
)

(159,615
)
Delivery of Class A common stock in
   connection with share-based incentive
   compensation and related tax benefit
   of $477

(30,714
)

(621,924
)

25,759

(4,955
)

(4,955
)
Business acquisitions and related equity
   transactions:

Class A common stock issuable
   (including related amortization)

13,377

13,377

13,377

Dividend equivalents

134

(134
)

-

-

Distributions to noncontrolling interests, net

-

(6,999
)

(6,999
)
Consolidated VIEs

-

11,464

11,464

Balance - June 30, 2019

129,766,091

$
1,298

$
582,342

$
1,179,901

$
(271,984
)

21,761,253

$
(872,755
)

$
618,802

$
99,076

$
717,878

~~See notes to condensed consolidated financial statements.~~

~~LAZARD LTD~~

~~CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY~~

~~FOR THE SIX MONTH PERIOD ENDED JUNE 30, 2019~~

~~(UNAUDITED)~~

~~(dollars in thousands)~~

Additional

Accumulated
Other
Comprehensive

Class A
Common Stock

Total
Lazard Ltd

Total

Common Stock

Paid-In-

Retained

Income (Loss),

Held By Subsidiaries

Stockholders’

Noncontrolling

Stockholders’

Shares

$

Capital

Earnings

Net of Tax

Shares

$

Equity

Interests

Equity

Balance - January 1, 2019

129,766,091

$
1,298

$
750,692

$
1,195,563

$
(273,818
)

17,574,805

$
(756,884
)

$
916,851

$
53,242

$
970,093

Comprehensive income (loss):

Net income

162,819

162,819

7,170

169,989

Other comprehensive income (loss) - net of tax

1,834

1,834

(1
)

1,833

Amortization of share-based incentive
   compensation

125,202

125,202

35,881

161,083

Dividend equivalents

20,142

(22,761
)

(2,619
)

(2,062
)

(4,681
)
Class A common stock dividends
   ($1.41 per share)

(155,324
)

(155,324
)

(155,324
)
Purchase of Class A common stock

9,715,003

(351,712
)

(351,712
)

(351,712
)
Delivery of Class A common stock in
   connection with share-based incentive
   compensation and related tax benefit
   of $4,358

(327,572
)

(5,528,555
)

235,841

(91,731
)

(91,731
)
Business acquisitions and related equity
   transactions:

Class A common stock issuable
   (including related amortization)

13,482

13,482

13,482

Dividend equivalents

396

(396
)

-

-

Distributions to noncontrolling interests, net

-

(6,618
)

(6,618
)
Consolidated VIEs

-

11,464

11,464

Balance - June 30, 2019

129,766,091

$
1,298

$
582,342

$
1,179,901

$
(271,984
)

21,761,253

$
(872,755
)

$
618,802

$
99,076

$
717,878

~~See notes to condensed consolidated financial statements.~~

~~LAZARD LTD~~

~~CONDENSED CONSOLIDATED STATEMENTS~~STATEMENT OF CHANGES IN STOCKHOLDERS’ EQUITY

FOR THE THREE MONTH PERIOD ENDED JUNE 30, 2020

(UNAUDITED)

(dollars in thousands)

					Additional						Accumulated Other Comprehensive			Class A Common Stock						Total Lazard Ltd						Total
	Common Stock				Paid-In-			Retained			Income (Loss),			Held By Subsidiaries						Stockholders’			Noncontrolling			Stockholders’
	Shares		$		Capital			Earnings			Net of Tax			Shares			$			Equity			Interests			Equity
Balance - April 1, 2020		112,766,091	$	1,128	$	-		$	1,119,176		$	(333,412	)		8,235,358		$	(300,459	)	$	486,433		$	73,184		$	559,617
Comprehensive income (loss):
Net income (loss)									73,458												73,458			(382	)		73,076
Other comprehensive income (loss) - net of tax												24,491									24,491			(1	)		24,490
Amortization of share-based incentive compensation						67,386															67,386			1,158			68,544
Dividend equivalents						4,628			(5,146	)											(518	)		(1,186	)		(1,704	)
Class A common stock dividends ($0.47 per share)									(49,133	)											(49,133	)					(49,133	)
Delivery of Class A common stock in connection with share-based incentive compensation and related tax benefit of $636						(20,230	)								(449,667	)		16,541			(3,689	)					(3,689	)
Business acquisitions and related equity transactions:
Class A common stock issuable (including related amortization)						52															52						52
Delivery of Class A common stock						(19	)								(588	)		19			-						-
Dividend equivalents						457			(457	)											-						-
Distributions to noncontrolling interests, net																					-			(408	)		(408	)
Consolidated VIEs																					-			11,006			11,006
Other									2,117												2,117						2,117
Balance - June 30, 2020		112,766,091	$	1,128	$	52,274		$	1,140,015		$	(308,921	)		7,785,103		$	(283,899	)	$	600,597		$	83,371		$	683,968

See notes to condensed consolidated financial statements.

LAZARD LTD

CONDENSED CONSOLIDATED ~~STATEMENTS~~STATEMENT OF CHANGES IN STOCKHOLDERS’ EQUITY

FOR THE SIX MONTH PERIOD ENDED JUNE 30, 2020

(UNAUDITED)

(dollars in thousands)

					Additional						Accumulated Other Comprehensive			Class A Common Stock						Total Lazard Ltd						Total
	Common Stock				Paid-In-			Retained			Income (Loss),			Held By Subsidiaries						Stockholders’			Noncontrolling			Stockholders’
	Shares		$		Capital			Earnings			Net of Tax			Shares			$			Equity			Interests			Equity
Balance - January 1, 2020		112,766,091	$	1,128	$	41,020		$	1,193,570		$	(293,648	)		8,513,493		$	(332,079	)	$	609,991		$	71,583		$	681,574
Adjustment for cumulative effect on prior years from the adoption of new accounting guidance									(7,575	)											(7,575	)					(7,575	)
Balance, as adjusted January 1, 2020		112,766,091		1,128		41,020			1,185,995			(293,648	)		8,513,493			(332,079	)		602,416			71,583			673,999
Comprehensive income (loss):
Net income (loss)									137,480												137,480			(6,073	)		131,407
Other comprehensive loss - net of tax												(15,273	)								(15,273	)					(15,273	)
Amortization of share-based incentive compensation						138,136															138,136			2,569			140,705
Dividend equivalents						11,345			(12,540	)											(1,195	)		(2,372	)		(3,567	)
Class A common stock dividends ($0.94 per share)									(97,892	)											(97,892	)					(97,892	)
Purchase of Class A common stock															2,912,035			(95,227	)		(95,227	)					(95,227	)
Delivery of Class A common stock in connection with share-based incentive compensation and related tax benefit of $983						(138,556	)		(74,228	)					(3,619,213	)		142,715			(70,069	)					(70,069	)
Business acquisitions and related equity transactions:
Class A common stock issuable (including related amortization)						104															104						104
Delivery of Class A common stock						(692	)								(21,212	)		692			-						-
Dividend equivalents						917			(917	)											-						-
Distributions to noncontrolling interests, net																					-			(1,794	)		(1,794	)
Consolidated VIEs																					-			19,458			19,458
Other									2,117												2,117						2,117
Balance - June 30, 2020		112,766,091	$	1,128	$	52,274		$	1,140,015		$	(308,921	)		7,785,103		$	(283,899	)	$	600,597		$	83,371		$	683,968

See notes to condensed consolidated financial statements.

LAZARD LTD

CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS’ EQUITY AND REDEEMABLE NONCONTROLLING INTERESTS

FOR THE THREE MONTH PERIOD ENDED JUNE 30, 2021

(UNAUDITED)

(dollars in thousands)

					Additional						Accumulated Other Comprehensive			Class A Common Stock						Total Lazard Ltd						Total			Redeemable
	Common Stock				Paid-In-			Retained			Income (Loss),			Held By Subsidiaries						Stockholders’			Noncontrolling			Stockholders’			Noncontrolling
	Shares		$		Capital			Earnings			Net of Tax			Shares			$			Equity			Interests			Equity			Interests
Balance - April 1, 2021		112,766,091	$	1,128	$	-		$	1,278,907		$	(255,711	)		6,675,269		$	(259,319	)	$	765,005		$	101,694		$	866,699		$	575,000
Comprehensive income (loss):
Net income									123,178												123,178			1,738			124,916
Other comprehensive income (loss) - net of tax												29,063									29,063			(1	)		29,062
Amortization of share-based incentive compensation						72,078															72,078			3,618			75,696
Dividend equivalents						4,104			(4,438	)											(334	)		(1,731	)		(2,065	)
Class A common stock dividends ($0.47 per share)									(49,523	)											(49,523	)					(49,523	)
Purchase of Class A common stock															2,430,000			(111,093	)		(111,093	)					(111,093	)
Delivery of Class A common stock in connection with share-based incentive compensation and related tax expense of $55						(12,259	)								(286,615	)		11,416			(843	)					(843	)
Business acquisitions and related equity transactions:
Delivery of Class A common stock						(5,278	)								(113,357	)		5,278			-						-
Dividend equivalents						3			(3	)											-						-
Distributions to noncontrolling interests, net																					-			(1,401	)		(1,401	)
Consolidated VIEs																					-			(264	)		(264	)
Contribution from redeemable noncontrolling interests, net																					-			-			-			671
Change in redemption value of redeemable noncontrolling interests						(648	)														(648	)		1,319			671			(671	)
Balance - June 30, 2021		112,766,091	$	1,128	$	58,000		$	1,348,121		$	(226,648	)		8,705,297		$	(353,718	)	$	826,883		$	104,972		$	931,855		$	575,000

See notes to condensed consolidated financial statements.

LAZARD LTD

CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS’ EQUITY AND REDEEMABLE NONCONTROLLING INTERESTS

FOR THE SIX MONTH PERIOD ENDED JUNE 30, 2021

(UNAUDITED)

(dollars in thousands)

					Additional						Accumulated Other Comprehensive			Class A Common Stock						Total Lazard Ltd						Total			Redeemable
	Common Stock				Paid-In-			Retained			Income (Loss),			Held By Subsidiaries						Stockholders’			Noncontrolling			Stockholders’			Noncontrolling
	Shares		$		Capital			Earnings			Net of Tax			Shares			$			Equity			Interests			Equity			Interests
Balance - January 1, 2021		112,766,091	$	1,128	$	135,439		$	1,295,386		$	(238,368	)		7,728,387		$	(281,813	)	$	911,772		$	87,661		$	999,433		$	-
Comprehensive income (loss):
Net income									210,478												210,478			5,264			215,742
Other comprehensive income (loss) - net of tax												11,720									11,720			-			11,720
Amortization of share-based incentive compensation						137,984															137,984			5,903			143,887
Dividend equivalents						9,963			(10,819	)											(856	)		(3,462	)		(4,318	)
Class A common stock dividends ($0.94 per share)									(98,964	)											(98,964	)					(98,964	)
Purchase of Class A common stock															5,329,541			(233,745	)		(233,745	)					(233,745	)
Delivery of Class A common stock in connection with share-based incentive compensation and related tax expense of $1,144						(145,081	)		(47,902	)					(3,340,667	)		126,247			(66,736	)					(66,736	)
Business acquisitions and related equity transactions:
Delivery of Class A common stock						(35,593	)								(1,011,964	)		35,593			-						-
Dividend equivalents						58			(58	)											-						-
Distributions to noncontrolling interests, net																					-			(2,421	)		(2,421	)
Consolidated VIEs																					-			7,511			7,511
Contribution from redeemable noncontrolling interests, net																					-			-			-			534,746
Change in redemption value of redeemable noncontrolling interests						(44,770	)														(44,770	)		4,516			(40,254	)		40,254
Balance - June 30, 2021		112,766,091	$	1,128	$	58,000		$	1,348,121		$	(226,648	)		8,705,297		$	(353,718	)	$	826,883		$	104,972		$	931,855		$	575,000

See notes to condensed consolidated financial statements.

LAZARD LTD

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

(dollars in thousands, except for per share data, unless otherwise noted)

1.	ORGANIZATION AND BASIS OF PRESENTATION

Organization

Lazard Ltd, a Bermuda holding company, and its subsidiaries (collectively referred to as “Lazard Ltd”, “Lazard”, “we” or the “Company”), including Lazard Ltd’s indirect investment in Lazard Group LLC, a Delaware limited liability company (collectively referred to, together with its subsidiaries, as “Lazard Group”), is one of the world’s preeminent financial advisory and asset management firms and has long specialized in crafting solutions to the complex financial and strategic challenges of our clients. We serve a diverse set of clients around the world, including corporations, governments, institutions, partnerships and individuals.

Lazard Ltd indirectly held 100% of all outstanding Lazard Group common membership interests as of June 30, ~~2020~~2021 and December 31, ~~2019.~~2020. Lazard Ltd, through its control of the managing members of Lazard Group, controls Lazard Group, which is governed by an Amended and Restated Operating Agreement, dated as of February 4, 2019 (the “Operating Agreement”).

Lazard Ltd’s primary operating asset is its indirect ownership of the common membership interests of, and managing member interests in, Lazard Group, whose principal operating activities are included in 2 business segments:

•

Financial Advisory, which offers corporate, partnership, institutional, government, sovereign and individual clients across the globe a wide array of financial advisory services regarding mergers and acquisitions (“M&A”), restructurings, capital advisory, ~~restructurings,~~ shareholder advisory, sovereign advisory, capital raising and other strategic advisory ~~matters,~~matters; and

•

Asset Management, which offers a broad range of global investment solutions and investment management services in equity and fixed income strategies, asset allocation strategies, alternative investments and private equity funds to corporations, public funds, sovereign entities, endowments and foundations, labor funds, financial intermediaries and private clients.

In addition, we record selected other activities in our Corporate segment, including management of cash, investments, deferred tax assets, outstanding indebtedness, certain contingent obligations, and assets and liabilities associated with (i) Lazard Group’s Paris-based subsidiary, Lazard Frères Banque SA (“LFB”) and (ii) a special purpose acquisition company sponsored by an affiliate of the Company, Lazard Growth Acquisition Corp. I (“LGAC”).

Basis of Presentation

The accompanying condensed consolidated financial statements of Lazard Ltd have been prepared pursuant to the rules and regulations of the United States Securities and Exchange Commission (the “SEC”) regarding interim financial reporting. Accordingly, they do not include all of the information and notes required by accounting principles generally accepted in the United States of America (“U.S. GAAP”) for complete financial statements and should be read in conjunction with the audited consolidated financial statements and notes thereto included in Lazard Ltd’s Annual Report on Form 10-K for the year ended December 31, ~~2019.~~2020. The accompanying December 31, ~~2019~~2020 unaudited condensed consolidated statement of financial condition data was derived from audited consolidated financial statements, but does not include all disclosures required by U.S. GAAP for annual financial statement purposes. The accompanying condensed consolidated financial statements reflect all adjustments that are, in the opinion of management, necessary for a fair presentation of the financial position, results of operations and cash flows for the interim periods presented.

Preparing financial statements requires management to make estimates and assumptions that affect the amounts that are reported in the financial statements and the accompanying disclosures. For example, discretionary compensation and benefits expense for interim periods is accrued based on the year-to-date amount of revenue earned, and an assumed annual ratio of compensation and benefits expense to revenue, with the applicable amounts adjusted for certain items. Although these estimates are based on management’s knowledge of current events and actions that Lazard may undertake in the future, actual results may differ materially from the estimates.

The consolidated results of operations for the three month and six month periods ended June 30, ~~2020~~2021 are not indicative of the results to be expected for any future interim or annual period.

LAZARD LTD

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS-(Continued)

(UNAUDITED)

(dollars in thousands, except for per share data, unless otherwise noted)

The condensed consolidated financial statements include Lazard Ltd, Lazard Group and Lazard Group’s principal operating subsidiaries: Lazard Frères & Co. LLC (“LFNY”), a New York limited liability company, along with its subsidiaries, including Lazard Asset Management LLC and its subsidiaries (collectively referred to as “LAM”); the French limited liability companies Compagnie Financière Lazard Frères SAS (“CFLF”), along with its subsidiaries, LFB and Lazard Frères Gestion SAS (“LFG”), and Maison Lazard SAS and its subsidiaries; and Lazard & Co., Limited (“LCL”), through Lazard & Co., Holdings Limited (“LCH”), an English private limited company, together with their jointly owned affiliates and subsidiaries.

The Company’s policy is to consolidate entities in which it has a controlling financial interest. The Company consolidates:

•

Voting interest entities (“VOEs”) where the Company holds a majority of the voting interest in such VOEs, and

•

Variable interest entities (“VIEs”) where the Company is the primary beneficiary having the power to direct the activities of the VIE that most significantly impact the VIE’s economic performance and the obligation to absorb losses of, or receive benefits from, the VIE that could be potentially significant to the VIE (see Note ~~21)~~20).

When the Company does not have a controlling interest in an entity, but exerts significant influence over such entity’s operating and financial decisions, the Company either (i) applies the equity method of accounting in which it records a proportionate share of the entity’s net earnings or (ii) elects the option to measure its investment at fair value. Intercompany transactions and balances have been eliminated.

Lazard Growth Acquisition Corp. I

2.	~~RECENT ACCOUNTING DEVELOPMENTS~~

~~Financial Instruments—Credit Losses: Measurement~~In February 2021, LGAC consummated its $575,000 initial public offering (the “LGAC IPO”). LGAC is a special purpose acquisition company, incorporated as a Cayman Islands exempted company for the purpose of ~~Credit Losses on Financial Instruments—In June 2016,~~effecting a merger, share exchange, asset acquisition, share purchase, reorganization or similar business combination with one or more businesses (a “Business Combination”). LGACo 1 LLC, a Delaware series limited liability company and the ~~FASB issued new guidance regarding~~Company’s subsidiary, is the ~~measurement~~sponsor of ~~credit losses on financial instruments.~~LGAC. The ~~new guidance replaces~~Company controls LGAC through the ~~incurred loss impairment methodology~~sponsor’s ownership of Class B founder shares of LGAC. As a result, both LGAC and the sponsor are consolidated in the ~~current guidance with~~Company’s financial statements.

The proceeds from the LGAC IPO of $575,000 are held in a ~~methodology that reflects current expected credit losses (“CECL”) and requires consideration~~trust account, until the earlier of: (i) the completion of a ~~broader range of reasonable~~Business Combination and ~~supportable information to determine credit loss estimates.~~

~~The Company adopted~~(ii) the ~~new guidance on January 1, 2020 using a modified retrospective approach and recorded a $7,575 cumulative-effect adjustment to retained earnings upon adoption. The impact~~distribution of the ~~new guidance primarily relates~~funds in the trust account to the ~~Company’s fee receivables.~~

~~To comply~~LGAC shareholders in connection with the ~~CECL model,~~redemption of LGAC’s Class A ordinary shares, subject to certain conditions. The cash held in the ~~Company applies~~trust account is recorded in “Restricted Cash” on the condensed consolidated statements of financial condition.

Transaction costs, which consisted of a ~~bad debt charge-off rate, determined based on historical charge-off experience~~net underwriting fee of $8,500, $20,125 of non-cash deferred underwriting fees and ~~adjusted for specific allowance based on current conditions~~$852 of ~~individual customers, to measure~~other offering costs, were charged against the expected credit loss for fee receivables. The Company also performs a qualitative assessment, on a quarterly basis, to monitor economic factors and other uncertainties that may require additional adjustment togross proceeds of the ~~expected credit loss allowance.~~ LGAC IPO as consistent with SEC Staff Accounting Bulletin (SAB) Topic 5.

~~See Note 4 for further details~~“Redeemable noncontrolling interests” of $575,000 associated with the publicly held LGAC Class A ordinary shares are recorded on the Company’s ~~receivables~~condensed consolidated statements of financial condition as of June 30, 2021 at redemption value and ~~allowance for doubtful accounts.~~

~~Intangibles—Goodwill~~classified as temporary equity in accordance with Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 480 “Distinguishing Liabilities from Equity”. Changes in redemption value are recognized immediately as they occur and ~~Other: Simplifying~~will adjust the ~~Test for Goodwill Impairment~~—In January 2017, the FASB issued updated guidance that eliminated Step 2 from the goodwill impairment test. Step 2 is the process of measuring a goodwill impairment loss by comparing the implied faircarrying value of aredeemable noncontrolling interests to equal the redemption value at the end of each reporting ~~unit’s goodwill with~~period. Increases or decreases in the carrying amount of redeemable noncontrolling interests shall be affected by charges to additional paid-in-capital.

The warrants exercisable for LGAC Class A ordinary shares that ~~goodwill. The new guidance requires entities to measure~~were issued in connection with the LGAC IPO (the “LGAC Warrants”) meet the definition of a ~~goodwill impairment loss~~liability under FASB ASC Topic 815 and are classified as ~~the amount by which a reporting unit’s carrying value exceeds its~~derivative liabilities remeasured at fair value ~~limited~~at each balance sheet date until exercised, with changes in fair value each period reported to earnings. See Note 7.

Restricted Cash

Restricted cash primarily represents LGAC deposits discussed above and other restricted cash deposits made by the ~~carrying amount of goodwill. The FASB also eliminated~~Company, including those to satisfy the requirements for entities that have reporting units with zero or negative carrying amounts to perform a qualitative assessment for the goodwill impairment test. Instead, those entities would be required to disclose the amount of goodwill allocated to each reporting unit with a zero or negative carrying amount. The Company adopted the new guidance on January 1, 2020 and, in accordance with the new guidance, applied it prospectively to goodwill impairment tests performed after the adoption date.clearing organizations.

~~Intangibles—Internal-Use Software: Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement that is a Service Contract~~—In August 2018, the FASB issued updated guidance on the accounting for implementation costs incurred in a cloud computing arrangement. The new guidance requires the capitalization of the implementation costs incurred in a cloud computing arrangement to be aligned with the requirements for capitalizing costs incurred to develop or obtain internal-use software. The Company adopted the new guidance as of January 1, 2020 and, in accordance with the new guidance, applied it prospectively to implementation costs incurred after the adoption date.

LAZARD LTD

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS-(Continued)

(UNAUDITED)

(dollars in thousands, except for per share data, unless otherwise noted)

~~Related Party Guidance for Variable Interest Entities~~—In October 2018, the FASB issued updated guidance that requires consideration of indirect interest held through related parties under common control for determining whether fees paid to decision makers and service providers are variable interests. The amendments are required to be applied retrospectively with a cumulative-effect adjustment. The Company adopted the new guidance as of January 1, 2020 and its application did not have a material impact to the Company’s financial statements.

~~Fair Value Measurement: Changes to the Disclosure Requirements for Fair Value Measurement~~—In August 2018, the FASB issued updated guidance which modifies the disclosure requirements on fair value measurement. The updated guidance eliminates or modifies various required disclosures under the current guidance and includes additional requirements. The additional disclosures related to level 3 fair value measurements are to be applied prospectively and other amendments are to be applied retrospectively. The Company adopted the new guidance on January 1, 2020 and its application did not have a material impact to the Company’s financial statements.

~~Compensation–Retirement Benefits: Changes to the Disclosure Requirements for Defined Benefit Plans~~—In August 2018, the FASB issued updated guidance which modifies the disclosure requirements regarding defined benefit plans and other postretirement plans. The updated guidance eliminates or clarifies certain currently required disclosures and includes additional requirements. The Company adopted the new guidance on January 1, 2020 and will update its annual disclosures in accordance with the new guidance.

2.	RECENT ACCOUNTING DEVELOPMENTS

Simplifying the Accounting for Income Taxes—In December 2019, the FASB issued new guidance to simplify the accounting for income taxes. The amendments ~~include~~included the removal of certain exceptions and various improvements. These improvements are related to the accounting for franchise tax based on income, evaluation of step up in tax basis of goodwill, allocation of consolidated tax expense to standalone legal entities, recognition of enacted change in tax laws or rates, and other minor changes. The Company adopted the new guidance ~~is effective for annual and interim reporting periods beginning after December 15, 2020, with early adoption permitted.~~on January 1, 2021. The Company ~~is currently evaluating~~evaluated each of the ~~new guidance.~~amendments, and the adoption of the amendments did not have a material impact to the Company’s financial statements.

3.	REVENUE RECOGNITION

~~Investment Banking and Other AdvisoryFees~~—Fees for Financial Advisory services are recorded when: (i) a contract with a client has been identified, (ii) the performance obligations in the contract have been identified, (iii) the fee or other transaction price has been determined, (iv) the fee or other transaction price has been allocated to each performance obligation in the contract, and (v) the Company has satisfied the applicable performance obligation. The expenses that are directly related to such transactions are recorded as incurred and presented within operating expenses when the Company is primarily responsible for fulfilling the promise of the arrangement. Revenues associated with the reimbursement of such expenses are recorded when the Company is contractually entitled to reimbursement and presented within investment banking and other advisory fees.

~~Asset Management Fees~~—Fees for Asset Management services are primarily comprised of management fees and incentive fees. Management fees are derived from fees for investment management and other services provided to clients. Revenue is recorded in accordance with the same five criteria as Financial Advisory fees, which generally results in management fees being recorded on a daily, monthly or quarterly basis, primarily based on a percentage of client assets managed. Fees vary with the type of assets managed, with higher fees earned on equity assets, alternative investment (such as hedge fund) and private equity funds, and lower fees earned on fixed income and money market products. Expenses that are directly related to the sale or distribution of fund interests are recorded as incurred and presented within operating expenses when the Company is primarily responsible for fulfilling the promise of the arrangement. Revenues associated with the reimbursement of such expenses are recorded when the Company is contractually entitled to reimbursement and presented within asset management fees.

In addition, the Company earns performance-based incentive fees on various investment products, including traditional products and alternative investment funds such as hedge funds and private equity funds.

For hedge funds, incentive fees are calculated based on a specific percentage of a fund’s net appreciation, in some cases in excess of established benchmarks or thresholds. The Company records incentive fees on traditional products and hedge funds when a significant reversal in the amount of the cumulative revenue to be recognized is not probable, which is typically at the end of the relevant performance measurement period. The incentive fee measurement period is generally an annual period (unless an account is terminated during the year). The incentive fees received at the end of the measurement period are not subject to reversal or payback.

~~LAZARD LTD~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS-(Continued)~~

~~(UNAUDITED)~~

~~(dollars in thousands, except for per share data, unless otherwise noted)~~

Incentive fees on hedge funds generally are subject to loss carryforward provisions in which losses incurred by the hedge funds in any year are applied against certain gains realized by the hedge funds in future periods before any incentive fees can be earned.

For private equity funds, incentive fees may be earned in the form of a “carried interest” if profits arising from realized investments exceed a specified threshold. Typically, such carried interest is ultimately calculated on a whole-fund basis and, therefore, clawback of carried interests during the life of the fund can occur. As a result, the Company records incentive fees earned on our private equity funds when a significant reversal in the amount of the cumulative revenue to be recognized is not probable, which is typically at the end of the relevant performance period.

~~Receivables relating to asset management and incentive fees are reported in “fees receivable” on the consolidated statements of financial condition.~~

The Company disaggregates revenue based on its business segment results and believes that the following information provides a reasonable representation of how performance obligations relate to the nature, amount, timing and uncertainty of revenue and cash flows:

	Three Months Ended				Six Months Ended				Three Months Ended				Six Months Ended
	June 30,				June 30,				June 30,				June 30,
	2020		2019		2020		2019		2021		2020		2021		2020
Net Revenue:
Financial Advisory (a)	$	304,806	$	329,612	$	603,772	$	667,982	$	451,940	$	304,806	$	770,352	$	603,772

Asset Management:
Management Fees and Other (b)	$	254,100	$	310,316	$	535,107	$	611,569	$	330,969	$	254,100	$	645,482	$	535,107
Incentive Fees (c)		749		5,275		2,263		5,855		34,286		749		67,263		2,263
Total Asset Management	$	254,849	$	315,591	$	537,370	$	617,424	$	365,255	$	254,849	$	712,745	$	537,370

(a)

Financial Advisory is comprised of a wide array of financial advisory services regarding M&A ~~Advisory, Capital Advisory, Capital Raising, Restructuring, Shareholder Advisory, Sovereign Advisory,~~advisory, restructuring, capital advisory, shareholder advisory, sovereign advisory, capital raising and other strategic advisory work for clients. The benefits of these advisory services are generally transferred to the Company’s clients over time, and consideration for these advisory services typically includes transaction completion, transaction announcement and retainer fees. Retainer fees are generally fixed and recognized over the period in which the advisory services are performed. However, transaction announcement and transaction completion fees are variable and subject to constraints, and they are typically not recognized until there is an announcement date or a completion date, respectively, due to the uncertainty associated with those events. Therefore, in any given period, advisory fees recognized for certain transactions will relate to services performed in prior periods. The advisory fees that may be unrecognized as of the end of a reporting period, primarily comprised of fees associated with transaction announcements and transaction completions, generally remain unrecognized due to the uncertainty associated with those events.

(b)

Management fees and other is primarily comprised of management services. The benefits of these management services are transferred to the Company’s clients over time. Consideration for these management services generally includes management fees, which are based on assets under management and recognized over the period in which the management services are performed. The selling or distribution of fund interests is a separate performance obligation within management fees and other, and the benefits of such services are transferred to the Company’s clients at the point in time that such fund interests are sold or distributed.

(c)

Incentive fees is primarily comprised of management services. The benefits of these management services are transferred to the Company’s clients over time. Consideration for these management services is generally variable and includes performance or incentive fees. The fees allocated to these management services that are unrecognized as of the end of the reporting period are generally amounts that are subject to constraints due to the uncertainty associated with performance targets and clawbacks.

In addition to the above, contracts with clients include trade-based commission income, which is recognized at the point in time of execution and presented within other revenue. Such income may be earned by providing trade facilitation, execution, clearance and settlement, custody, and trade administration services to clients.

LAZARD LTD

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS-(Continued)

(UNAUDITED)

(dollars in thousands, except for per share data, unless otherwise noted)

With regard to the disclosure requirement for remaining performance obligations, the Company elected the practical expedients permitted in the guidance to (i) exclude contracts with a duration of one year or less; and (ii) exclude variable consideration, such as transaction completion and transaction announcement fees, that is allocated entirely to unsatisfied performance obligations. Excluded variable consideration typically relates to contracts with a duration of one year or less, and is generally constrained due to uncertainties. Therefore, when applying the practical expedients, amounts related to remaining performance obligations are not material to the Company’s financial statements.

4.	RECEIVABLES

The Company’s receivables represent fee receivables, amounts due from customers and other receivables. The fee receivables are generally due within 60 days from the date of invoice, except as related to certain Restructuring services and certain Capital Raising activities, specifically Private Capital Advisory services, which have fee receivables due upon specified contractual payment terms. For customer loans within ~~customer~~customers and other receivables, the Company has elected to apply the practical expedient, in accordance with ~~CECL~~current expected credit losses (“CECL”) guidance, for financial assets with collateral maintenance provisions, which results in no expected credit losses given that these loans are maintained with collateral having a fair value in excess of the carrying amount of the loans as of June 30, ~~2020.~~2021.

Receivables are stated net of an estimated allowance for doubtful accounts determined in accordance with the CECL model, for general credit risk of the overall portfolio and for specific accounts deemed uncollectible, which may include situations where a fee is in dispute.

For fee receivables, the allowance for doubtful accounts is determined together for all Financial Advisory fees, except for Private Capital Advisory given the different nature of the business, client composition and risk characteristics. In addition, a separate allowance for doubtful accounts is determined for all Asset Management fees. The allowance is measured by the application of an average charge-off rate, determined annually based on historical bad debt charge-off experience, to the fee receivable balance of the respective services, adjusted for specific allowance recognized based on current conditions of individual clients. The current factors are considered on a quarterly basis and include the aging of the receivables, the ~~clients’~~client’s ability to make payments, and the Company’s relationship with the client. In addition, the Company also performs a qualitative assessment on a quarterly basis to monitor economic factors and other uncertainties that may require additional adjustment to the expected credit loss allowance.

With respect to fees receivable from Financial Advisory activities, such receivables are generally deemed past due when they are outstanding 60 days from the date of invoice, except for certain transactions that include specific contractual payment terms that may vary from approximately one month to four years following the invoice date (as is the case for certain Private Capital Advisory fees) or may be subject to court approval (as is the case with Restructuring activities that include bankruptcy proceedings). In such cases, receivables are deemed past due when payment is not received by the agreed-upon contractual date or the court approval date, respectively. Financial Advisory fee receivables past due, from the date of invoice or the specific contractual payment terms, in excess of 180 days are fully provided for unless there is evidence that the balance is collectible. Notwithstanding our policy for receivables past due, any receivables that we determine are impaired result in specific reserves against such exposures. Asset Management fees are fully provided for when such receivables are outstanding 12 months after the invoice date. In addition, the Company specifically reserves against exposures relating to Asset Management fees where we determine receivables are impaired prior to being outstanding for 12 months.

LAZARD LTD

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS-(Continued)

(UNAUDITED)

(dollars in thousands, except for per share data, unless otherwise noted)

Activity in the allowance for doubtful accounts for the three month and six month periods ended June 30, ~~2020~~2021 and ~~2019~~2020 was as follows:

	Three Months Ended					Six Months Ended						Three Months Ended					Six Months Ended
	June 30,					June 30,						June 30,					June 30,
	2020		2019			2020			2019			2021			2020		2021			2020
Beginning Balance	$	31,287	$	43,258		$	27,130		$	40,164		$	35,002		$	31,287	$	36,649		$	27,130
Adjustment for adoption of new accounting guidance		-		-			7,575			-			-			-		-			7,575
Bad debt expense, net of reversals		9,444		(9,380	)		8,917			(5,551	)		2,169			9,444		2,544			8,917
Charge-offs, foreign currency translation and other adjustments		228		(343	)		(2,663	)		(1,078	)		(927	)		228		(2,949	)		(2,663	)
Ending Balance *	$	40,959	$	33,535		$	40,959		$	33,535		$	36,244		$	40,959	$	36,244		$	40,959

*The allowance for doubtful accounts balances are substantially all related to M&A and Restructuring fee receivables that include recoverable expense receivables.

Bad debt expense, net of reversals represents the current period provision of expected credit losses and is included in “operating expenses—other” on the condensed consolidated statements of operations.

Of the Company’s fee receivables at June 30, ~~2020~~2021 and December 31, ~~2019, $77,941~~2020, $100,902 and ~~$77,052,~~$90,521, respectively, represented ~~interest-bearing~~ financing receivables for our Private Capital Advisory fees. Based upon our historical loss experience, the credit quality of the counterparties, and the lack of uncollectible amounts, there was 0 allowance for doubtful accounts required at those dates related to such receivables.

At June 30, 2021 and December 31, 2020, customers and other receivables included $123,185 and $99,965, respectively, of customer loans, which are fully collateralized and closely monitored for counterparty creditworthiness, with such collateral having a fair value in excess of the carrying amount of the loans as of June 30, 2021 and December 31, 2020.

The aggregate carrying amount of ~~our non-interest bearing~~all other receivables of ~~$574,171~~$594,713 and ~~$586,086~~$552,655 at June 30, ~~2020~~2021 and December 31, ~~2019,~~2020, respectively, approximates fair value.

5.	INVESTMENTS

The Company’s investments and securities sold, not yet purchased, consist of the following at June 30, ~~2020~~2021 and December 31, ~~2019:~~2020:

	June 30,		December 31,		June 30,		December 31,
	2020		2019		2021		2020
Interest-bearing deposits	$	-	$	517
Debt		-		100,000	$	174,991	$	99,987
Equities		39,690		48,521		47,124		37,365
Funds:
Alternative investments (a)		32,610		16,581		40,670		34,264
Debt (a)		134,527		113,579		127,811		123,554
Equity (a)		280,853		218,435		437,105		325,795
Private equity		35,686		34,362		40,006		37,567
		483,676		382,957		645,592		521,180
Total investments		523,366		531,995
Less:
Interest-bearing deposits		-		517
Investments, at fair value	$	523,366	$	531,478	$	867,707	$	658,532
Securities sold, not yet purchased, at fair value (included in “other liabilities”)	$	10,127	$	12,894	$	3,295	$	1,176

(a)

Interests in alternative investment funds, debt funds and equity funds include investments with fair values of ~~$9,886, $100,858~~$15,955, $95,699 and ~~$228,353,~~$372,988, respectively, at June 30, ~~2020~~2021 and ~~$9,881, $78,360~~$11,128, $90,758 and ~~$170,897,~~$277,725, respectively, at December 31, ~~2019,~~2020, held in order to satisfy the Company’s liability upon vesting of previously granted Lazard Fund Interests (“LFI”) and other similar

LAZARD LTD

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS-(Continued)

(UNAUDITED)

(dollars in thousands, except for per share data, unless otherwise noted)

deferred compensation arrangements. LFI represent grants by the Company to eligible employees of actual or notional interests in a number of Lazard-managed funds, subject to service-based vesting conditions (see Notes 7 and 13).

Interest-bearing deposits have original maturities of greater than three months but equal to or less than one year and are carried at cost that approximates fair value due to their short-term maturities.

Debt primarily consists of U.S. Treasury securities with original maturities of greater than three months and less than one year.

Equities primarily consist of seed investments invested in marketable equity securities of large-, mid- and small-cap domestic, international and global companies held within separately managed accounts related to our Asset Management business.

Alternative investment funds primarily consist of interests in various Lazard-managed hedge funds, funds of funds and mutual funds. Such amounts primarily consist of seed investments in funds related to our Asset Management business and amounts related to LFI discussed above.

Debt funds primarily consist of seed investments in funds related to our Asset Management business that invest in debt securities, amounts related to LFI discussed above and an investment in a Lazard-managed debt fund.

Equity funds primarily consist of seed investments in funds related to our Asset Management business that invest in equity securities, and amounts related to LFI discussed above.

Private equity investments include those owned by Lazard and those consolidated but not owned by Lazard. Private equity investments owned by Lazard are primarily comprised of investments in private equity funds. Such investments primarily include (i) Edgewater Growth Capital Partners III, L.P. (“EGCP III”), a fund primarily making equity and buyout investments in middle market companies and (ii) a fund targeting significant noncontrolling-stake investments in established private companies.

Private equity investments consolidated but not owned by Lazard relate to the economic interests that are owned by the management team and other investors in the Edgewater Funds (“Edgewater”).

During the three month and six month periods ended June 30, ~~2020~~2021 and ~~2019,~~2020, the Company reported in “revenue-other” on its condensed consolidated statements of operations net unrealized investment gains and losses pertaining to “equity securities and trading debt securities” still held as of the reporting date as follows:

Three Months Ended

Six Months Ended

June 30,

June 30,

2020

2019

2020

2019

Net unrealized investment gains (losses)

$
43,494

$
7,229

$
(938
)

$
27,152

	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2021		2020		2021		2020
Net unrealized investment gains (losses)	$	18,637	$	43,494	$	19,691	$	(938	)

6.	FAIR VALUE MEASUREMENTS

Fair Value Hierarchy of Investments and Certain Other Assets and Liabilities—Lazard categorizes its investments and certain other assets and liabilities recorded at fair value into a three-level fair value hierarchy as follows:

Level 1.

Assets and liabilities whose values are based on unadjusted quoted prices for identical assets or liabilities in an active market that Lazard has the ability to access.

Level 2.

Assets and liabilities whose values are based on (i) quoted prices for similar assets or liabilities in an active market, or quoted prices for identical or similar assets or liabilities in non-active markets, or (ii) inputs other than quoted prices that are directly observable or derived principally from, or corroborated by, market data.

Level 3.

Assets and liabilities whose values are based on prices or valuation techniques that require inputs that are both unobservable and significant to the overall fair value measurement. These inputs reflect our own assumptions about the assumptions a market participant would use in pricing the asset or liability. Items included in Level 3 include securities or other financial assets whose trading volume and level of activity have significantly decreased when compared with normal market activity and there is no longer sufficient frequency or volume to provide pricing information on an ongoing basis.

17The fair value of debt is classified as Level 1 when the fair values are based on unadjusted quoted prices in active markets.

LAZARD LTD

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS-(Continued)

(UNAUDITED)

(dollars in thousands, except for per share data, unless otherwise noted)

~~The fair value of debt is classified as Level 1 when the fair values are based on unadjusted quoted prices in active markets.~~

The fair value of equities is classified as Level 1 or Level 3 as follows: marketable equity securities are classified as Level 1 and are valued based on the last trade price on the primary exchange for that security as provided by external pricing services; equity ~~securities~~interests in private companies are generally classified as Level 3.

The fair value of investments in alternative investment funds, debt funds and equity funds is classified as Level 1 when the fair values are primarily based on the publicly reported closing price for the fund.

The fair value of investments in private equity funds is classified as Level 3 for certain investments that are valued based on the potential transaction ~~value as of June 30, 2020.~~value.

The fair value of securities sold, not yet purchased, is classified as Level 1 when the fair values are based on unadjusted quoted prices in active markets.

The fair value of derivatives entered into by the ~~contingent consideration liability is~~Company and classified as Level ~~3 and the fair value of the liability~~1 is remeasured at each reporting period. The inputs used to derive the fair value of the contingent consideration include the application of probabilities when assessing certain performance thresholds for the relevant periods.Any change in the fair value is recognized in “amortization and other acquisition-related (benefits) costs” in the condensed consolidated statement of operations. Our business acquisitions may involve the potential payment of contingent consideration upon the achievement of certain performance thresholds. The contingent consideration liability is initially recorded at fair value of the contingent paymentsbased on the ~~acquisition date and is included in “other liabilities” on the condensed consolidated statements~~listed market price of ~~financial condition.~~

such instruments. The fair value of derivatives entered into by the Company isand classified as Level 2 ~~and~~ is based on the values of the related underlying assets, indices or reference rates as follows: the fair value of forward foreign currency exchange rate contracts is a function of the spot rate and the interest rate differential of the two currencies from the trade date to settlement date; the fair value of total return swaps is based on the change in fair value of the related underlying equity security, financial instrument or index and a specified notional holding; the fair value of interest rate swaps is based on the interest rate yield curve; and the fair value of derivative liabilities related to LFI and other similar deferred compensation arrangements is based on the value of the underlying investments, adjusted for forfeitures. The fair value of derivatives entered into by the Company and classified as Level 3 is based on a Black-Scholes valuation model that utilizes both observable and unobservable inputs. Unobservable inputs include model adjustments for valuation uncertainty. See Note 7.

~~LAZARD LTD~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS-(Continued)~~

~~(UNAUDITED)~~

~~(dollars in thousands, except for per share data, unless otherwise noted)~~

Investments Measured at Net Asset Value (“NAV”)—As a practical expedient, the Company uses NAV or its equivalent to measure the fair value of certain investments. NAV is primarily determined based on information provided by external fund administrators. The Company’s investments valued at NAV as a practical expedient in (i) alternative investment funds, debt funds and equity funds are redeemable in the near term, and (ii) private equity funds are not redeemable in the near term as a result of redemption restrictions.

The following tables present, as of June 30, ~~2020~~2021 and December 31, ~~2019,~~2020, the classification of (i) investments and certain other assets and liabilities measured at fair value on a recurring basis within the fair value hierarchy and (ii) investments measured at NAV or its equivalent as a practical expedient:

June 30, 2020

Level 1

Level 2

Level 3

NAV

Total

Assets:

Investments:

Equities

$
38,110

$
-

$
1,580

$
-

$
39,690

Funds:

Alternative investments

15,574

-

-

17,036

32,610

Debt

134,522

-

-

5

134,527

Equity

280,817

-

-

36

280,853

Private equity

-

-

1,012

34,674

35,686

Derivatives

-

6,652

-

-

6,652

Total

$
469,023

$
6,652

$
2,592

$
51,751

$
530,018

Liabilities:

Securities sold, not yet purchased

$
10,127

$
-

$
-

$
-

$
10,127

Derivatives

-

275,773

-

-

275,773

Total

$
10,127

$
275,773

$
-

$
-

$
285,900

	December 31, 2019										June 30, 2021
	Level 1		Level 2		Level 3		NAV		Total		Level 1		Level 2		Level 3		NAV		Total
Assets:
Investments:
Debt	$	100,000	$	-	$	-	$	-	$	100,000	$	174,991	$	-	$	-	$	-	$	174,991
Equities		46,921		-		1,600		-		48,521		45,478		-		1,646		-		47,124
Funds:
Alternative investments		15,731		-		-		850		16,581		17,849		-		-		22,821		40,670
Debt		113,574		-		-		5		113,579		127,806		-		-		5		127,811
Equity		218,393		-		-		42		218,435		437,055		-		-		50		437,105
Private equity		-		-		1,371		32,991		34,362		-		-		2,628		37,378		40,006
Derivatives		-		1,395		-		-		1,395		-		1,065		-		-		1,065
Total	$	494,619	$	1,395	$	2,971	$	33,888	$	532,873	$	803,179	$	1,065	$	4,274	$	60,254	$	868,772
Liabilities:
Securities sold, not yet purchased	$	12,894	$	-	$	-	$	-	$	12,894	$	3,295	$	-	$	-	$	-	$	3,295
Derivatives		-		236,273		-		-		236,273		13,225		397,277		-		-		410,502
Total	$	12,894	$	236,273	$	-	$	-	$	249,167	$	16,520	$	397,277	$	-	$	-	$	413,797

1917

LAZARD LTD

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS-(Continued)

(UNAUDITED)

(dollars in thousands, except for per share data, unless otherwise noted)

	December 31, 2020
	Level 1		Level 2		Level 3		NAV		Total
Assets:
Investments:
Debt	$	99,987	$	-	$	-	$	-	$	99,987
Equities		35,694		-		1,671		-		37,365
Funds:
Alternative investments		17,411		-		-		16,853		34,264
Debt		123,549		-		-		5		123,554
Equity		325,749		-		-		46		325,795
Private equity		-		-		1,486		36,081		37,567
Derivatives		-		536		-		-		536
Total	$	602,390	$	536	$	3,157	$	52,985	$	659,068
Liabilities:
Securities sold, not yet purchased	$	1,176	$	-	$	-	$	-	$	1,176
Derivatives		-		314,485		-		-		314,485
Total	$	1,176	$	314,485	$	-	$	-	$	315,661

The following tables provide a summary of changes in fair value of the Company’s Level 3 assets and liabilities for the three month and six month periods ended June 30, ~~2020~~2021 and ~~2019:~~2020:

	Three Months Ended June 30, 2020														Three Months Ended June 30, 2021
	Beginning Balance		Net Unrealized/ Realized Gains/Losses Included In Earnings (a)			Purchases/ Acquisitions		Sales/ Dispositions/ Settlements		Foreign Currency Translation Adjustments			Ending Balance		Beginning Balance		Net Unrealized/ Realized Gains/Losses Included In Earnings (a)		Purchases/ Acquisitions/ Issuances		Sales/ Dispositions/ Settlements/ Transfers (b)			Foreign Currency Translation Adjustments		Ending Balance
Assets:
Investments:
Equities	$	1,425	$	156		$	-	$	-	$	(1	)	$	1,580	$	1,641	$	0	$	0	$	0		$	5	$	1,646
Private equity funds		1,347		(335	)		-		-		-			1,012		1,472		1,152		0		0			4		2,628
Total Level 3 Assets	$	2,772	$	(179	)	$	-	$	-	$	(1	)	$	2,592
Total Level 3 assets															$	3,113	$	1,152	$	0	$	0		$	9	$	4,274

Liabilities:
Derivatives															$	11,500	$	0	$	0	$	(11,500	)	$	0	$	0
Total Level 3 liabilities															$	11,500	$	0	$	0	$	(11,500	)	$	0	$	0

Six Months Ended June 30, 2020

Beginning
Balance

Net Unrealized/
Realized
Gains/Losses
Included In
Earnings (a)

Purchases/
Acquisitions

Sales/
Dispositions/
Settlements

Foreign
Currency
Translation
Adjustments

Ending
Balance

Assets:

Investments:

Equities

$
1,600

$
57

$
-

$
-

$
(77
)

$
1,580

Private equity funds

1,371

(359
)

-

-

-

1,012

Total Level 3 Assets

$
2,971

$
(302
)

$
-

$
-

$
(77
)

$
2,592

	Three Months Ended June 30, 2019														Six Months Ended June 30, 2021
	Beginning Balance		Net Unrealized/ Realized Gains/Losses Included In Earnings (a)			Purchases/ Acquisitions/ Transfers (b)		Sales/ Dispositions/ Settlements			Foreign Currency Translation Adjustments		Ending Balance		Beginning Balance		Net Unrealized/ Realized Gains/Losses Included In Earnings (a)		Purchases/ Acquisitions/ Issuances		Sales/ Dispositions/ Settlements/ Transfers (b)			Foreign Currency Translation Adjustments			Ending Balance
Assets:
Investments:
Equities	$	1,618	$	(12	)	$	-	$	-		$	-	$	1,606	$	1,671	$	1	$	0	$	0		$	(26	)	$	1,646
Private equity funds		-		-			2,131		-			-		2,131		1,486		1,152		0		0			(10	)		2,628
Total Level 3 Assets	$	1,618	$	(12	)	$	2,131	$	-		$	-	$	3,737
Total Level 3 assets															$	3,157	$	1,153	$	0	$	0		$	(36	)	$	4,274

Liabilities:
Contingent consideration liability	$	13,048	$	4,611		$	-	$	(13,273	)	$	-	$	4,386
Total Level 3 Liabilities	$	13,048	$	4,611		$	-	$	(13,273	)	$	-	$	4,386
Derivatives															$	0	$	0	$	11,500	$	(11,500	)	$	0		$	0
Total Level 3 liabilities															$	0	$	0	$	11,500	$	(11,500	)	$	0		$	0

2018

LAZARD LTD

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS-(Continued)

(UNAUDITED)

(dollars in thousands, except for per share data, unless otherwise noted)

	Six Months Ended June 30, 2019															Three Months Ended June 30, 2020
	Beginning Balance		Net Unrealized/ Realized Gains/Losses Included In Earnings (a)			Purchases/ Acquisitions/ Transfers (b)		Sales/ Dispositions/ Settlements			Foreign Currency Translation Adjustments			Ending Balance		Beginning Balance		Net Unrealized/ Realized Gains/Losses Included In Earnings (a)			Purchases/ Acquisitions		Sales/ Dispositions/ Settlements		Foreign Currency Translation Adjustments			Ending Balance
Assets:
Investments:
Equities	$	1,622	$	(14	)	$	-	$	-		$	(2	)	$	1,606	$	1,425	$	156		$	0	$	0	$	(1	)	$	1,580
Private equity funds		-		-			2,131		-			-			2,131		1,347		(335	)		0		0		0			1,012
Total Level 3 Assets	$	1,622	$	(14	)	$	2,131	$	-		$	(2	)	$	3,737
Total Level 3 assets																$	2,772	$	(179	)	$	0	$	0	$	(1	)	$	2,592

Liabilities:
Contingent consideration liability	$	10,009	$	7,650		$	-	$	(13,273	)	$	-		$	4,386
Total Level 3 Liabilities	$	10,009	$	7,650		$	-	$	(13,273	)	$	-		$	4,386

	Six Months Ended June 30, 2020
	Beginning Balance		Net Unrealized/ Realized Gains/Losses Included In Earnings (a)			Purchases/ Acquisitions		Sales/ Dispositions/ Settlements		Foreign Currency Translation Adjustments			Ending Balance
Assets:
Investments:
Equities	$	1,600	$	57		$	0	$	0	$	(77	)	$	1,580
Private equity funds		1,371		(359	)		0		0		0			1,012
Total Level 3 assets	$	2,971	$	(302	)	$	0	$	0	$	(77	)	$	2,592

(a)

Earnings recorded in “other revenue” for investments in ~~equities~~Level 3 assets for the three month and six month periods ended June 30, ~~2020~~2021 and ~~2019~~2020 include net unrealized ~~losses~~gains (losses) of ~~$179, $302, $12~~$1,152, $1,153, $(179) and ~~$14,~~$(302), respectively. Earnings recorded in “amortization and other acquisition-related costs” for the contingent consideration liability for the three month and six month periods ended June 30, 2019 include unrealized losses of $4,611 and $7,650, respectively.

(b)

~~Certain investments that were valued at NAV as~~Transfers out of ~~December 31, 2018 were transferred to~~ Level 3 derivatives during the three month ~~and six month periods~~period ended June 30, ~~2019 as~~2021 reflected transfers of derivative liabilities for LGAC Warrants to Level 1 principally due to a change in the inputs used to value these ~~investments are valued based on a potential transaction value that differs from NAV.~~derivatives.

There were 0 other transfers into or out of Level 3 within the fair value hierarchy during the three month and six month periods ended June 30, ~~2020~~2021 and ~~2019.~~2020.

The following tables present, at June 30, ~~2020~~2021 and December 31, ~~2019,~~2020, certain investments that are valued using NAV or its equivalent as a practical expedient in determining fair value:

June 30, 2020

June 30, 2021

Investments Redeemable

Fair Value

Unfunded

Commitments

% of

Fair Value

Not

Redeemable

Redemption

Frequency

Redemption

Notice Period

Fair Value

Unfunded

Commitments

% of

Fair Value

Not

Redeemable

Redemption

Frequency

Redemption

Notice Period

Alternative investment funds:

Hedge funds

16,440

(a)

30-60 days

22,190

(a)

30-60 days

Other

596

(b)

<30-30 days

631

(b)

<30-30 days

Debt funds

(c)

<30 days

(c)

<30 days

Equity funds

(d)

<30-60 days

(d)

<30-60 days

Private equity funds:

Equity growth

34,674

6,056

(e)

100%

(f)

37,378

5,604

(e)

100%

(f)

Total

51,751

6,056

60,254

5,604

(a)	monthly ~~(99%~~(79%) and quarterly ~~(1%~~(21%)

(b)	daily ~~(6%~~(8%) and monthly ~~(94%~~(92%)

(c)	daily (100%)

(d)	monthly ~~(36%~~(38%) and annually ~~(64%~~(62%)

LAZARD LTD

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS-(Continued)

(UNAUDITED)

(dollars in thousands, except for per share data, unless otherwise noted)

(e)	Unfunded commitments to private equity investments consolidated but not owned by Lazard of ~~$11,155~~$9,225 are excluded. Such commitments are required to be funded by capital contributions from noncontrolling interest holders.

(f)	Distributions from each fund will be received as the underlying investments of the funds are liquidated.

~~LAZARD LTD~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS-(Continued)~~

~~(UNAUDITED)~~

~~(dollars in thousands, except for per share data, unless otherwise noted)~~

	December 31, 2019											December 31, 2020
										Investments Redeemable											Investments Redeemable
	Fair Value		Unfunded Commitments			% of Fair Value Not Redeemable				Redemption Frequency	Redemption Notice Period	Fair Value		Unfunded Commitments			% of Fair Value Not Redeemable				Redemption Frequency	Redemption Notice Period
Alternative investment funds:
Hedge funds	$	241	$	-		NA				(a)	30-60 days	$	16,216	$	-		NA				(a)	30-60 days
Other		609		-		NA				(b)	<30-30 days		637		-		NA				(b)	<30-30 days
Debt funds		5		-		NA				(c)	<30 days		5		-		NA				(c)	<30 days
Equity funds		42		-		NA				(d)	<30-60 days		46		-		NA				(d)	<30-60 days
Private equity funds:
Equity growth		32,991		6,056	(e)		100	%	(f)	NA	NA		36,081		5,865	(e)		100	%	(f)	NA	NA
Total	$	33,888	$	6,056								$	52,985	$	5,865

(a)	monthly ~~(52%~~(99%) and quarterly ~~(48%~~(1%)

(b)	daily ~~(6%~~(8%) and monthly ~~(94%~~(92%)

(c)	daily (100%)

(d)	monthly ~~(34%~~(39%) and annually ~~(66%~~(61%)

(e)	Unfunded commitments to private equity investments consolidated but not owned by Lazard of ~~$11,155~~$10,022 are excluded. Such commitments are required to be funded by capital contributions from noncontrolling interest holders.

(f)	Distributions from each fund will be received as the underlying investments of the funds are liquidated.

Investment Capital Funding Commitments—At June 30, ~~2020,~~2021, the Company’s maximum unfunded commitments for capital contributions to investment funds primarily arose from commitments to EGCP III, which amounted to ~~$5,484.~~$5,165. The investment period for EGCP III ended on October 12, 2016, after which point the Company’s obligation to fund capital contributions for new investments in EGCP III expired. The Company remains obligated until October 12, 2023 (or any earlier liquidation of EGCP III) to make capital contributions necessary to fund follow-on investments and to pay for fund expenses.

7.	DERIVATIVES

The Company enters into forward foreign currency exchange rate contracts, interest rate swaps, interest rate futures, total return swap contracts on various equity and debt indices and other derivative contracts to economically hedge exposures to fluctuations in currency exchange rates, interest rates and equity and debt prices. The Company reports its derivative instruments separately as assets and liabilities unless a legal right of set-off exists under a master netting agreement enforceable by law. The Company’s derivative instruments are recorded at their fair value, and are included in “other assets” and “other liabilities” on the condensed consolidated statements of financial condition. Gains and losses on the Company’s derivative instruments are generally included in “interest income” and “interest expense”, respectively, or “revenue-other”, depending on the nature of the underlying item, in the condensed consolidated statements of operations.

In addition to the derivative instruments described above, the Company records derivative liabilities relating to its obligations pertaining to LFI and other similar deferred compensation arrangements, the fair value of which is based on the value of the underlying investments, adjusted for estimated forfeitures, and is included in “accrued compensation and benefits” in the condensed consolidated statements of financial condition. Changes in the fair value of the derivative liabilities are included in “compensation and benefits” in the condensed consolidated statements of operations, the impact of which equally offsets the changes in the fair value of investments which are currently expected to be delivered upon settlement of LFI and other similar deferred compensation arrangements, which are reported in “revenue-other” in the condensed consolidated statements of operations.

~~LAZARD LTD~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS-(Continued)~~

~~(UNAUDITED)~~

~~(dollars in thousands, except for per share data, unless otherwise noted)~~

~~The~~ table below presents the fair value of the Company’s derivative instruments reported within “other assets” and “other liabilities” and the fair value of the Company’s derivative liabilities relating to its obligations pertaining to LFI and other similar deferred compensation arrangements reported within “accrued compensation and benefits” (see Note 13) on the accompanying condensed consolidated statements of financial condition as of June 30, ~~2020~~2021 and December 31, ~~2019:~~2020:

	June 30,		December 31,		June 30,		December 31,
	2020		2019		2021		2020
Derivative Assets:
Forward foreign currency exchange rate contracts	$	582	$	1,395	$	1,065	$	536
Total return swaps and other (a)		6,070		-
	$	6,652	$	1,395	$	1,065	$	536
Derivative Liabilities:
Forward foreign currency exchange rate contracts	$	912	$	1,720	$	528	$	333
Total return swaps and other (a)		-		8,527		1,688		2,752
LGAC Warrants						13,225		-
LFI and other similar deferred compensation arrangements		274,861		226,026		395,061		311,400
	$	275,773	$	236,273	$	410,502	$	314,485

LAZARD LTD

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS-(Continued)

(UNAUDITED)

(dollars in thousands, except for per share data, unless otherwise noted)

(a)

For total return swaps and for contracts with the same counterparty under legally enforceable master netting agreements, (i) as of June 30, 2021 amounts represent the netting of gross derivative assets and liabilities of ~~$6,584~~$367 and ~~$514 as of June 30, 2020,~~$9,716, respectively, and ~~$152~~receivables for net cash collateral under such contracts of $7,661, and ~~$8,679~~(ii) as of December 31, ~~2019,~~2020 amounts represent the netting of gross derivative assets and liabilities of $152 and $9,797, respectively, and receivables for net cash collateral under such contracts ~~with the same counterparty under legally enforceable master netting agreements.~~of $6,893. Such amounts are recorded “net” by counterparty in “other assets” and “other liabilities” ~~as of June 30, 2020 and December 31, 2019, respectively.~~.

Net gains (losses) with respect to derivative instruments ~~(predominantly reflected~~(included in “revenue-other”) and the Company’s derivative liabilities relating to its obligations pertaining to LFI and other similar deferred compensation arrangements (included in “compensation and benefits” expense) as reflected on the accompanying condensed consolidated statements of operations for the three month and six month periods ended June 30, ~~2020~~2021 and ~~2019,~~2020, were as follows:

	Three Months Ended						Six Months Ended						Three Months Ended						Six Months Ended
	June 30,						June 30,						June 30,						June 30,
	2020			2019			2020			2019			2021			2020			2021			2020
Forward foreign currency exchange rate contracts	$	(3,549	)	$	(3,424	)	$	(1,777	)	$	1,096		$	(1,719	)	$	(3,549	)	$	5,099		$	(1,777	)
LFI and other similar deferred compensation arrangements		(23,803	)		(6,484	)		(4,166	)		(20,354	)		(16,491	)		(23,803	)		(23,978	)		(4,166	)
LGAC Warrants														(1,725	)		-			(1,725	)		-
Total return swaps and other		(11,808	)		(1,976	)		7,037			(9,633	)		(6,695	)		(11,808	)		(10,974	)		7,037
Total	$	(39,160	)	$	(11,884	)	$	1,094		$	(28,891	)	$	(26,630	)	$	(39,160	)	$	(31,578	)	$	1,094

PROPERTY

At June 30, ~~2020~~2021 and December 31, ~~2019,~~2020, property consisted of the following:

	Estimated Depreciable		June 30,		December 31,		Estimated Depreciable		June 30,		December 31,
	Life in Years		2020		2019		Life in Years		2021		2020
Buildings		33	$	141,842	$	142,298		33	$	150,532	$	155,434
Leasehold improvements	3-20			197,345		197,358	3-20			221,061		220,975
Furniture and equipment	3-10			218,952		215,254	3-10			243,270		240,825
Construction in progress				52,022		32,477				46,074		42,824
Total				610,161		587,387				660,937		660,058
Less - Accumulated depreciation and amortization				381,540		367,545				408,935		402,471
Property			$	228,621	$	219,842			$	252,002	$	257,587

~~LAZARD LTD~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS-(Continued)~~

~~(UNAUDITED)~~

~~(dollars in thousands, except for per share data, unless otherwise noted)~~

9.	GOODWILL AND OTHER INTANGIBLE ASSETS

The components of goodwill and other intangible assets at June 30, ~~2020~~2021 and December 31, ~~2019~~2020 are presented below:

	June 30,		December 31,		June 30,		December 31,
	2020		2019		2021		2020
Goodwill	$	368,069	$	371,773	$	380,687	$	383,861
Other intangible assets (net of accumulated amortization)		1,090		1,821		180		210
	$	369,159	$	373,594	$	380,867	$	384,071

At June 30, ~~2020~~2021 and December 31, ~~2019,~~2020, goodwill of ~~$303,528~~$316,146 and ~~$307,232,~~$319,320, respectively, was attributable to the Company’s Financial Advisory segment and, at each such respective date, $64,541 of goodwill was attributable to the Company’s Asset Management segment.

~~Changes in the carrying amount of goodwill for the six month periods ended June 30, 2020 and 2019 are as follows:~~

Six Months Ended

June 30,

2020

2019

Balance, January 1

$
371,773

$
371,561

Foreign currency translation adjustments

(3,704
)

(25
)
Balance, June 30

$
368,069

$
371,536

~~All changes in the carrying amount of goodwill for the six month periods ended June 30, 2020 and 2019 are attributable to the Company’s Financial Advisory segment.~~

~~The gross cost and accumulated amortization of other intangible assets as of June 30, 2020 and December 31, 2019, by major intangible asset category, are as follows:~~

June 30, 2020

December 31, 2019

Gross
Cost

Accumulated
Amortization

Net
Carrying
Amount

Gross
Cost

Accumulated
Amortization

Net
Carrying
Amount

Success/incentive fees

$
35,223

$
34,474

$
749

$
35,338

$
33,840

$
1,498

Management fees, customer relationships and
non-compete agreements

34,945

34,604

341

34,788

34,465

323

$
70,168

$
69,078

$
1,090

$
70,126

$
68,305

$
1,821

Amortization expense of intangible assets, included in “amortization and other acquisition-related costs” in the condensed consolidated statements of operations, for the three month and six month periods ended June 30, 2020 was $455 and $901, respectively, and for the three month and six month periods ended June 30, 2019 was $431 and $862, respectively. Estimated future amortization expense is as follows:

Year Ending December 31,

Amortization
Expense

2020 (July 1 through December 31)

$
880

2021

60

2022

60

2023

60

2024

30

Total amortization expense

$
1,090

2421

LAZARD LTD

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS-(Continued)

(UNAUDITED)

(dollars in thousands, except for per share data, unless otherwise noted)

Changes in the carrying amount of goodwill for the six month periods ended June 30, 2021 and 2020 are as follows:

	Six Months Ended
	June 30,
	2021			2020
Balance, January 1	$	383,861		$	371,773
Foreign currency translation adjustments		(3,174	)		(3,704	)
Balance, June 30	$	380,687		$	368,069

All changes in the carrying amount of goodwill for the six month periods ended June 30, 2021 and 2020 are attributable to the Company’s Financial Advisory segment.

The gross cost and accumulated amortization of other intangible assets as of June 30, 2021 and December 31, 2020, by major intangible asset category, are as follows:

	June 30, 2021						December 31, 2020
	Gross Cost		Accumulated Amortization		Net Carrying Amount		Gross Cost		Accumulated Amortization		Net Carrying Amount
Success/incentive fees	$	35,451	$	35,451	$	-	$	35,385	$	35,385	$	-
Management fees, customer relationships and non-compete agreements		34,989		34,809		180		34,980		34,770		210
	$	70,440	$	70,260	$	180	$	70,365	$	70,155	$	210

Amortization expense of intangible assets, included in “amortization of intangible assets related to acquisitions” in the condensed consolidated statements of operations, for the three month and six month periods ended June 30, 2021 was $15 and $30, respectively, and for the three month and six month periods ended June 30, 2020 was $455 and $901, respectively. Estimated future amortization expense is as follows:

Year Ending December 31,	Amortization Expense
2021 (July 1 through December 31)	$	30
2022		60
2023		60
2024		30
Total amortization expense	$	180

LAZARD LTD

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS-(Continued)

(UNAUDITED)

(dollars in thousands, except for per share data, unless otherwise noted)

10.	SENIOR DEBT

Senior debt is comprised of the following as of June 30, ~~2020~~2021 and December 31, ~~2019:~~2020:

							Outstanding as of																		Outstanding as of
	Initial			Annual			June 30, 2020						December 31, 2019						Initial			Annual			June 30, 2021						December 31, 2020
	Principal Amount		Maturity Date	Interest Rate(b)			Principal		Unamortized Debt Costs		Carrying Value		Principal		Unamortized Debt Costs		Carrying Value		Principal Amount		Maturity Date	Interest Rate(a)			Principal		Unamortized Debt Costs		Carrying Value		Principal		Unamortized Debt Costs		Carrying Value
Lazard Group 2025 Senior Notes	$	400,000	2/13/25		3.75	%	$	400,000	$	2,180	$	397,820	$	400,000	$	2,416	$	397,584	$	400,000	2/13/25		3.75	%	$	400,000	$	1,712	$	398,288	$	400,000	$	1,948	$	398,052
Lazard Group 2027 Senior Notes		300,000	3/1/27		3.625	%		300,000		2,625		297,375		300,000		2,822		297,178		300,000	3/1/27		3.625	%		300,000		2,210		297,790		300,000		2,405		297,595
Lazard Group 2028 Senior Notes		500,000	9/19/28		4.50	%		500,000		7,366		492,634		500,000		7,814		492,186		500,000	9/19/28		4.50	%		500,000		6,142		493,858		500,000		6,568		493,432
Lazard Group 2029 Senior Notes ~~(a)~~		500,000	3/11/29		4.375	%		500,000		6,984		493,016		500,000		7,386		492,614		500,000	3/11/29		4.375	%		500,000		5,952		494,048		500,000		6,338		493,662
Total							$	1,700,000	$	19,155	$	1,680,845	$	1,700,000	$	20,438	$	1,679,562							$	1,700,000	$	16,016	$	1,683,984	$	1,700,000	$	17,259	$	1,682,741

(a)

During March 2019, Lazard Group completed an offering of $500,000 aggregate principal amount of 4.375% senior notes due 2029 (the “2029 Notes”). Interest on the 2029 Notes is payable semi-annually on March 11 and September 11 of each year, beginning September 11, 2019. Lazard Group used a portion of the net proceeds of the 2029 Notes to redeem or otherwise retire $250,000 aggregate principal amount of the 4.25% senior notes due 2020 (the “2020 Notes”). In March 2019, $167,943 aggregate principal amount was redeemed or otherwise retired, and the remaining $82,057 was redeemed or otherwise retired in April 2019.

~~(b)~~

The effective interest rates of Lazard Group’s 3.75% senior notes due February 13, 2025 (the “2025 Notes”), Lazard Group’s 3.625% senior notes due March 1, 2027 (the “2027 Notes”), Lazard Group’s 4.50% senior notes due September 19, 2028 (the “2028 Notes”), and ~~the~~Lazard Group’s 4.375% senior notes due March 11, 2029 ~~Notes~~(the “2029 Notes”) are 3.87%, 3.76%, ~~4.68%~~4.67% and ~~4.54%~~4.53%, respectively.

The Company’s senior debt at June 30, ~~2020~~2021 and December 31, ~~2019~~2020 is carried at ~~historical amounts~~their principal balances outstanding, net of ~~$1,680,845 and $1,679,562, respectively.~~unamortized debt costs. At those dates, the fair value of such senior debt was approximately ~~$1,873,000~~$1,912,400 and ~~$1,839,000,~~$1,954,000, respectively. The fair value of the Company’s senior debt is based on market quotations. The Company’s senior debt would be categorized within Level 2 of the hierarchy of fair value measurements if carried at fair value.

~~On September 25, 2015, Lazard Group entered into an amended and restated credit agreement for a~~ ~~five-year~~ $150,000 senior revolving credit facility with a group of lenders (the “Existing Credit Agreement”), which was amended and restated in its entirety in July 2020 by the Amended and Restated Credit Agreement (as defined below). The Existing Credit Agreement amended and restated Lazard Group’s previous credit agreement dated September 25, 2012. Borrowings under the Existing Credit Agreement generally will bear interest at LIBOR plus an applicable margin for specific interest periods determined based on Lazard Group’s highest credit rating from an internationally recognized credit agency. At June 30, 2020 and December 31, 2019, 0 amounts were outstanding under the Existing Credit Agreement.

As of June 30, 2020, the Company had approximately $168,000 in unused lines of credit available to it, including the credit facility provided under the Existing Credit Agreement and unused lines of credit available to LFB of approximately $17,000.

The Existing Credit Agreement, the indenture and the supplemental indentures relating to Lazard Group’s senior notes contain certain covenants, events of default and other customary provisions, including a customary make-whole provision in the event of early redemption, where applicable. As of June 30, 2020, the Company was in compliance with such provisions. All of the Company’s senior debt obligations are unsecured.

On July 22, 2020, Lazard Group entered into an Amended and Restated Credit Agreement for a three-year, $200,000 senior revolving credit facility with a group of lenders, which expires in July 2023 (the “Amended and Restated Credit Agreement”). The Amended and Restated Credit Agreement ~~amends~~amended and ~~restates the Existing Credit Agreement~~restated Lazard Group’s amended and restated credit agreement, dated September 25, 2015, in its entirety. Borrowings under the Amended and Restated Credit Agreement generally will bear interest at LIBOR plus an applicable margin for specific interest periods determined based on Lazard Group’s highest credit rating from an internationally recognized credit agency. The Amended and

~~LAZARD LTD~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS-(Continued)~~

~~(UNAUDITED)~~

~~(dollars in thousands, except for per share data, unless otherwise noted)~~

Restated Credit Agreement contains certain covenants, events of default and other customary provisions, including customary LIBOR-replacement mechanics. At June 30, 2021 and December 31, 2020, 0 amounts were outstanding under the Amended and Restated Credit Agreement.

As of June 30, 2021, the Company had approximately $213,000 in unused lines of credit available to it, including the credit facility provided under the Amended and Restated Credit Agreement and unused lines of credit available to LFB of approximately $12,000.

The Amended and Restated Credit Agreement and the indenture and the supplemental indentures relating to Lazard Group’s senior notes contain certain covenants, events of default and other customary provisions, including a customary make-whole provision in the event of early redemption, where applicable. As of June 30, 2021, the Company was in compliance with such provisions. All of the Company’s senior debt obligations are unsecured.

11.	COMMITMENTS AND CONTINGENCIES

Other Commitments—The Company has various other contractual commitments arising in the ordinary course of business. In addition, from time to time, LFB and LFNY may enter into underwriting commitments in which it will participate as an underwriter. At June 30, ~~2020,~~2021, LFB and LFNY had 0 such underwriting commitments.

See Notes 6 and 14 for information regarding commitments relating to investment capital funding commitments and obligations to fund our pension plans, respectively.

LAZARD LTD

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS-(Continued)

(UNAUDITED)

(dollars in thousands, except for per share data, unless otherwise noted)

In the opinion of management, the fulfillment of the commitments described herein will not have a material adverse effect on the Company’s condensed consolidated financial position or results of operations.

Legal—The Company is involved from time to time in judicial, governmental, regulatory and arbitration proceedings and inquiries concerning matters arising in connection with the conduct of our businesses, including proceedings initiated by former employees alleging wrongful termination. The Company reviews such matters on a case-by-case basis and establishes any required accrual if a loss is probable and the amount of such loss can be reasonably estimated. The Company experiences significant variation in its revenue and earnings on a quarterly basis. Accordingly, the results of any pending matter or matters could be significant when compared to the Company’s earnings in any particular fiscal quarter. The Company believes, however, based on currently available information, that the results of any pending matters, in the aggregate, will not have a material effect on its business or financial condition.

12.	STOCKHOLDERS’ EQUITY

Share Repurchase Program— Since ~~2018~~2019 and through the six month period ended June 30, ~~2020,~~2021, the Board of Directors of Lazard authorized the repurchase of Lazard Ltd Class A common stock (“common stock”), the only class of common stock of Lazard outstanding, ~~(“common stock”),~~ as set forth in the table below:

Date	Repurchase Authorization		Expiration	Repurchase Authorization		Expiration
April 2018	$	300,000	December 31, 2020
October 2018	$	300,000	December 31, 2020
February 2019	$	300,000	December 31, 2020	$	300,000	December 31, 2020
October 2019	$	300,000	December 31, 2021	$	300,000	December 31, 2021
April 2021				$	300,000	December 31, 2022

The Company expects that the share repurchase program will continue to be used to offset a portion of the shares that have been or will be issued under the Lazard Ltd 2008 Incentive Compensation Plan (the “2008 Plan”) and the Lazard Ltd 2018 Incentive Compensation Plan, as amended (the “2018 Plan”). Pursuant to the share repurchase program, purchases have been made in the open market or through privately negotiated transactions. The rate at which the Company purchases shares in connection with the share repurchase program may vary from period to period due to a variety of factors. Purchases with respect to such program are set forth in the table below:

Six Months Ended June 30:	Number of Shares Purchased		Average Price Per Share		Number of Shares Purchased		Average Price Per Share
2019		9,715,003	$	36.20
2020		2,912,035	$	32.70		2,912,035	$	32.70
2021						5,329,541	$	43.86

~~LAZARD LTD~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS-(Continued)~~

~~(UNAUDITED)~~

~~(dollars in thousands, except for per share data, unless otherwise noted)~~

During the six month periods ended June 30, ~~2020~~2021 and ~~2019,~~2020, certain of our executive officers received common stock in connection with the vesting or settlement of previously-granted deferred equity incentive awards. The vesting or settlement of such equity awards gave rise to a tax payable by the executive officers, and, consistent with our past practice, the Company purchased shares of common stock from certain of our executive officers equal in value to all or a portion of the estimated amount of such tax. In addition, during the six month ~~period~~periods ended June 30, 2021 and 2020, the Company purchased shares of common stock from certain of our executive officers. The aggregate value of all such purchases during the six month periods ended June 30, ~~2020~~2021 and ~~2019~~2020 was approximately ~~$10,000~~$18,600 and ~~$14,600,~~$10,000, respectively. Such shares of common stock are reported at cost.

As of June 30, ~~2020,~~2021, a total of ~~$305,598~~$366,255 of share repurchase authorization remained available under the Company’s share repurchase program, ~~$5,598~~$66,255 of which will expire on December 31, ~~2020~~2021 and $300,000 of which will expire on December 31, ~~2021.~~2022.

During the six month period ended June 30, ~~2020,~~2021, the Company had in place trading plans under Rule 10b5-1 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), pursuant to which it effected stock repurchases in the open market.

Preferred Stock—Lazard Ltd has 15,000,000 authorized shares of preferred stock, par value $0.01 per share, inclusive of its Series A and Series B preferred stock. Series A and Series B preferred shares were issued in connection with certain prior year business acquisitions and were each non-participating securities convertible into common stock, and had no voting or dividend rights. As of both June 30, 2020 and December 31, 2019, 0 shares of Series A or Series B preferred stock were outstanding.

~~Accumulated Other Comprehensive Income (Loss), Net of Tax—The tables below reflect the balances of each component of AOCI at June 30, 2020 and 2019 and activity during the three month and six month periods then ended:~~

Three Months Ended June 30, 2020

Currency
Translation
Adjustments

Employee
Benefit
Plans

Total
AOCI

Amount
Attributable to
Noncontrolling
Interests

Total
Lazard Ltd
AOCI

Balance, April 1, 2020

$
(171,332
)

$
(162,081
)

$
(333,413
)

$
(1
)

$
(333,412
)
Activity:

Other comprehensive income (loss) before
reclassifications

22,384

491

22,875

(1
)

22,876

Adjustments for items reclassified to earnings,
net of tax

-

1,615

1,615

-

1,615

Net other comprehensive income (loss)

22,384

2,106

24,490

(1
)

24,491

Balance, June 30, 2020

$
(148,948
)

$
(159,975
)

$
(308,923
)

$
(2
)

$
(308,921
)

Six Months Ended June 30, 2020

Currency
Translation
Adjustments

Employee
Benefit
Plans

Total
AOCI

Amount
Attributable to
Noncontrolling
Interests

Total
Lazard Ltd
AOCI

Balance, January 1, 2020

$
(120,586
)

$
(173,064
)

$
(293,650
)

$
(2
)

$
(293,648
)
Activity:

Other comprehensive income (loss) before
reclassifications

(28,362
)

9,579

(18,783
)

-

(18,783
)
Adjustments for items reclassified to earnings,
net of tax

-

3,510

3,510

-

3,510

Net other comprehensive income (loss)

(28,362
)

13,089

(15,273
)

-

(15,273
)
Balance, June 30, 2020

$
(148,948
)

$
(159,975
)

$
(308,923
)

$
(2
)

$
(308,921
)

2724

LAZARD LTD

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS-(Continued)

(UNAUDITED)

(dollars in thousands, except for per share data, unless otherwise noted)

business acquisitions and were each non-participating securities convertible into common stock, and had no voting or dividend rights. As of both June 30, 2021 and December 31, 2020, 0 shares of Series A or Series B preferred stock were outstanding.

Accumulated Other Comprehensive Income (Loss) (“AOCI”), Net of Tax—The tables below reflect the balances of each component of AOCI at June 30, 2021 and 2020 and activity during the three month and six month periods then ended:

	Three Months Ended June 30, 2019															Three Months Ended June 30, 2021
	Currency Translation Adjustments			Employee Benefit Plans			Total AOCI			Amount Attributable to Noncontrolling Interests			Total Lazard Ltd AOCI			Currency Translation Adjustments			Employee Benefit Plans			Total AOCI			Amount Attributable to Noncontrolling Interests			Total Lazard Ltd AOCI
Balance, April 1, 2019	$	(126,357	)	$	(142,502	)	$	(268,859	)	$	(1	)	$	(268,858	)
Balance, April 1, 2021																$	(87,467	)	$	(168,243	)	$	(255,710	)	$	1		$	(255,711	)
Activity:
Other comprehensive income (loss) before reclassifications		(7,053	)		2,812			(4,241	)		(2	)		(4,239	)		5,502			(1,477	)		4,025			(1	)		4,026
Adjustments for items reclassified to earnings, net of tax		-			1,113			1,113			-			1,113			23,579			1,458			25,037			-			25,037
Net other comprehensive income (loss)		(7,053	)		3,925			(3,128	)		(2	)		(3,126	)		29,081			(19	)		29,062			(1	)		29,063
Balance, June 30, 2019	$	(133,410	)	$	(138,577	)	$	(271,987	)	$	(3	)	$	(271,984	)
Balance, June 30, 2021																$	(58,386	)	$	(168,262	)	$	(226,648	)	$	-		$	(226,648	)

Six Months Ended June 30, 2019

Currency
Translation
Adjustments

Employee
Benefit
Plans

Total
AOCI

Amount
Attributable to
Noncontrolling
Interests

Total
Lazard Ltd
AOCI

Balance, January 1, 2019

$
(130,137
)

$
(143,683
)

$
(273,820
)

$
(2
)

$
(273,818
)
Activity:

Other comprehensive income (loss) before
reclassifications

(3,273
)

2,861

(412
)

(1
)

(411
)
Adjustments for items reclassified to earnings,
net of tax

-

2,245

2,245

-

2,245

Net other comprehensive income (loss)

(3,273
)

5,106

1,833

(1
)

1,834

Balance, June 30, 2019

$
(133,410
)

$
(138,577
)

$
(271,987
)

$
(3
)

$
(271,984
)

	Six Months Ended June 30, 2021
	Currency Translation Adjustments			Employee Benefit Plans			Total AOCI			Amount Attributable to Noncontrolling Interests		Total Lazard Ltd AOCI
Balance, January 1, 2021	$	(67,724	)	$	(170,644	)	$	(238,368	)	$	-	$	(238,368	)
Activity:
Other comprehensive loss before reclassifications		(14,241	)		(412	)		(14,653	)		-		(14,653	)
Adjustments for items reclassified to earnings, net of tax		23,579			2,794			26,373			-		26,373
Net other comprehensive income		9,338			2,382			11,720			-		11,720
Balance, June 30, 2021	$	(58,386	)	$	(168,262	)	$	(226,648	)	$	-	$	(226,648	)

	Three Months Ended June 30, 2020
	Currency Translation Adjustments			Employee Benefit Plans			Total AOCI			Amount Attributable to Noncontrolling Interests			Total Lazard Ltd AOCI
Balance, April 1, 2020	$	(171,332	)	$	(162,081	)	$	(333,413	)	$	(1	)	$	(333,412	)
Activity:
Other comprehensive income (loss) before reclassifications		22,384			491			22,875			(1	)		22,876
Adjustments for items reclassified to earnings, net of tax		0			1,615			1,615			-			1,615
Net other comprehensive income (loss)		22,384			2,106			24,490			(1	)		24,491
Balance, June 30, 2020	$	(148,948	)	$	(159,975	)	$	(308,923	)	$	(2	)	$	(308,921	)

LAZARD LTD

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS-(Continued)

(UNAUDITED)

(dollars in thousands, except for per share data, unless otherwise noted)

	Six Months Ended June 30, 2020
	Currency Translation Adjustments			Employee Benefit Plans			Total AOCI			Amount Attributable to Noncontrolling Interests			Total Lazard Ltd AOCI
Balance, January 1, 2020	$	(120,586	)	$	(173,064	)	$	(293,650	)	$	(2	)	$	(293,648	)
Activity:
Other comprehensive income (loss) before reclassifications		(28,362	)		9,579			(18,783	)		-			(18,783	)
Adjustments for items reclassified to earnings, net of tax		0			3,510			3,510			-			3,510
Net other comprehensive income (loss)		(28,362	)		13,089			(15,273	)		-			(15,273	)
Balance, June 30, 2020	$	(148,948	)	$	(159,975	)	$	(308,923	)	$	(2	)	$	(308,921	)

The table below reflects adjustments for items reclassified ~~out of~~from AOCI, by component, for the three month and six month periods ended June 30, ~~2020~~2021 and ~~2019:~~2020:

	Three Months Ended				Six Months Ended				Three Months Ended				Six Months Ended
	June 30,				June 30,				June 30,				June 30,
	2020		2019		2020		2019		2021		2020		2021		2020
Amortization relating to employee benefit plans (a)	$	1,953	$	1,287	$	4,186	$	2,597
Currency translation losses (a)									$	23,579	$	-	$	23,579	$	-
Employee benefit plans:
Amortization relating to employee benefit plans (b)										1,941		1,953		3,658		4,186
Less - related income taxes		338		174		676		352		483		338		864		676
										1,458		1,615		2,794		3,510
Total reclassifications, net of tax	$	1,615	$	1,113	$	3,510	$	2,245	$	25,037	$	1,615	$	26,373	$	3,510

(a)	Represents currency translation losses reclassified to earnings from AOCI associated with restructuring and closing of certain of our offices. Such amounts are included in “revenue—other” on the condensed consolidated statements of operations.

(b)	Included in the computation of net periodic benefit cost (see Note 14). Such amounts are included in “operating expenses—other” on the condensed consolidated statements of operations.

Noncontrolling Interests—Noncontrolling interests principally represent (i) interests held in Edgewater’s management vehicles that the Company is deemed to control, but does not own, (ii) profits interest participation rights (see Note 13), (iii) LGAC interests (see Note 1) and ~~(iii)~~(iv) consolidated VIE interests held by employees (see Note ~~21)~~20).

28The tables below summarize net income (loss) attributable to noncontrolling interests for the three month and six month periods ended June 30, 2021 and 2020 and noncontrolling interests as of June 30, 2021 and December 31, 2020 in the Company’s condensed consolidated financial statements:

	Net Income (Loss) Attributable to Noncontrolling Interests
	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2021			2020			2021			2020
Edgewater	$	1,874		$	(2,944	)	$	3,330		$	(4,347	)
Consolidated VIEs		2,420			2,561			4,688			(1,727	)
LGAC		(2,558	)		-			(2,758	)		-
Other		2			1			4			1
Total	$	1,738		$	(382	)	$	5,264		$	(6,073	)

LAZARD LTD

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS-(Continued)

(UNAUDITED)

(dollars in thousands, except for per share data, unless otherwise noted)

The tables below summarize net income (loss) attributable to noncontrolling interests for the three month and six month periods ended June 30, 2020 and 2019 and noncontrolling interests as of June 30, 2020 and December 31, 2019 in the Company’s condensed consolidated financial statements:

Net Income (Loss)
Attributable to Noncontrolling
Interests

Three Months Ended

Six Months Ended

June 30,

June 30,

2020

2019

2020

2019

Edgewater

$
(2,944
)

$
7,501

$
(4,347
)

$
6,935

Consolidated VIEs

2,561

234

(1,727
)

234

Other

1

1

1

1

Total

$
(382
)

$
7,736

$
(6,073
)

$
7,170

	Noncontrolling Interests as of				Noncontrolling Interests as of
	June 30,		December 31,		June 30,		December 31,
	2020		2019		2021		2020
Edgewater	$	43,987	$	50,151	$	46,281	$	45,352
Profits interest participation rights		3,400		3,177		4,197		1,776
Consolidated VIEs		35,971		18,241		52,716		40,517
LGAC						1,758		-
Other		13		14		20		16
Total	$	83,371	$	71,583	$	104,972	$	87,661

Dividends Declared, July 29, ~~2020~~2021—On July 29, ~~2020,~~2021, the Board of Directors of Lazard declared a quarterly dividend of $0.47 per share on our common stock. The dividend is payable on August ~~21, 2020,~~20, 2021, to stockholders of record on August ~~10, 2020~~9, 2021.

13.	INCENTIVE PLANS

Share-Based Incentive Plan Awards

A description of Lazard Ltd’s 2018 Plan, 2008 Plan and 2005 Equity Incentive Plan (the “2005 Plan”) and activity with respect thereto during the three month and six month periods ended June 30, ~~2020~~2021 and ~~2019~~2020 is presented below.

Shares Available Under the 2018 Plan, 2008 Plan and 2005 Plan

The 2018 Plan became effective on April 24, 2018 and was amended on April 29, 2021 to increase the aggregate number of shares authorized for issuance under the 2018 plan. The 2018 Plan replaced the 2008 Plan, which was terminated on April 24, 2018. The 2018 Plan ~~authorizes the~~originally authorized issuance of up to 30,000,000 shares of common stock, plus any shares of common stock that were subject to outstanding awards under the 2008 Plan as of March 14, 2018 that are forfeited, canceled or settled in cash following April 24, 2018, which was the date that the 2018 Plan was approved by our shareholders. The amendment that our shareholders approved on April 29, 2021 increased the shares of common stock available pursuant to the 2018 Plan by 20,000,000 shares, which is in addition to any shares of common stock that remain available under the original authorization. Such shares may be issued pursuant to the grant or exercise of stock options, stock appreciation rights, restricted stock units (“RSUs”), performance-based restricted stock units (“PRSUs”), profits interest participation rights, including performance-based restricted participation units (“PRPUs”), and other share-based awards.

The 2008 Plan authorized the issuance of shares of common stock pursuant to the grant or exercise of stock options, stock appreciation rights, RSUs, PRSUs and other share-based awards. Under the 2008 Plan, the maximum number of shares available was based on a formula that limited the aggregate number of shares that could, at any time, be subject to awards that were considered “outstanding” under the 2008 Plan to 30% of the then-outstanding shares of common stock. The 2008 Plan was terminated on April 24, 2018, and no additional awards have been or will be granted under the 2008 Plan after its termination, although outstanding awards granted under the 2008 Plan before its termination continue to be subject to its terms.

The 2005 Plan authorized the issuance of up to 25,000,000 shares of common stock pursuant to the grant or exercise of stock options, stock appreciation rights, RSUs and other share-based awards. The 2005 Plan expired in the second quarter of 2015, although outstanding deferred stock unit (“DSU”) awards granted under the 2005 Plan before its expiration continue to be subject to its terms.

LAZARD LTD

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS-(Continued)

(UNAUDITED)

(dollars in thousands, except for per share data, unless otherwise noted)

The following reflects the amortization expense recorded with respect to share-based incentive plans within “compensation and benefits” expense (with respect to RSUs, PRSUs, restricted stock, profits interest participation rights, including PRPUs, and other share-based awards) and “professional services” expense (with respect to DSUs) within the Company’s accompanying condensed consolidated statements of operations for the three month and six month periods ended June 30, ~~2020~~2021 and ~~2019:~~2020:

	Three Months Ended				Six Months Ended				Three Months Ended				Six Months Ended
	June 30,				June 30,				June 30,				June 30,
	2020		2019		2020		2019		2021		2020		2021		2020
Share-based incentive awards:
RSUs	$	40,223	$	48,194	$	83,140	$	103,391	$	36,102	$	40,223	$	70,907	$	83,140
PRSUs		630		928		4,991		2,249		155		630		5,714		4,991
Restricted Stock		9,015		8,085		17,546		17,597		5,699		9,015		11,766		17,546
Profits interest participation rights		16,885		17,413		33,051		35,881		32,109		16,885		53,682		33,051
DSUs		1,791		1,782		1,977		1,965		1,631		1,791		1,818		1,977
Total	$	68,544	$	76,402	$	140,705	$	161,083	$	75,696	$	68,544	$	143,887	$	140,705

The ultimate amount of compensation and benefits expense relating to share-based awards is dependent upon the actual number of shares of common stock that vest. The Company periodically assesses the forfeiture rates used for such estimates, including as a result of any applicable performance conditions. A change in estimated forfeiture rates or performance results in a cumulative adjustment to compensation and benefits expense and also would cause the aggregate amount of compensation expense recognized in future periods to differ from the estimated unrecognized compensation expense described below.

The Company’s share-based incentive plans and awards are described below.

RSUs and DSUs

RSUs generally require future service as a condition for the delivery of the underlying shares of common stock (unless the recipient is then eligible for retirement under the Company’s retirement policy) and convert into shares of common stock on a one-for-one basis after the stipulated vesting periods. The grant date fair value of the RSUs, net of an estimated forfeiture rate, is amortized over the vesting periods or requisite service periods (generally, one-third after two years and the remaining two-thirds after the third year) and is adjusted for actual forfeitures over such period.

RSUs generally include a dividend participation right that provides that, during the applicable vesting period, each RSU is attributed additional RSUs equivalent to any dividends paid on common stock during such period. During the six month period ended June 30, ~~2020,~~2021, dividend participation rights required the issuance of ~~351,709~~220,811 RSUs and the associated charge to “retained earnings”, net of estimated forfeitures (with corresponding credits to “additional paid-in-capital”) was ~~$10,712.~~$9,132.

Non-executive members of the Board of Directors (“Non-Executive Directors”) receive approximately 55% of their annual compensation for service on the Board of Directors and its committees in the form of DSUs, which resulted in ~~59,693~~30,764 DSUs being granted during the six month period ended June 30, ~~2020.~~2021. Their remaining compensation is payable in cash, which they may elect to receive in the form of additional DSUs under the Directors’ Fee Deferral Unit Plan described below. DSUs are convertible into shares of common stock at the time of cessation of service to the Board of Directors. DSUs include a cash dividend participation right equivalent to dividends paid on common stock.

~~The Company’s~~Lazard Ltd’s Directors’ Fee Deferral Unit Plan permits the Non-Executive Directors to elect to receive additional DSUs in lieu of some or all of their cash fees. The number of DSUs granted to a Non-Executive Director pursuant to this election will equal the value of cash fees that the applicable Non-Executive Director has elected to forego pursuant to such election, divided by the market value of a share of common stock on the date immediately preceding the date of the grant. During the six month period ended June 30, ~~2020, 11,948~~2021, 8,317 DSUs had been granted pursuant to such Plan.

DSU awards are expensed at their fair value on their date of grant, inclusive of amounts related to the Directors’ Fee Deferral Unit Plan.

LAZARD LTD

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS-(Continued)

(UNAUDITED)

(dollars in thousands, except for per share data, unless otherwise noted)

The following is a summary of activity relating to RSUs and DSUs during the six month period ended June 30, ~~2020:~~2021:

RSUs

DSUs

Units

Weighted
Average
Grant Date
Fair Value

Units

Weighted
Average
Grant Date
Fair Value

Balance, January 1, 2020

10,387,566

$
44.66

395,973

$
38.01

Granted (including 351,709 RSUs relating to dividend
participation)

3,108,966

$
42.87

71,641

$
27.60

Forfeited

(43,009
)

$
42.08

-

-

Settled

(4,433,341
)

$
46.66

-

-

Balance, June 30, 2020

9,020,182

$
43.07

467,614

$
36.41

	RSUs					DSUs
	Units			Weighted Average Grant Date Fair Value		Units			Weighted Average Grant Date Fair Value
Balance, January 1, 2021		9,266,344		$	42.96		478,800		$	36.36
Granted (including 220,811 RSUs relating to dividend participation)		2,903,430		$	43.11		39,081		$	46.51
Forfeited		(90,990	)	$	40.97		-			-
Settled		(3,735,389	)	$	47.42		(185,657	)		35.89
Balance, June 30, 2021		8,343,395		$	41.03		332,224		$	37.82

In connection with RSUs that settled during the six month period ended June 30, ~~2020,~~2021, the Company satisfied its minimum statutory tax withholding requirements in lieu of delivering ~~1,609,901~~1,352,483 shares of common stock during such six month period. Accordingly, ~~2,823,440~~2,382,906 shares of common stock held by the Company were delivered during the six month period ended June 30, ~~2020.~~2021.

As of June 30, ~~2020,~~2021, estimated unrecognized RSU compensation expense was ~~$157,115,~~$142,097, with such expense expected to be recognized over a weighted average period of approximately 0.9 years subsequent to June 30, ~~2020.~~2021.

Restricted Stock

The following is a summary of activity related to shares of restricted common stock associated with compensation arrangements during the six month period ended June 30, ~~2020:~~2021:

Restricted
Shares

Weighted
Average
Grant Date
Fair Value

Balance, January 1, 2020

1,039,306

$
41.79

Granted (including 21,190 relating to dividend participation)

683,042

$
42.89

Forfeited

(17,192
)

$
39.33

Settled

(510,659
)

$
44.64

Balance, June 30, 2020

1,194,497

$
41.23

	Restricted Shares			Weighted Average Grant Date Fair Value
Balance, January 1, 2021		1,144,959		$	41.09
Granted (including 19,202 relating to dividend participation)		434,323		$	43.27
Forfeited		(28,984	)	$	41.20
Settled		(501,877	)	$	42.91
Balance, June 30, 2021		1,048,421		$	41.12

~~LAZARD LTD~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS-(Continued)~~

~~(UNAUDITED)~~

~~(dollars in thousands, except for per share data, unless otherwise noted)~~

In connection with shares of restricted common stock that settled during the six month period ended June 30, ~~2020,~~2021, the Company satisfied its minimum statutory tax withholding requirements in lieu of delivering ~~174,222~~175,849 shares of common stock during such six month period. Accordingly, ~~336,437~~326,028 shares of common stock held by the Company were delivered during the six month period ended June 30, ~~2020.~~2021.

Restricted stock awards granted in 2021 and 2020 generally include a dividend participation right that provides that during the applicable vesting period each restricted stock award is attributed additional shares of restricted common stock equivalent to any dividends paid on common stock during such period. During the six month period ended June 30, ~~2020,~~2021, dividend participation rights required the issuance of ~~21,190~~19,202 shares of restricted common stock and the associated charge to “retained earnings”, net of estimated forfeitures (with corresponding credits to “additional paid-in-capital”) was ~~$633.~~$831. With respect to awards granted prior to 2020, the restricted stock awards include a cash dividend participation right equivalent to dividends paid on common stock during the period, which will vest concurrently with the underlying restricted stock award.

At June 30, ~~2020,~~2021, estimated unrecognized restricted stock expense was ~~$27,899,~~$22,309, with such expense to be recognized over a weighted average period of approximately 0.9 years subsequent to June 30, ~~2020.~~2021.

LAZARD LTD

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS-(Continued)

(UNAUDITED)

(dollars in thousands, except for per share data, unless otherwise noted)

PRSUs

PRSUs are RSUs that are subject to ~~both~~ performance-based and service-based vesting ~~conditions.~~conditions, and beginning with awards granted in February 2021, a market-based condition. The number of shares of common stock that a recipient will receive upon vesting of a PRSU will be calculated by reference to certain ~~performance~~performance-based and, for awards granted in February 2021, market-based metrics that relate to ~~the Company’s~~Lazard Ltd’s performance over a three-year period. The target number of shares of common stock subject to each PRSU is one; however, based on the achievement of the performance criteria, the number of shares of common stock that may be received in connection with each PRSU generally can range from zero to two times the target number for awards granted prior to February 2021. For awards granted in February 2021, based on both the performance-based and market-based criteria, the number of shares of common stock can range from zero to 2.4 times the target number. PRSUs will vest on a single date approximately three years following the date of the grant, provided the applicable service and performance conditions are satisfied. ~~In addition, the performance metrics applicable~~PRSUs granted prior to each PRSU will be evaluated on an annual basis at the end of each fiscal year during the performance period and, if the Company has achieved a threshold level of performance with respect to the fiscal year, 25% of the target number of shares of common stock subject to each PRSU will no longer be at risk of forfeiture based on the achievement of performance criteria. PRSUsFebruary 2021 include dividend participation rights that provide that during vesting periods, the target number of PRSUs ~~(or, following the relevant performance period, the actual number of shares of common stock that are no longer subject to performance conditions)~~ receive dividend equivalents at the same rate that dividends are paid on common stock during such periods. These dividend equivalents are credited as RSUs that are not subject to the performance-based vesting criteria but are otherwise subject to the same restrictions as the underlying PRSUs to which they relate. PRSUs granted in February 2021 include dividend participation rights that are subject to the same vesting restrictions (including performance criteria) as the underlying PRSUs to which they relate and are settled in cash at the same rate that dividends are paid on common stock.

The following is a summary of activity relating to PRSUs during the six month period ended June 30, ~~2020:~~2021:

PRSUs

Weighted
Average
Grant Date
Fair Value

Balance, January 1, 2020

797,705

$
47.65

Settled

(550,650
)

$
43.54

Balance, June 30, 2020

247,055

$
56.80

	PRSUs			Weighted Average Grant Date Fair Value
Balance, January 1, 2021		546,959		$	53.48
Granted		32,394		$	46.63
Settled		(546,959	)	$	53.48
Balance, June 30, 2021		32,394		$	46.63

In connection with certain PRSUs that settled during the six month period ended June 30, ~~2020,~~2021, the Company satisfied its minimum statutory tax withholding requirements in lieu of delivering ~~91,314~~100,882 shares of common stock during such six month period. Accordingly, ~~459,336~~446,077 shares of common stock held by the Company were delivered during the six month period ended June 30, ~~2020.~~2021.

Compensation expense recognized for PRSU awards is determined by multiplying the number of shares of common stock underlying such awards that, based on the Company’s estimate, are considered probable of vesting, by the grant date fair value. As of June 30, ~~2020,~~2021, the total estimated unrecognized compensation expense was ~~$1,689,~~$1,662, and the Company expects to amortize such expense over a weighted-average period of approximately ~~0.4~~1.4 years subsequent to June 30, ~~2020.~~2021.

Profits Interest Participation Rights

~~In early 2019, the Company established a new long-term incentive compensation program consisting of profits~~Profits interest participation rights ~~which~~ are equity incentive awards that, subject to certain conditions, may be exchanged for shares of common stock pursuant to the 2018 Plan. ~~Pursuant to the program, in February 2019 and February 2020, the~~The Company granted profits interest

~~LAZARD LTD~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS-(Continued)~~

~~(UNAUDITED)~~

~~(dollars in thousands, except for per share data, unless otherwise noted)~~

participation rights subject to service-based and performance-based vesting criteria and other conditions, and beginning in February 2021, incremental market-based vesting criteria, which we refer to as performance-based restricted participation units (“PRPUs”), to ~~each~~certain of ~~the Company’s NEOs, and~~our executive officers. The Company also granted profits interest participation rights subject to service-based vesting criteria and other conditions, but not the performance-based and incremental market-based vesting criteria associated with PRPUs, to a limited number of other senior ~~employees, pursuant to profits interest participation right agreements.~~employees. Profits interest participation rights generally provide for vesting approximately three years following the grant date, so long as applicable conditions have been satisfied.

Profits interest participation rights are a class of membership interests in Lazard Group that are intended to qualify as “profits interests” for U.S. federal income tax purposes, and are recorded as noncontrolling interests within stockholders’ equity in the Company’s condensed consolidated statements of financial condition until they are exchanged into common stock, at which time there is a reclassification to additional paid-in-capital. The profits interest participation rights generally allow the recipient to realize value only to the extent that both (i) the service-based vesting conditions and, if applicable, the ~~performance~~performance-based and incremental market-based conditions, are satisfied, and (ii) an amount of economic appreciation in the assets of Lazard Group occurs as necessary to

LAZARD LTD

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS-(Continued)

(UNAUDITED)

(dollars in thousands, except for per share data, unless otherwise noted)

satisfy certain partnership tax rules (referred to as the "Minimum Value Condition") before the fifth anniversary of the grant date, otherwise the profits interest participation rights will be forfeited. Upon satisfaction of such conditions, profits interest participation rights that are in parity with the value of common stock will be exchanged on a one-for-one basis for shares of common stock. If forfeited based solely on failing to meet the Minimum Value Condition, the associated compensation expense would not be reversed. With regard to the profits interest participation rights granted in February 2019 and February 2020, the Minimum Value Condition was met during the ~~six month period~~year ended ~~June 30, 2020.~~December 31, 2020 and during February 2021, respectively.

Like outstanding RSUs and similar awards, profits interest participation rights are subject to continued employment and other conditions and restrictions and are forfeited if those conditions and restrictions are not fulfilled. More specifically, vesting of profits interest participation rights are subject to compliance with restrictive covenants including non-compete, non-solicitation of clients, no hire of employees and confidentiality, which are similar to those applicable to PRSUs and RSUs. In addition, profits interest participation rights must satisfy the Minimum Value Condition. PRPUs, like outstanding PRSUs, are subject to the achievement of incremental pre-established performance conditions and financial metrics and only result in value to the recipient to the extent the conditions are satisfied.

The number of shares of common stock that a recipient will receive upon the exchange of a PRPU award is calculated by reference to applicable ~~financial metrics.~~performance-based and, beginning with PRPUs granted in 2021, incremental market-based conditions and only result in value to the recipient to the extent the conditions are satisfied. The target number of shares of common stock subject to each PRPU is one. Based on the achievement of performance criteria, as determined by the Compensation Committee, the number of shares of common stock that may be received in connection with ~~each~~the PRPU ~~award~~awards granted in February 2019 and February 2020 will range from zero to two times the target number. For the PRPU awards granted in February 2021, subject to both performance-based and incremental market-based criteria, the number of shares will range from zero to 2.4 times the target number. Unless applicable ~~performance~~ conditions are satisfied during the three year performance period, and the Minimum Value Condition is satisfied within five years following the grant date, all PRPUs will be forfeited, and the recipients will not be entitled to any such awards.

In addition, the performance metrics applicable to ~~each~~the PRPU awards granted in February 2019 and February 2020 will be evaluated on an annual basis at the end of each fiscal year during the performance period, and, if ~~the Company~~Lazard Ltd has achieved a threshold level of performance with respect to the fiscal year, 25% of the target number of PRPUs will no longer be at risk of forfeiture based on the achievement of performance criteria. Profits interest participation rights are allocated income, subject to vesting and settled in cash, in respect of dividends paid on common stock.

The following is a summary of activity relating to profits interest participation rights, including PRPUs, during the six month period ended June 30, ~~2020:~~2021:

Profits Interest Participation Rights

Weighted
Average
Grant Date
Fair Value

Balance, January 1, 2020

1,462,702

$
38.65

Granted

1,060,373

$
42.89

Balance, June 30, 2020 (a)

2,523,075

$
40.43

	Profits Interest Participation Rights		Weighted Average Grant Date Fair Value
Balance, January 1, 2021		2,523,075	$	40.43
Granted		1,159,864	$	44.73
Balance, June 30, 2021 (a)		3,682,939	$	41.78

(a)

Table includes ~~1,050,778~~1,561,120 PRPUs, which represents the target number of PRPUs granted as of June 30, ~~2020,~~2021, including ~~486,611~~510,342 PRPUs granted during the six month period ended June 30, ~~2020.~~2021. The weighted average grant date fair values for PRPUs and other profits interest participation rights outstanding as of January 1, ~~2020~~2021 were $40.61 and ~~those~~$40.30, respectively. The weighted average grant date fair values for PRPUs and other profits interest participation rights granted during the six month period ended June 30, ~~2020~~2021 were ~~in each case, the same for PRPUs~~$46.63 and ~~other profits interest participation rights.~~$43.23, respectively. The weighted average grant date fair values for PRPUs and other profits interest participation rights outstanding as of June 30, ~~2020~~2021 were ~~$40.61~~$42.58 and ~~$40.30,~~$41.20, respectively.

~~LAZARD LTD~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS-(Continued)~~

~~(UNAUDITED)~~

~~(dollars in thousands, except for per share data, unless otherwise noted)~~

Compensation expense recognized for profits interest participation rights, including PRPUs, is determined by multiplying the number of shares of common stock underlying such awards that, based on the Company’s estimate, are considered probable of vesting, by the grant date fair value. As of June 30, ~~2020,~~2021, the total estimated unrecognized compensation expense was ~~$29,875, and the~~$46,902. The Company expects to amortize such expense over a weighted-average period of approximately ~~1.1~~0.7 years subsequent to June 30, ~~2020.~~2021.

LAZARD LTD

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS-(Continued)

(UNAUDITED)

(dollars in thousands, except for per share data, unless otherwise noted)

LFI and Other Similar Deferred Compensation Arrangements

~~Commencing in February 2011, the Company granted LFI to eligible employees.~~ In connection with LFI and other similar deferred compensation arrangements, granted to eligible employees, which generally require future service as a condition for vesting, the Company recorded a prepaid compensation asset and a corresponding compensation liability on the grant date based upon the fair value of the award. The prepaid asset is amortized on a straight-line basis over the applicable vesting periods or requisite service periods (which are generally similar to the comparable periods for RSUs) and is charged to “compensation and benefits” expense within the Company’s condensed consolidated statement of operations. LFI and similar deferred compensation arrangements that do not require future service are expensed immediately. The related compensation liability is accounted for at fair value as a derivative liability, which contemplates the impact of estimated forfeitures, and is adjusted for changes in fair value primarily related to changes in value of the underlying investments.

The following is a summary of activity relating to LFI and other similar deferred compensation arrangements during the six month period ended June 30, ~~2020:~~2021:

	Prepaid Compensation Asset			Compensation Liability			Prepaid Compensation Asset			Compensation Liability
Balance, January 1, 2020	$	74,597		$	226,026
Balance, January 1, 2021							$	101,631		$	311,400
Granted		143,289			143,289			161,892			161,892
Settled		-			(98,569	)		-			(100,792	)
Forfeited		(3,351	)		(3,685	)		(1,100	)		(5,756	)
Amortization		(66,037	)		-			(80,887	)		-
Change in fair value related to:
Increase in fair value of underlying investments		-			4,166
Change in fair value of underlying investments								-			23,978
Adjustment for estimated forfeitures		-			3,722			-			5,562
Other		142			(88	)		3			(1,223	)
Balance, June 30, 2020	$	148,640		$	274,861
Balance, June 30, 2021							$	181,539		$	395,061

The amortization of the prepaid compensation asset will generally be recognized over a weighted average period of approximately ~~1.0~~0.9 years subsequent to June 30, ~~2020.~~2021.

The following is a summary of the impact of LFI and other similar deferred compensation arrangements on “compensation and benefits” expense within the accompanying condensed consolidated statements of operations for the three month and six month periods ended June 30, ~~2020~~2021 and ~~2019:~~2020:

	Three Months Ended				Six Months Ended				Three Months Ended				Six Months Ended
	June 30,				June 30,				June 30,				June 30,
	2020		2019		2020		2019		2021		2020		2021		2020
Amortization, net of forfeitures	$	43,177	$	44,210	$	69,425	$	62,144	$	51,770	$	43,177	$	81,793	$	69,425
Change in the fair value of underlying investments		23,803		6,484		4,166		20,354		16,491		23,803		23,978		4,166
Total	$	66,980	$	50,694	$	73,591	$	82,498	$	68,261	$	66,980	$	105,771	$	73,591

~~LAZARD LTD~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS-(Continued)~~

~~(UNAUDITED)~~

~~(dollars in thousands, except for per share data, unless otherwise noted)~~

14.	EMPLOYEE BENEFIT PLANS

The Company provides retirement and other post-retirement benefits to certain of its employees through defined benefit pension plans (the “pension plans”). The Company also offers defined contribution plans to its employees. The pension plans generally provide benefits to participants based on average levels of compensation. Expenses related to the Company’s employee benefit plans are included in “compensation and benefits” expense for the service cost component, and “operating expenses—other” for the other components of benefit costs on the condensed consolidated statements of operations.

Employer Contributions to Pension Plans—The Company’s funding policy for its U.S. and non-U.S. pension plans is to fund when required or when applicable upon an agreement with the plans’ trustees. Management also evaluates from time to time whether to make voluntary contributions to the plans.

LAZARD LTD

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS-(Continued)

(UNAUDITED)

(dollars in thousands, except for per share data, unless otherwise noted)

The following table summarizes the components of net periodic benefit cost (credit) related to the Company’s pension plans for the three month and six month periods ended June 30, ~~2020~~2021 and ~~2019:~~2020:

	Pension Plans						Pension Plans
	Three Months Ended June 30,						Three Months Ended June 30,
	2020			2019			2021			2020
Components of Net Periodic Benefit Cost (Credit):
Service cost	$	235		$	205		$	231		$	235
Interest cost		2,910			3,858			2,141			2,910
Expected return on plan assets		(6,435	)		(6,873	)		(6,597	)		(6,435	)
Amortization of:
Prior service cost		27			27			30			27
Net actuarial loss (gain)		1,926			1,260			1,911			1,926
Settlement loss		588			1,739			384			588
Net periodic benefit cost (credit)	$	(749	)	$	216		$	(1,900	)	$	(749	)

Pension Plans

Six Months Ended June 30,

2020

2019

Components of Net Periodic Benefit Cost (Credit):

Service cost

$
370

$
412

Interest cost

5,893

7,760

Expected return on plan assets

(13,063
)

(13,899
)
Amortization of:

Prior service cost

54

56

Net actuarial loss (gain)

4,132

2,541

Settlement loss

1,510

3,522

Net periodic benefit cost (credit)

$
(1,104
)

$
392

~~LAZARD LTD~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS-(Continued)~~

~~(UNAUDITED)~~

~~(dollars in thousands, except for per share data, unless otherwise noted)~~

~~15.BUSINESS REALIGNMENT~~

The Company conducted a review of its business, which resulted in a realignment that included employee reductions and the closing of subscale offices and investment strategies, most of which were completed during the third quarter of 2019.

~~Activity related to the obligations pursuant to business realignment during the six month period ended June 30, 2020 was as follows:~~

Accrued

Compensation

Other

and Benefits

Liabilities

Total

Balance, January 1, 2020

$
20,210

$
5,068

$
25,278

Less:

Costs paid or otherwise settled

(17,675
)

(5,068
)

(22,743
)
Balance, June 30, 2020

$
2,535

$
-

$
2,535

	Pension Plans
	Six Months Ended June 30,
	2021			2020
Components of Net Periodic Benefit Cost (Credit):
Service cost	$	457		$	370
Interest cost		4,256			5,893
Expected return on plan assets		(13,131	)		(13,063	)
Amortization of:
Prior service cost		60			54
Net actuarial loss (gain)		3,598			4,132
Settlement loss		764			1,510
Net periodic benefit cost (credit)	$	(3,996	)	$	(1,104	)

~~16.~~15.

INCOME TAXES

Lazard Ltd, through its subsidiaries, is subject to U.S. federal income taxes on all of its U.S. operating income, as well as on the portion of non-U.S. income attributable to its U.S. subsidiaries. In addition, Lazard Ltd, through its subsidiaries, is subject to state and local taxes on its income apportioned to various state and local jurisdictions. Outside the U.S., Lazard Group operates principally through subsidiary corporations that are subject to local income taxes in foreign jurisdictions. Lazard Group is also subject to Unincorporated Business Tax (“UBT”) attributable to its operations apportioned to New York City.

The Company recorded income tax provisions of 41,345 and $84,809 for the three month and six month periods ended June 30, 2021, respectively, and $22,789 and $48,555 for the three month and six month periods ended June 30, 2020, respectively, ~~and $28,172 and $51,359 for the three month and six month periods ended June 30, 2019, respectively,~~ representing effective tax rates of ~~23.8%~~24.9%, ~~27.0%~~28.2%, ~~27.7%~~23.8% and ~~23.2%~~27.0%, respectively. The difference between the U.S. federal statutory rate of 21.0% and the effective tax rates reflected above principally relates to (i) the tax impact of differences in the value of share based incentive compensation and other discrete items, (ii) foreign source income (loss) not subject to U.S. income taxes (including interest on intercompany financings), (iii) taxes payable to foreign jurisdictions that are not offset against U.S. income taxes, (iv) change in the U.S. federal valuation allowance affecting the provision for income taxes, (v) U.S. state and local taxes, which are incremental to the U.S. federal statutory tax rate, and (vi) impact of U.S. tax reform, including base erosion and anti-abuse tax.

LAZARD LTD

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS-(Continued)

(UNAUDITED)

(dollars in thousands, except for per share data, unless otherwise noted)

~~17.~~16.

NET INCOME PER SHARE OF COMMON STOCK

The Company issued certain profits interest participation rights, including certain PRPUs, that the Company is required under U.S. GAAP to treat as participating securities and therefore the Company is required to utilize the “two-class” method of computing basic and diluted net income per share.

The Company’s basic and diluted net income per share calculations using the “two-class” method for the three month and six month periods ended June 30, ~~2020~~2021 and ~~2019~~2020 are presented below:

	Three Months Ended						Six Months Ended						Three Months Ended						Six Months Ended
	June 30,						June 30,						June 30,						June 30,
	2020			2019			2020			2019			2021			2020			2021			2020
Net income attributable to Lazard Ltd	$	73,458		$	65,777		$	137,480		$	162,819		$	123,178		$	73,458		$	210,478		$	137,480
Add - adjustment for earnings attributable to participating securities		(1,349	)		(1,604	)		(2,362	)		(1,604	)		(1,549	)		(1,349	)		(2,841	)		(2,362	)
Net income attributable to Lazard Ltd - basic		72,109			64,173			135,118			161,215			121,629			72,109			207,637			135,118
Add - adjustment for earnings attributable to participating securities		1,170			5			2,183			5			1,549			1,170			2,841			2,183
Net income attributable to Lazard Ltd - diluted	$	73,279		$	64,178		$	137,301		$	161,220		$	123,178		$	73,279		$	210,478		$	137,301
Weighted average number of shares of Class A common stock outstanding		104,732,667			110,076,582			104,597,422			110,847,112
Weighted average number of shares of common stock outstanding														105,104,377			104,732,667			105,324,825			104,597,422
Add - adjustment for shares of common stock issuable on a non-contingent basis		1,929,397			1,904,622			1,885,591			1,115,617			1,642,277			1,929,397			1,694,282			1,885,591
Weighted average number of shares of common stock outstanding - basic		106,662,064			111,981,204			106,483,013			111,962,729			106,746,654			106,662,064			107,019,107			106,483,013
Add - dilutive effect, as applicable, of:
Weighted average number of incremental shares of common stock issuable from share-based incentive compensation		4,825,685			4,194,145			6,320,951			6,534,988			6,856,824			4,825,685			7,693,778			6,320,951
Weighted average number of shares of common stock outstanding - diluted		111,487,749			116,175,349			112,803,964			118,497,717			113,603,478			111,487,749			114,712,885			112,803,964
Net income attributable to Lazard Ltd per share of common stock:
Basic	$	0.68		$	0.57		$	1.27		$	1.44		$	1.14		$	0.68		$	1.94		$	1.27
Diluted	$	0.66		$	0.55		$	1.22		$	1.36		$	1.08		$	0.66		$	1.83		$	1.22

~~18.~~17.

RELATED PARTIES

Sponsored Funds

The Company serves as an investment advisor for certain affiliated investment companies and fund entities and receives management fees and, for the alternative investment funds, performance-based incentive fees for providing such services. Investment advisory fees relating to such services were $186,446 and $360,124 for the three month and six month periods ended June 30, 2021, respectively, and $118,573 and $254,528 for the three month and six month periods ended June 30, 2020, ~~respectively, and $153,198 and $297,368 for the three month and six month periods ended June 30, 2019,~~ respectively, and are included in “asset management fees” on the condensed consolidated statements of operations. Of such amounts, ~~$49,189~~$68,303 and ~~$54,561~~$72,076 remained as receivables at June 30, ~~2020~~2021 and December 31, ~~2019,~~2020, respectively, and are included in “fees receivable” on the condensed consolidated statements of financial condition.

Tax Receivable Agreement

The Second Amended and Restated Tax Receivable Agreement, dated as of October 26, 2015 (the ~~“Amended and Restated Tax Receivable Agreement”~~“TRA”), between Lazard and LTBP Trust, a Delaware statutory trust (the “Trust”), provides for the payment by our subsidiaries to the Trust of (i) approximately 45% of the amount of cash savings, if any, in U.S. federal, state and local income tax or franchise tax that we actually realize as a result of ~~certain~~the increases in the tax basis of certain assets and of certain other tax benefits related to the ~~Amended and Restated Tax Receivable Agreement,~~TRA, and (ii) an amount that we ~~currently expect will approximate 85% of the cash tax~~

LAZARD LTD

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS-(Continued)

(UNAUDITED)

(dollars in thousands, except for per share data, unless otherwise noted)

currently expect will equal 85% of the cash tax savings that may arise from tax benefits attributable to payments under the ~~Amended and Restated Tax Receivable Agreement.~~TRA. Our subsidiaries expect to benefit from the balance of cash savings, if any, in income tax that our subsidiaries ~~realize.~~realize from such tax benefits. Any amount paid by our subsidiaries to the Trust will generally be distributed pro rata to the owners of the Trust, who include certain of our executive ~~officers, in proportion to their beneficial interests in the Trust.~~officers.

For purposes of the ~~Amended and Restated Tax Receivable Agreement,~~TRA, cash savings in income and franchise tax will be computed by comparing our subsidiaries’ actual income and franchise tax liability to the amount of such taxes that our subsidiaries would have been required to pay had there been no increase in the tax basis of certain ~~tangible and intangible~~ assets of ~~Lazard Group attributable to our subsidiaries’ interest in~~ Lazard Group and had our subsidiaries not entered into the ~~Amended and Restated Tax Receivable Agreement.~~TRA. The term of the ~~Amended and Restated Tax Receivable Agreement~~TRA will continue until approximately 2033 or, if earlier, until all relevant tax benefits have been utilized or expired.

The amount of the ~~Amended and Restated Tax Receivable Agreement~~TRA liability is an undiscounted amount based upon ~~currently enacted~~the current tax laws ~~including the Tax Act, the current~~and structure of the Company and various assumptions regarding potential future operating profitability. The assumptions reflected in the estimate involve significant ~~judgment. For example,~~judgment and if our structure or income assumptions were to change, ~~or our annual taxable income were to increase,~~ we could be required to accelerate payments under the ~~Amended and Restated Tax Receivable Agreement.~~TRA. As such, the actual amount and timing of payments under the ~~Amended and Restated Tax Receivable Agreement~~TRA could differ materially from our estimates. Any changes in the amount of the estimated liability would be recorded as a non-compensation expense in the condensed consolidated statement of operations. Adjustments, if necessary, to the related deferred tax assets would be recorded through the “provision (benefit) for income taxes”.

The cumulative liability relating to our obligations under the ~~Amended and Restated Tax Receivable Agreement~~TRA as of June 30, ~~2020~~2021 and December 31, ~~2019~~2020 was ~~$221,890~~$211,236 and ~~$247,344,~~$221,451, respectively, and is recorded in “tax receivable agreement obligation” on the condensed consolidated statements of financial condition. The balance at June 30, ~~2020~~2021 reflects a payment made under the ~~Amended and Restated Tax Receivable Agreement~~TRA in the six months ended June 30, ~~2020~~2021 of ~~$25,454.~~$10,215.

See Note 12 for information regarding related party transactions pertaining to shares repurchased from certain of our executive officers.

~~19.~~18.

REGULATORY AUTHORITIES

LFNY is a U.S. registered broker-dealer and is subject to the net capital requirements of Rule 15c3-1 under the Exchange Act. Under the basic method permitted by this rule, the minimum required net capital, as defined, is a specified fixed percentage (6 2/3%) of total aggregate indebtedness recorded in LFNY’s Financial and Operational Combined Uniform Single (“FOCUS”) report filed with the Financial Industry Regulatory Authority (“FINRA”), or $5, whichever is greater. In addition, the ratio of aggregate indebtedness (as defined) to net capital may not exceed 15:1. At June 30, ~~2020,~~2021, LFNY’s regulatory net capital was ~~$54,589,~~$145,599, which exceeded the minimum requirement by ~~$49,893.~~$141,258. LFNY’s aggregate indebtedness to net capital ratio was ~~1.29:~~0.45:1 as of June 30, ~~2020.~~2021.

Certain U.K. subsidiaries of the Company, including LCL, Lazard Fund Managers Limited and Lazard Asset Management Limited (collectively, the “U.K. Subsidiaries”) are regulated by the Financial Conduct Authority. At June 30, ~~2020,~~2021, the aggregate regulatory net capital of the U.K. Subsidiaries was ~~$154,476,~~$168,980, which exceeded the minimum requirement by ~~$137,981.~~$145,509.

CFLF, under which asset management and commercial banking activities are carried out in France, is subject to regulation by the Autorité de Contrôle Prudentiel et de Résolution (“ACPR”) for its banking activities conducted through its subsidiary, LFB. LFB, as a registered bank, is engaged primarily in commercial and private banking services for clients and funds managed by LFG (asset management) and other clients, and asset-liability management. The investment services activities of the Paris group, exercised through LFB and other subsidiaries of CFLF, primarily LFG, also are subject to regulation and supervision by the Autorité des Marchés Financiers. At June 30, ~~2020,~~2021, the consolidated regulatory net capital of CFLF was ~~$134,909,~~$150,047, which exceeded the minimum requirement set for regulatory capital levels by ~~$78,438.~~$81,204. In addition, pursuant to the consolidated supervision rules in the European Union, LFB, in particular, as a French credit institution, is required to be supervised by a regulatory body, either in the U.S. or in the European Union. During the third quarter of 2013, the Company and the ACPR agreed on terms for the consolidated supervision of LFB and certain other non-Financial Advisory European subsidiaries of the Company (referred to herein, on a combined basis, as the “combined European regulated group”) under such rules. Under this supervision, the combined European regulated group is required to comply with minimum requirements for regulatory net capital to be reported on a quarterly basis and satisfy periodic financial and other reporting obligations. At March 31, 2021, the regulatory net capital of the combined European regulated group was $176,304, which exceeded the minimum requirement set for regulatory capital levels by $59,073. Additionally, the combined European regulated group, together with our European Financial Advisory entities, is required to perform an annual risk assessment and provide

LAZARD LTD

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS-(Continued)

(UNAUDITED)

(dollars in thousands, except for per share data, unless otherwise noted)

other reporting obligations. At March 31, 2020, the regulatory net capital of the combined European regulated group was $177,590, which exceeded the minimum requirement set for regulatory capital levels by $73,477. Additionally, the combined European regulated group, together with our European Financial Advisory entities, is required to perform an annual risk assessment and provide certain other information on a periodic basis, including financial reports and information relating to financial performance, balance sheet data and capital structure.

Certain other U.S. and non-U.S. subsidiaries are subject to various capital adequacy requirements promulgated by various regulatory and exchange authorities in the countries in which they operate. At June 30, ~~2020,~~2021, for those subsidiaries with regulatory capital requirements, their aggregate net capital was ~~$159,190,~~$232,926, which exceeded the minimum required capital by ~~$132,498.~~$203,719.

At June 30, ~~2020,~~2021, each of these subsidiaries individually was in compliance with its regulatory capital requirements.

Any new or expanded rules and regulations that may be adopted in countries in which we operate (including regulations that have not yet been proposed) could affect us in other ways.

~~20.~~19.

SEGMENT INFORMATION

The Company’s reportable segments offer different products and services and are managed separately as different levels and types of expertise are required to effectively manage the segments’ transactions. Each segment is reviewed to determine the allocation of resources and to assess its performance. The Company’s principal operating activities are included in its Financial Advisory and Asset Management business segments as described in Note 1. In addition, as described in Note 1, the Company records selected other activities in its Corporate segment.

The Company’s segment information for the three month and six month periods ended June 30, ~~2020~~2021 and ~~2019~~2020 is prepared using the following methodology:

•

Revenue and expenses directly associated with each segment are included in determining operating income.

•

Expenses not directly associated with specific segments are allocated based on the most relevant measures applicable, including headcount, square footage and other factors.

•

Segment assets are based on those directly associated with each segment, and include an allocation of certain assets relating to various segments, based on the most relevant measures applicable, including headcount, square footage and other factors.

The Company records other revenue, interest income and interest expense among the various segments based on the segment in which the underlying asset or liability is reported.

Each segment’s operating expenses include (i) compensation and benefits expenses incurred directly in support of the businesses and (ii) other operating expenses, which include directly incurred expenses for occupancy and equipment, marketing and business development, technology and information services, professional services, fund administration and outsourced services and indirect support costs (including compensation and other operating expenses related thereto) for administrative services. Such administrative services include, but are not limited to, accounting, tax, human resources, legal, facilities management and senior management activities.

LAZARD LTD

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS-(Continued)

(UNAUDITED)

(dollars in thousands, except for per share data, unless otherwise noted)

Management evaluates segment results based on net revenue and operating income (loss) and believes that the following information provides a reasonable representation of each segment’s contribution with respect to net revenue, operating income (loss) and total assets:

		Three Months Ended						Six Months Ended							Three Months Ended						Six Months Ended
		June 30,						June 30,							June 30,						June 30,
		2020			2019			2020			2019				2021			2020			2021			2020
Financial Advisory	Net Revenue	$	304,806		$	329,612		$	603,772		$	667,982		Net Revenue	$	451,940		$	304,806		$	770,352		$	603,772
	Operating Expenses		251,015			276,238			497,862			556,499		Operating Expenses		369,083			251,015			627,130			497,862
	Operating Income	$	53,791		$	53,374		$	105,910		$	111,483		Operating Income	$	82,857		$	53,791		$	143,222		$	105,910
Asset Management	Net Revenue	$	254,849		$	315,591		$	537,370		$	617,424		Net Revenue	$	365,255		$	254,849		$	712,745		$	537,370
	Operating Expenses		195,049			219,021			399,818			426,369		Operating Expenses		269,314			195,049			501,417			399,818
	Operating Income	$	59,800		$	96,570		$	137,552		$	191,055		Operating Income	$	95,941		$	59,800		$	211,328		$	137,552
Corporate	Net Revenue	$	12,637		$	(14,513	)	$	(30,836	)	$	(11,042	)	Net Revenue	$	5,942		$	12,637		$	147		$	(30,836	)
	Operating Expenses		30,363			33,746			32,664			70,148		Operating Expenses		18,479			30,363			54,146			32,664
	Operating Loss	$	(17,726	)	$	(48,259	)	$	(63,500	)	$	(81,190	)	Operating Loss	$	(12,537	)	$	(17,726	)	$	(53,999	)	$	(63,500	)
Total	Net Revenue	$	572,292		$	630,690		$	1,110,306		$	1,274,364		Net Revenue	$	823,137		$	572,292		$	1,483,244		$	1,110,306
	Operating Expenses		476,427			529,005			930,344			1,053,016		Operating Expenses		656,876			476,427			1,182,693			930,344
	Operating Income	$	95,865		$	101,685		$	179,962		$	221,348		Operating Income	$	166,261		$	95,865		$	300,551		$	179,962

	As Of				As Of
	June 30, 2020		December 31, 2019		June 30, 2021		December 31, 2020
Total Assets
Financial Advisory	$	1,141,965	$	1,144,339	$	1,196,078	$	1,181,783
Asset Management		781,683		821,641		958,946		958,588
Corporate		3,388,470		3,673,601		4,251,776		3,831,490
Total	$	5,312,118	$	5,639,581	$	6,406,800	$	5,971,861

~~LAZARD LTD~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS-(Continued)~~

~~(UNAUDITED)~~

~~(dollars in thousands, except for per share data, unless otherwise noted)~~

~~21.~~20.

CONSOLIDATED VIEs

The Company’s consolidated VIEs as of June 30, ~~2020~~2021 and December 31, ~~2019~~2020 include certain funds that were established for the benefit of employees participating in the Company’s existing LFI deferred compensation arrangement. Lazard invests in these funds and is the investment manager and is therefore deemed to have both the power to direct the most significant activities of the funds and the right to receive benefits (or the obligation to absorb losses) that could potentially be significant to these funds. The Company’s consolidated VIE assets, except as it relates to $172,045 and $121,376 of LFI held by Lazard Group as of June 30, 2021 and December 31, 2020, respectively, can only be used to settle the obligations of the consolidated VIEs. The Company’s consolidated VIE assets and liabilities as reflected in the condensed consolidated statements of financial condition consist of the following at June 30, ~~2020~~2021 and December 31, ~~2019:~~

2020.

	June 30, 2020		December 31, 2019		June 30, 2021		December 31, 2020
ASSETS
Cash and cash equivalents	$	3,876	$	3,826	$	4,515	$	3,558
Customers and other receivables		424		102		10,383		160
Investments ~~(a)~~		152,481		97,474		219,670		158,370
Other assets		472		245		836		400
Total Assets	$	157,253	$	101,647	$	235,404	$	162,488

LIABILITIES
Deposits and other customer payables	$	236	$	62	$	10,346	$	104
Other liabilities		679		513		297		491
Total Liabilities	$	915	$	575	$	10,643	$	595

~~(a)~~

~~Includes $120,572 and $83,036 of LFI held by Lazard Group which is eliminated in the condensed consolidated statements of financial condition as of June 30, 2020 and December 31, 2019, respectively.~~

~~22.~~

~~COVID-19~~

On March 11, 2020, the World Health Organization declared the coronavirus (“COVID-19”) a pandemic. In response, on March 27, 2020 the President of the United States signed the Coronavirus Aid, Relief, and Economic Security (CARES) Act into law, and the United States Congress continues to discuss additional stimulus measures. Several governments in jurisdictions that encompass the Company’s largest offices and most significant operations implemented extended strict social distancing measures in the first quarter of 2020, and those strict social distancing measures remain in place in a number of such jurisdictions. In response, the Company implemented remote work arrangements for its employees and restricted business travel. These arrangements have not materially affected our ability to maintain and conduct our business operations, including the operation of financial reporting systems, internal controls over financial reporting and disclosure controls and procedures. While the COVID-19 pandemic has adversely affected the global economy, the nature and extent of COVID-19’s effect on the Company’s operational and financial performance will depend on future developments, including the course of the pandemic, the success of governments in continuing to relax social distancing measures and restarting economic activity, the efficacy of monetary and fiscal measures taken or that may be taken in the future and the potential for structural damage to the economy due to the sharp drop in aggregate demand and, particularly in the U.S., a high level of unemployment, all of which are uncertain and difficult to predict considering the rapidly evolving landscape.

Item 2.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

The following discussion should be read in conjunction with Lazard Ltd’s condensed consolidated financial statements and the related notes included elsewhere in this Quarterly Report on Form 10-Q (the “Form 10-Q”), as well as Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”) included in our Annual Report on Form 10-K for the year ended December 31, ~~2019~~2020 (the “Form 10-K”). All references to ~~“2020,~~“2021,” ~~“2019,~~“2020,” “second quarter,” “first half” or “the period” refer to, as the context requires, the three month and six month periods ended June 30, ~~2020~~2021 and ~~June 30, 2019.~~2020.

Forward-Looking Statements and Certain Factors that May Affect Our Business

Management has included in Parts I and II of this Form 10-Q, including in its MD&A, statements that are forward-looking statements. In some cases, you can identify these statements by forward-looking words such as “may,” “might,” “will,” “should,” “could,” “would,” “expect,” “plan,” “anticipate,” “believe,” “estimate,” “predict,” “potential,” “target,” “goal” or “continue,” and the negative of these terms and other comparable terminology. These forward-looking statements, which are subject to known and unknown risks, uncertainties and assumptions about us, may include projections of our future financial performance based on our growth strategies, business plans and initiatives and anticipated trends in our business. These statements, including with respect to the current COVID-19 pandemic, are only predictions based on our current expectations and projections about future events. There are important factors that could cause our actual results, level of activity, performance or achievements to differ materially from the results, level of activity, performance or achievements expressed or implied by the forward-looking statements. These factors include, but are not limited to, those discussed in our Form 10-K under the caption “Risk Factors,” including the following:

•

a decline in general economic conditions or the global or regional financial markets;

•

a decline in our revenues, for example due to a decline in overall mergers and acquisitions (“M&A”) activity, our share of the M&A market or our assets under management (“AUM”);

•

losses caused by financial or other problems experienced by third parties;

•

losses due to unidentified or unanticipated risks;

•

a lack of liquidity, i.e., ready access to funds, for use in our businesses; and

•

competitive pressure on our businesses and on our ability to retain and attract employees at current compensation levels.

These risks and uncertainties are not exhaustive. Other sections of the Form 10-K and this Form 10-Q describe additional factors that could adversely affect our business and financial performance. Moreover, we operate in a very competitive and rapidly changing environment. New risks and uncertainties emerge from time to time, and it is not possible for our management to predict all risks and uncertainties, nor can management assess the impact of all factors on our business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements.

Although we believe the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, level of activity, performance or achievements. Moreover, neither we nor any other person assumes responsibility for the accuracy or completeness of any of these forward-looking statements. You should not rely upon forward-looking statements as predictions of future events. We are under no duty to update any of these forward-looking statements after the date of this Form 10-Q to conform our prior statements to actual results or revised expectations and we do not intend to do so.

Forward-looking statements include, but are not limited to, statements about:

•

financial goals, including ratios of compensation and benefits expense to operating revenue;

•

ability to deploy surplus cash through dividends, share repurchases and debt repurchases;

•

ability to offset stockholder dilution through share repurchases;

•

possible or assumed future results of operations and operating cash flows;

•

strategies and investment policies;

•

financing plans and the availability of short-term borrowing;

•

competitive position;

•

future acquisitions, including the consideration to be paid and the timing of consummation;

•

potential growth opportunities available to our businesses;

•

potential impact of investments in our technology infrastructure and data science capabilities;

•

recruitment and retention of our managing directors and employees;

•

potential levels of compensation expense, including awarded compensation and benefits expense and adjusted compensation and benefits expense, and non-compensation expense;

•

potential operating performance, achievements, productivity improvements, efficiency and cost reduction efforts;

•

likelihood of success and impact of litigation;

•

expected tax rates, including effective tax rates;

•

changes in interest and tax rates;

•

availability of certain tax benefits, including certain potential deductions;

•

potential impact of certain events or circumstances on our financial statements and operations, including the ~~current~~ongoing COVID-19 pandemic;

•

changes in foreign currency exchange rates;

•

expectations with respect to the economy, the securities markets, the market for mergers, acquisitions, restructuring and other financial advisory activity, the market for asset management activity and other macroeconomic, regional and industry trends;

•

effects of competition on our business; and

•

impact of new or future legislation and regulation, including tax laws and regulations, on our business.

The Company is committed to providing timely and accurate information to the investing public, consistent with our legal and regulatory obligations. To that end, the Company uses its website, its twitter account (twitter.com/Lazard) and other social media sites to convey information about our businesses, including the anticipated release of quarterly financial results, quarterly financial, statistical and business-related information, and the posting of updates of AUM in our Asset Management business. Investors can link to Lazard Ltd, Lazard Group and their operating company websites through http://www.lazard.com. Our websites and social media sites and the information contained therein or connected thereto shall not be deemed to be incorporated into this Form 10-Q.

~~Business Summary~~Financial Advisory

Lazard is one of the world’s preeminent financial advisory and asset management firms. We have long specialized in crafting solutions to the complex financial and strategic challenges of a diverse set of clients around the world, including corporations, governments, institutions, partnerships and individuals. Founded in 1848 in New Orleans, we currently operate from more than 40 cities and 25 countries across key business and financial centers in North America, Europe, Asia, Australia, and Central and South America.

Our primary business purpose is to serve our clients. Our deep roots in business centers around the world form a global network of relationships with key decision-makers in corporations, governments and investing institutions. This network is both a competitive strength and a powerful resource for Lazard and our clients. As a firm that competes on the quality of our advice, we have two fundamental assets: our people and our reputation.Net Revenue

We operate in cyclical businesses across multiple geographies, industries and asset classes. In recent years, we have expanded our geographic reach, bolstered our industry expertise and continued to build in growth areas. Companies, government bodies and investors seek independent advice with a geographic perspective, deep understanding of capital structure, informed research and knowledge of global, regional and local economic conditions. We believe that our business model as an independent advisor will continue to create opportunities for us to attract new clients and key personnel.

~~Our principal sources of revenue are derived from activities in the following business segments:~~$

451,940		$	304,806			$	770,352			$	603,772
	Operating Expenses			369,083				251,015				627,130			497,862
	Operating Income		$	82,857			$	53,791			$	143,222		$	105,910
Asset Management	Net Revenue		$	365,255			$	254,849			$	712,745		$	537,370
	Operating Expenses			269,314				195,049				501,417			399,818
	Operating Income		$	95,941			$	59,800			$	211,328		$	137,552
Corporate	Net Revenue		$	5,942			$	12,637			$	147		$	(30,836	)
	Operating Expenses			18,479				30,363				54,146			32,664
	Operating Loss		$	(12,537	)		$	(17,726	)		$	(53,999	)	$	(63,500	)
Total	Net Revenue		$	823,137			$	572,292			$	1,483,244		$	1,110,306
	Operating Expenses			656,876				476,427				1,182,693			930,344
	Operating Income		$	166,261			$	95,865			$	300,551		$	179,962		•	Financial Advisory, which offers corporate, partnership, institutional, government, sovereign and individual clients across the globe a wide array of financial advisory services regarding M&A, capital advisory, restructurings, shareholder advisory, sovereign advisory, capital raising and other strategic advisory matters, and

•

~~Our consolidated net revenue was derived from the following segments:~~

Three Months Ended

Six Months Ended

June 30,

June 30,

2020

2019

2020

2019

Financial Advisory

53
%

52
%

54
%

52
%
Asset Management

45

50

48

48

Corporate

2

(2
)

(2
)

-

Total

100
%

100
%

100
%

100
%

We also invest our own capital from time to time, generally alongside capital of qualified institutional and individual investors in alternative investments or private equity investments, and, since 2005, we have engaged in a number of alternative investments and private equity activities, including, historically, investments through (i) Edgewater, our Chicago-based private equity firm and (ii) a fund targeting significant noncontrolling-stake investments in established private companies. We also make investments to seed our Asset Management strategies.

~~Business~~ ~~Environment and Outlook~~

Economic and global financial market conditions can materially affect our financial performance. As described above, our principal sources of revenue are derived from activities in our Financial Advisory and Asset Management business segments. As our Financial Advisory revenues are primarily dependent on the successful completion of merger, acquisition, restructuring, capital raising or similar transactions, and our Asset Management revenues are primarily driven by the levels of AUM, weak economic and global financial market conditions can result in a challenging business environment for M&A and capital-raising activity as well as our Asset Management business, but may provide opportunities for our restructuring business.

During the second quarter of 2020, the coronavirus (“COVID-19”) pandemic continued to have a negative impact on economic activity around the world. Governments and central banks have taken extraordinary measures to support local economies and capital markets, but the macroeconomic outlook remains uncertain while significant health risks persist.

Lazard’s offices around the world have continued to operate in the context of applicable local regulations and guidelines regarding business activity, and in the second quarter of 2020, the majority of our employees worked from home, employing virtual and secure cloud-based systems to continue communicating, collaborating and conducting client business.

~~We continue to expect a challenging environment in the near-term due to elevated uncertainty, capital markets volatility and a downturn in global M&A activity.~~

~~Our outlook with respect to our Financial Advisory and Asset Management businesses is described below.~~

•

~~Financial Advisory~~—During this period of financial stress and uncertainty, we are focused on serving clients with our depth of expertise in capital structure, capital raising, debt negotiations and restructuring and exchange offers. We expect that the volume and timing of new M&A transactions will be severely impacted in the near term. We are seeing increased activity in our restructuring, capital advisory and sovereign advisory practices, however, the increased activity in these areas may not fully offset the anticipated decline in M&A activity in the near term, though we expect to see an increase in M&A activity as the year progresses. The global scale and breadth of our Financial Advisory business allows us to advise on a wide range of strategic and restructuring transactions across a variety of industries. In addition, we continue to invest in our Financial

~~Advisory business by selectively hiring talented senior professionals and continuing to focus on our M&A, restructuring and other advisory services.~~

	As Of
	June 30, 2021		December 31, 2020
Total Assets
Financial Advisory	$	1,196,078	$	1,181,783
Asset Management		958,946		958,588
Corporate		4,251,776		3,831,490
Total	$	6,406,800	$	5,971,861

•

~~Asset Management~~—In the short to intermediate term, we normally would expect most investor demand to come through financial institutions, and from defined benefit and defined contribution plans in developed economies because of their sheer scope and size. However, the current volatility in the capital markets and the uncertainties arising from the COVID-19 pandemic may negatively impact our business in a manner that we cannot predict. Over the longer term, and depending upon local and global market conditions, we would expect an increasing share of our AUM to come from the developing economies around the globe, as their retirement systems evolve and individual wealth is increasingly deployed in the financial markets. Given our diversified investment platform and our ability to provide investment solutions for a global mix of clients, we believe we are positioned to benefit from opportunities across the asset management industry despite the current challenges that markets have created for that industry. We are continually developing new investment strategies that extend our existing platforms and assessing potential product acquisitions or other inorganic growth opportunities. Among other efforts, we have been particularly focused on continuing to incorporate environmental, social and corporate governance (“ESG”) considerations, as appropriate, into our investment research and launching strategies that use ESG factors to drive long-term investment returns. In addition to these new ESG and sustainable strategies, recent examples of growth initiatives include the following: various Quantitative Equity strategies, explainable AI capabilities, and several U.S. Systematic Equity strategies.

~~We operate~~20.

CONSOLIDATED VIEs

The Company’s consolidated VIEs as of June 30, 2021 and December 31, 2020 include certain funds that were established for the benefit of employees participating in the Company’s existing LFI deferred compensation arrangement. Lazard invests in these funds and is the investment manager and is therefore deemed to have both the power to direct the most significant activities of the funds and the right to receive benefits (or the obligation to absorb losses) that could potentially be significant to these funds. The Company’s consolidated VIE assets, except as it relates to $172,045 and $121,376 of LFI held by Lazard Group as of June 30, 2021 and December 31, 2020, respectively, can only be used to settle the obligations of the consolidated VIEs. The Company’s consolidated VIE assets and liabilities as reflected in the condensed consolidated statements of financial condition consist of the following at June 30, 2021 and December 31, 2020.

	June 30, 2021		December 31, 2020
ASSETS
Cash and cash equivalents	$	4,515	$	3,558
Customers and other receivables		10,383		160
Investments		219,670		158,370
Other assets		836		400
Total Assets	$	235,404	$	162,488

LIABILITIES
Deposits and other customer payables	$	10,346	$	104
Other liabilities		297		491
Total Liabilities	$	10,643	$	595

Item 2.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

The following discussion should be read in conjunction with Lazard Ltd’s condensed consolidated financial statements and the related notes included elsewhere in this Quarterly Report on Form 10-Q (the “Form 10-Q”), as well as Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”) included in our Annual Report on Form 10-K for the year ended December 31, 2020 (the “Form 10-K”). All references to “2021,” “2020,” “second quarter,” “first half” or “the period” refer to, as the context requires, the three month and six month periods ended June 30, 2021 and 2020.

Forward-Looking Statements and Certain Factors that May Affect Our Business

•

a decline in general economic conditions or the global or regional financial markets;

•

a ~~very~~ decline in our revenues, for example due to a decline in overall mergers and acquisitions (“M&A”) activity, our share of the M&A market or our assets under management (“AUM”);

•

losses caused by financial or other problems experienced by third parties;

•

losses due to unidentified or unanticipated risks;

•

a lack of liquidity, i.e., ready access to funds, for use in our businesses; and

•

competitive and rapidly changing environment. New risks and uncertainties emerge continuously, and it is not possible for our management to predict all risks and uncertainties, nor can we assess the impact of all potentially applicable factorspressure on our businesses and on our ability to retain and attract employees at current compensation levels.

Forward-looking statements include, but are not limited to, statements about:

•

financial goals, including ratios of compensation and benefits expense to operating revenue;

•

ability to deploy surplus cash through dividends, share repurchases and debt repurchases;

•

ability to offset stockholder dilution through share repurchases;

•

possible or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements. See Item 1A, “Risk Factors” in this Form 10-Q and our Form 10-K. Furthermore, net income and revenue in any period may not be indicative of full-year results or theassumed future results of ~~any other period~~operations and ~~may vary significantly from year to year~~operating cash flows;

•

strategies and ~~quarter to quarter.~~investment policies;

~~Overall, we continue to focus on~~

•

financing plans and the ~~development~~availability of ~~our business,~~short-term borrowing;

•

competitive position;

•

future acquisitions, including the ~~generation~~consideration to be paid and the timing of ~~stable revenue growth, earnings growth and shareholder returns, the evaluation of~~ consummation;

•

potential growth opportunities ~~the investment~~available to our businesses;

•

potential impact of investments in ~~new~~our technology ~~to support the development of existing~~infrastructure and ~~new business opportunities, the prudent management~~data science capabilities;

•

recruitment and retention of our ~~costs~~managing directors and ~~expenses,~~employees;

•

potential levels of compensation expense, including awarded compensation and benefits expense and adjusted compensation and benefits expense, and non-compensation expense;

•

potential operating performance, achievements, productivity improvements, efficiency and cost reduction efforts;

•

likelihood of success and impact of litigation;

•

expected tax rates, including effective tax rates;

•

changes in interest and tax rates;

•

availability of certain tax benefits, including certain potential deductions;

•

potential impact of certain events or circumstances on our financial statements and operations, including the ~~efficient use of our assets and the return of capital to our shareholders.~~ongoing COVID-19 pandemic;

~~Certain market data~~•

changes in foreign currency exchange rates;

•

effects of competition on our ~~Financial Advisory~~business; and ~~Asset Management businesses is included below.~~

•

impact of new or future legislation and regulation, including tax laws and regulations, on our business.

Financial Advisory

As reflected in the following table, which sets forth global M&A industry statistics, the value and number of all completed transactions, including the subset of completed transactions involving values greater than $500 million, decreased in the first half of 2020 as compared to 2019. With respect to announced M&A transactions, the value and number of all transactions, including the subset of announced transactions involving values greater than $500 million, decreased in the first half of 2020 as compared to 2019.

Three Months Ended

Six Months Ended

June 30,

June 30,

2020

2019

%
Incr / (Decr)

2020

2019

%
Incr / (Decr)

($ in billions)

Completed M&A Transactions:

All deals:

Value

$
839

$
845

(1
)%

$
1,517

$
1,784

(15
)%
Number

6,414

9,222

(30
)%

14,785

17,952

(18
)%
Deals Greater than $500 million:

Value

$
700

$
627

12
%

$
1,203

$
1,361

(12
)%
Number

193

264

(27
)%

445

556

(20
)%
Announced M&A Transactions:

All deals:

Value

$
450

$
1,111

(59
)%

$
1,124

$
2,186

(49
)%
Number

6,720

9,291

(28
)%

15,234

18,030

(16
)%
Deals Greater than $500 million:

Value

$
293

$
885

(67
)%

$
787

$
1,762

(55
)%
Number

157

324

(52
)%

378

574

(34
)%

Net Revenue

~~Source: Dealogic as of July 6, 2020.~~$

Global restructuring activity during the first half of 2020, as measured by the number of corporate defaults, increased as compared to the first half of 2019. The number of defaulting issuers was 111 in the first half of 2020 according to Moody’s Investors Service, Inc, as compared to 46 in the first half of 2019.451,940

Net revenue trends in Financial Advisory are generally correlated to the level of completed industry-wide M&A transactions and restructuring transactions occurring subsequent to corporate debt defaults, respectively. However, deviations from this relationship can occur in any given year for a number of reasons. For instance, our results can diverge from industry-wide activity where there are material variances from the level of industry-wide M&A activity in a particular market where Lazard has significant market share, or regarding the relative number of our advisory engagements with respect to larger-sized transactions, and where we are involved in non-public or sovereign advisory assignments.

304,806

770,352

603,772

Operating Expenses

369,083

251,015

627,130

497,862

Operating Income

82,857

53,791

143,222

105,910

Asset Management

Equity market indices for major markets at June 30, 2020 generally decreased as compared to such indices at December 31, 2019 and generally increased as compared to such indices at March 31, 2020. The percentage change in major equity market indices at June 30, 2020, as compared to such indices at March 31, 2020, December 31, 2019 and at June 30, 2019, is shown in the table below.

Percentage Changes
June 30, 2020 vs.

March 31,
2020

December 31,
2019

June 30,
2019

MSCI World Index

20
%

(5
)%

3
%
Euro Stoxx

18
%

(12
)%

(4
)%
MSCI Emerging Market

18
%

(10
)%

(3
)%
S&P 500

21
%

(3
)%

8
%

Net Revenue

365,255

254,849

712,745

537,370

Operating Expenses

269,314

195,049

501,417

399,818

Operating Income

95,941

59,800

211,328

137,552

Corporate

Net Revenue

5,942

12,637

147

(30,836

)

Operating Expenses

18,479

30,363

54,146

32,664

Operating Loss

(12,537

)

(17,726

)

(53,999

)

(63,500

)

Total

Net Revenue

823,137

572,292

1,483,244

1,110,306

Operating Expenses

656,876

476,427

1,182,693

930,344

Operating Income

166,261

95,865

300,551

179,962

	As Of
	June 30, 2021		December 31, 2020
Total Assets
Financial Advisory	$	1,196,078	$	1,181,783
Asset Management		958,946		958,588
Corporate		4,251,776		3,831,490
Total	$	6,406,800	$	5,971,861

~~The fees that we receive for providing investment management~~20.

CONSOLIDATED VIEs

	June 30, 2021		December 31, 2020
ASSETS
Cash and cash equivalents	$	4,515	$	3,558
Customers and other receivables		10,383		160
Investments		219,670		158,370
Other assets		836		400
Total Assets	$	235,404	$	162,488

LIABILITIES
Deposits and other customer payables	$	10,346	$	104
Other liabilities		297		491
Total Liabilities	$	10,643	$	595

Item 2.

Management’s Discussion and ~~advisory services are primarily driven~~Analysis of Financial Condition and Results of Operations

The following discussion should be read in conjunction with Lazard Ltd’s condensed consolidated financial statements and the related notes included elsewhere in this Quarterly Report on Form 10-Q (the “Form 10-Q”), as well as Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”) included in our Annual Report on Form 10-K for the year ended December 31, 2020 (the “Form 10-K”). All references to “2021,” “2020,” “second quarter,” “first half” or “the period” refer to, as the context requires, the three month and six month periods ended June 30, 2021 and 2020.

Forward-Looking Statements and Certain Factors that May Affect Our Business

•

a decline in general economic conditions or the ~~level of AUM and the nature of the AUM product mix. Accordingly, market movements, foreign currency exchange rate volatility and changes~~global or regional financial markets;

•

a decline in our ~~AUM product mix will impact the level of~~ revenues, we receive from our Asset Management business when comparing periodic results. A substantial portion of our AUM is invested in equities. Movements in AUM during the period generally reflect the changes in equity market indices.

~~Financial Statement Overview~~

~~Net Revenue~~

The majority of Lazard’s Financial Advisory net revenue historically has been earned from the successful completion of M&A transactions, capital advisory services, capital raising, restructuring, shareholder advisory, sovereign advisory and other strategic advisory matters. The main drivers of Financial Advisory net revenue are overall M&A activity, the level of corporate debt defaults and the environment for capital raising activities, particularly in the industries and geographic markets in which Lazard focuses. In some client engagements, often those involving financially distressed companies, revenue is earned in the form of retainers and similar fees that are contractually agreed upon with each client for each assignment and are not necessarily linked to the completion of a transaction. In addition, Lazard also earns fees from providing strategic advice to clients, with such fees not being dependent on a specific transaction, and may also earn fees in connection with public and private securities offerings. Significant fluctuations in Financial Advisory net revenue can occur over the course of any given year, because a significant portion of such net revenue is earned upon the successful completion of a transaction, restructuring or capital raising activity, the timing of which is uncertain and is not subject to Lazard’s control.

Lazard’s Asset Management segment principally includes Lazard Asset Management LLC (together with its subsidiaries, “LAM”), Lazard Frères Gestion SAS (“LFG”) and Edgewater. Asset Management net revenue is derived from fees for investment management and advisory services provided to clients. As noted above, the main driver of Asset Management net revenue is the level and product mix of AUM, which is generally influenced by the performance of the global equity markets and,example due to a ~~lesser extent, fixed income markets as well as Lazard’s investment performance, which impacts its ability to successfully attract~~decline in overall mergers and retain assets. As a result, fluctuations (including timing thereof) in financial markets and client asset inflows and outflows have a direct effect on Asset Management net revenue and operating income. Asset Management fees are generally based on the level of AUM measured daily, monthly or quarterly, and an increase or reduction in AUM, due to market price fluctuations, currency fluctuations, changes in product mix, or net client asset flows will result in a corresponding increase or decrease in management fees. The majority of our investment advisory contracts are generally terminable at any time or on notice of 30 days or less. Institutional and individual clients, and firms with which we have strategic alliances, can terminate their relationship with us, reduce the aggregate amount of AUM or shift their funds to other types of accounts with different rate structures for a number of reasons, including investment performance, changes in prevailing interest rates and financial market performance. In addition, as Lazard’s AUM includes significant amounts of assets that are denominated in currencies other than U.S. Dollars, changes in the value of the U.S. Dollar relative to foreign currencies will impact the value of Lazard’s AUM and the overall amount of management fees generated by the AUM. Fees vary with the type of assets managed and the vehicle in which they are managed, with higher fees earned on equity assets and alternative investment funds, such as hedge funds and private equity funds, and lower fees earned on fixed income and cash management products.

~~The Company earns performance-based incentive fees on various investment products, including traditional products and alternative investment funds, such as hedge funds and private equity funds.~~

For hedge funds, incentive fees are calculated based on a specified percentage of a fund’s net appreciation, in some cases in excess of established benchmarks or thresholds. The Company records incentive fees on traditional products and hedge funds at the end of the relevant performance measurement period, when potential uncertainties regarding the ultimate realizable amounts have been determined. The incentive fee measurement period is generally an annual period (unless an account terminates or redemption occurs during the year). The incentive fees received at the end of the measurement period are not subject to reversal or payback. Incentive fees on hedge funds are often subject to loss carryforward provisions in which losses incurred by the hedge funds in any year are applied against certain gains realized by the hedge funds in future periods before any incentive fees can be earned.

For private equity funds, incentive fees may be earned in the form of a “carried interest” if profits arising from realized investments exceed a specified threshold. Typically, such carried interest is ultimately calculated on a whole-fund basis and, therefore, clawback of carried interest during the life of the fund can occur. As a result, incentive fees earned on our private equity funds are not recognized until potential uncertainties regarding the ultimate realizable amounts have been determined, including any potential for clawback.

~~losses on investments held in connection with Lazard Fund Interests~~acquisitions (“~~LFI”~~M&A”) and interest income and interest expense. Corporate net revenue also can fluctuate due to changes in the fair value of debt and equity securities, as well as due to changes in interest and currency exchange rates and in the levels of cash, investments and indebtedness.

Corporate segment total assets represented 64% of Lazard’s consolidated total assets as of June 30, 2020, which are attributable to cash and cash equivalents, investments in debt and equity securities, interests in alternative investment, debt, equity and private equity funds, deferred tax assets and certain assets associated with LFB.

~~Operating Expenses~~

The majority of Lazard’s operating expenses relate to compensation and benefits for managing directors and employees. Our compensation and benefits expense includes (i) salaries and benefits, (ii) amortization of the relevant portion of previously granted deferred incentive compensation awards, including (a) share-based incentive compensation under the Lazard Ltd 2018 Incentive Compensation Plan (the “2018 Plan”) and the Lazard Ltd 2008 Incentive Compensation Plan (the “2008 Plan”) and (b) LFI and other similar deferred compensation arrangements (see Note 13 of Notes to Condensed Consolidated Financial Statements), (iii) a provision for discretionary or guaranteed cash bonuses and profit pools and (iv) when applicable, severance payments. Compensation expense in any given period is dependent on many factors, including general economic and market conditions, our actual and forecasted operating and financial performance, staffing levels, estimated forfeiture rates, competitive pay conditions and the nature of revenues earned, as well as the mix between current and deferred compensation.

For interim periods, we use “adjusted compensation and benefits expense” and the ratio of “adjusted compensation and benefits expense” to “operating revenue,” both non-GAAP measures, for comparison of compensation and benefits expense between periods. For the reconciliations and calculations with respect to “adjusted compensation and benefits expense” and related ratios to “operating revenue,” see the table under “Consolidated Results of Operations” below.

We believe that “awarded compensation and benefits expense” and the ratio of “awarded compensation and benefits expense” to “operating revenue,” both non-GAAP measures, when presented in conjunction with U.S. GAAP measures are appropriate measures to assess the annual cost of compensation and provide a meaningful and useful basis for comparison of compensation and benefits expense between present, historical and future years. “Awarded compensation and benefits expense” for a given year is calculated using “adjusted compensation and benefits expense,” also a non-GAAP measure, as modified by the following items:

•

we deduct amortization expense recorded for accounting principles generally accepted in the United States of America (“U.S. GAAP”) purposes in the fiscal year associated with deferred incentive compensation awards;

•

~~we add incentive compensation with respect to the fiscal year, which is comprised of:~~

~~(i)~~

~~the deferred incentive compensation awards granted in the year-end compensation process with respect to the fiscal year (e.g~~., deferred incentive compensation awards granted in 2020 related to the 2019 year-end compensation process), including performance-based restricted stock unit (“PRSU”) and performance-based restricted participation unit (“PRPU”) awards (based on the target payout level);

~~(ii)~~

~~the portion of investments in people (e.g., “sign-on” bonuses or retention awards) and other special deferred incentive compensation awards that is applicable to the fiscal year the award becomes effective; and~~

~~(iii)~~

~~amounts in excess of the target payout level for PRSU and PRPU awards at the end of their respective performance periods; and~~

•

~~we reduce the amounts in (i), (ii) and (iii) above by an estimate of future forfeitures with respect to such awards.~~

Compensation and benefits expense is the largest component of our operating expenses. We seek to maintain discipline with respect to compensation, including the rate at which we award deferred compensation. Our goal is to maintain a ratio of awarded compensation and benefits expense to operating revenue and a ratio of adjusted compensation and benefits expense to operating revenue over the cycle in the mid- to high-50s percentage range. While we have implemented policies and initiatives that we believe will assist us in maintaining ratios within this range, there can be no guarantee that we will continue to maintain such ratios, or that our policies or initiatives will not change, in the future. We may benefit from pressure on compensation costs within the financial services industry in future periods; however, increased competition for senior professionals, changes in the macroeconomic environment or the financial markets generally, lower operating revenue resulting from, for example, a decrease in M&A activity, our share of the M&A market or our ~~AUM levels, changes~~assets under management (“AUM”);

•

losses caused by financial or other problems experienced by third parties;

•

losses due to unidentified or unanticipated risks;

•

a lack of liquidity, i.e., ready access to funds, for use in ~~the mix of revenues from~~our businesses; and

•

competitive pressure on our businesses and on our ability to retain and attract employees at current compensation levels.

Forward-looking statements include, but are not limited to, statements about:

•

financial goals, including ratios of compensation and benefits expense to operating revenue;

•

ability to deploy surplus cash through dividends, share repurchases and debt repurchases;

•

ability to offset stockholder dilution through share repurchases;

•

possible or assumed future results of operations and operating cash flows;

•

strategies and investment policies;

•

financing plans and the availability of short-term borrowing;

•

competitive position;

•

future acquisitions, including the consideration to be paid and the timing of consummation;

•

potential growth opportunities available to our businesses;

•

potential impact of investments in our ~~businesses or various other factors could prevent us from achieving this goal.~~

~~Our operating expenses also include “non-compensation expense”, which includes costs for occupancy~~technology infrastructure and ~~equipment, marketing~~data science capabilities;

•

recruitment and ~~business development, technology and information services, professional services, fund administration and outsourced~~

~~services and other expenses. Our occupancy costs represent a significant portion~~retention of our ~~aggregate~~managing directors and employees;

•

potential levels of compensation expense, including awarded compensation and benefits expense and adjusted compensation and benefits expense, and non-compensation expense;

•

potential operating ~~expenses~~performance, achievements, productivity improvements, efficiency and ~~are subject to change from time to time, particularly as leases for real property expire~~cost reduction efforts;

•

likelihood of success and ~~are renewed~~impact of litigation;

•

expected tax rates, including effective tax rates;

•

changes in interest and tax rates;

•

availability of certain tax benefits, including certain potential deductions;

•

potential impact of certain events or ~~replaced with new, long-term leases for~~circumstances on our financial statements and operations, including the ~~same or other real property.~~ongoing COVID-19 pandemic;

~~We believe that “adjusted non-compensation expense”, a non-GAAP measure, when presented~~

•

changes in ~~conjunction with U.S. GAAP measures provides a meaningful and useful basis for our investors to assess our operating results. For calculations~~foreign currency exchange rates;

•

expectations with respect to ~~“adjusted non-compensation expense”, see~~ the ~~table under “Consolidated Results of Operations” below.~~

~~Our operating expenses also include “amortization~~economy, the securities markets, the market for mergers, acquisitions, restructuring and other ~~acquisition-related costs”~~financial advisory activity, the market for asset management activity and other macroeconomic, regional and industry trends;

•

effects of competition on our business; and

•

impact of new or future legislation and regulation, including tax laws and regulations, on our business.

Business Summary

Lazard, one of the world’s preeminent financial advisory and asset management firms, operates from 41 cities across 26 countries in North America, Europe, Asia, Australia, Central and South America. With origins dating to 1848, we have long specialized in crafting solutions to the complex financial and strategic challenges of a diverse set of clients around the world, including corporations, governments, institutions, partnerships and individuals.

Our principal sources of revenue are derived from activities in the following business segments:

•

Financial Advisory, which ~~includes~~offers corporate, partnership, institutional, government, sovereign and individual clients across the globe a wide array of financial advisory services regarding M&A, restructurings, capital advisory, shareholder advisory, sovereign advisory, capital raising and other strategic advisory matters, and

•

Asset Management, which offers a broad range of global investment solutions and investment management services in ~~2019~~equity and fixed income strategies, asset allocation strategies, alternative investments and private equity funds to corporations, public funds, sovereign entities, endowments and foundations, labor funds, financial intermediaries and private clients.

Our consolidated net revenue was derived from the following segments:

	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2021			2020			2021			2020
Financial Advisory		55	%		53	%		52	%		54	%
Asset Management		44			45			48			48
Corporate		1			2			-			(2	)
Total		100	%		100	%		100	%		100	%

Business Environment and Outlook

The global macroeconomic environment continues to strengthen. While the course of the coronavirus (“COVID-19”) pandemic remains uncertain, business conditions in most of the developed world continue to improve. Governments and central banks have taken extraordinary measures to support local economies and capital markets, but the macroeconomic outlook remains uncertain while significant health risks persist.

Our outlook with respect to our Financial Advisory and Asset Management businesses is described below.

•

Financial Advisory—During a very active M&A market we are focused on serving clients with our depth of expertise in capital structure, capital raising, debt negotiations and restructuring and exchange offers. Announced M&A transaction volumes have recovered due to liquid financial markets and a strong economic recovery. We still expect there to be elevated uncertainty in the ~~change~~near term due to the ongoing health crisis and a more stringent regulatory market. However, fiscal and monetary stimulus in developed countries and the rollout of vaccines globally have created heightened levels of optimism and CEO confidence. The global scale and breadth of our Financial Advisory business allows us to advise on a wide range of strategic and restructuring transactions across a variety of industries. In addition, we continue to invest in our Financial Advisory business by selectively hiring talented senior professionals and continuing to focus on our M&A, restructuring and other advisory services.

•

Asset Management—In the short to intermediate term, we normally would expect most investor demand to come through financial institutions, and from defined benefit and defined contribution plans in developed economies because of their sheer

scope and size. However, continued uncertainties in capital markets arising from the COVID-19 pandemic may negatively impact our business in a manner that we cannot predict. Over the longer term, and depending upon local and global market conditions, we would expect an increasing share of our AUM to come from the developing economies around the globe, as their retirement systems evolve and individual wealth is increasingly deployed in the financial markets. Given our diversified investment platform and our ability to provide investment solutions for a global mix of clients, we believe we are positioned to benefit from opportunities across the asset management industry despite the current challenges that markets have created for that industry. We are continually developing new investment strategies that extend our existing platforms and assessing potential product acquisitions or other inorganic growth opportunities. Among other efforts, we have been particularly focused on continuing to incorporate environmental, social and corporate governance (“ESG”) considerations, as appropriate, into our investment research and launching strategies that use ESG and sustainability factors to drive long-term investment returns. In addition to these new ESG and sustainable strategies, recent examples of growth initiatives include the following: various Quantitative Equity strategies, new convertible bond strategies, thematically oriented strategies and a new long/short credit strategy.

We operate in a very competitive and rapidly changing environment. New risks and uncertainties emerge continuously, and it is not possible for our management to predict all risks and uncertainties, nor can we assess the impact of all potentially applicable factors on our business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements. See Item 1A, “Risk Factors” in our Form 10-K. Furthermore, net income and revenue in any period may not be indicative of full-year results or the results of any other period and may vary significantly from year to year and quarter to quarter.

Overall, we continue to focus on the development of our business, including the generation of stable revenue growth, earnings growth and shareholder returns, the evaluation of potential growth opportunities, the investment in new technology to support the development of existing and new business opportunities, the prudent management of our costs and expenses, the efficient use of our assets and the return of capital to our shareholders.

Certain market data with respect to our Financial Advisory and Asset Management businesses is included below.

Financial Advisory

As reflected in the following table, which sets forth global M&A industry statistics, the value of all completed transactions, including the subset of completed transactions involving values greater than $500 million, increased in the first half of 2021 as compared to 2020. With respect to announced M&A transactions, the value and number of all transactions, including the subset of announced transactions involving values greater than $500 million, increased in the first half of 2021 as compared to 2020.

	Three Months Ended							Six Months Ended
	June 30,							June 30,
	2021		2020		% Incr / (Decr)			2021		2020		% Incr / (Decr)
	($ in billions)
Completed M&A Transactions:
All deals:
Value	$	996	$	911		9	%	$	2,069	$	1,623		27	%
Number		6,850		7,365		(7	)%		15,058		16,086		(6	)%
Deals Greater than $500 million:
Value	$	763	$	750		2	%	$	1,594	$	1,273		25	%
Number		318		220		45	%		630		489		29	%
Announced M&A Transactions:
All deals:
Value	$	1,557	$	475		228	%	$	2,999	$	1,141		163	%
Number		7,453		7,304		2	%		16,180		15,923		2	%
Deals Greater than $500 million:
Value	$	1,279	$	312		310	%	$	2,439	$	799		205	%
Number		449		171		163	%		912		395		131	%

Source: Dealogic as of July 7, 2021.

Global restructuring activity during the first half of 2021, as measured by the number of corporate defaults, decreased as compared to the first half of 2020. The number of defaulting issuers was 28 in the first half of 2021 according to Moody’s Investors Service, Inc., as compared to 114 in the first half of 2020.

Asset Management

Equity market indices for major markets at June 30, 2021 generally increased as compared to such indices at December 31, 2020 and March 31, 2021. The percentage change in major equity market indices at June 30, 2021, as compared to such indices at March 31, 2021, December 31, 2020 and at June 30, 2020, is shown in the table below.

	Percentage Changes June 30, 2021 vs.
	March 31, 2021			December 31, 2020			June 30, 2020
MSCI World Index		8	%		13	%		40	%
Euro Stoxx		5	%		17	%		29	%
MSCI Emerging Market		5	%		8	%		41	%
S&P 500		9	%		15	%		41	%

The fees that we receive for providing investment management and advisory services are primarily driven by the level of AUM and the nature of the AUM product mix. Accordingly, market movements, foreign currency exchange rate volatility and changes in our AUM product mix will impact the level of revenues we receive from our Asset Management business when comparing periodic results. A substantial portion of our AUM is invested in equities. Movements in AUM during the period generally reflect the changes in equity market indices.

Financial Statement Overview

Net Revenue

The majority of Lazard’s Financial Advisory net revenue historically has been earned from the successful completion of M&A transactions, restructuring, capital advisory services, shareholder advisory, sovereign advisory, capital raising and other strategic advisory matters. The main drivers of Financial Advisory net revenue are overall M&A activity, the level of corporate debt defaults and the environment for capital raising activities, particularly in the industries and geographic markets in which Lazard focuses. In some client engagements, often those involving financially distressed companies, revenue is earned in the form of retainers and similar fees that are contractually agreed upon with each client for each assignment and are not necessarily linked to the completion of a transaction. In addition, Lazard also earns fees from providing strategic advice to clients, with such fees not being dependent on a specific transaction, and may also earn fees in connection with public and private securities offerings. Significant fluctuations in Financial Advisory net revenue can occur over the course of any given year, because a significant portion of such net revenue is earned upon the successful completion of a transaction, restructuring or capital raising activity, the timing of which is uncertain and is not subject to Lazard’s control.

funds to other types of accounts with different rate structures for a number of reasons, including investment performance, changes in prevailing interest rates and financial market performance. In addition, as Lazard’s AUM includes significant amounts of assets that are denominated in currencies other than U.S. Dollars, changes in the value of the U.S. Dollar relative to foreign currencies will impact the value of Lazard’s AUM and the overall amount of management fees generated by the AUM. Fees vary with the type of assets managed and the vehicle in which they are managed, with higher fees earned on equity assets and alternative investment funds, such as hedge funds and private equity funds, and lower fees earned on fixed income and cash management products.

The Company earns performance-based incentive fees on various investment products, including traditional products and alternative investment funds, such as hedge funds and private equity funds.

For private equity funds, incentive fees may be earned in the form of a “carried interest” if profits arising from realized investments exceed a specified threshold. Typically, such carried interest is ultimately calculated on a whole-fund basis and, therefore, clawback of carried interest during the life of the fund can occur. As a result, incentive fees earned on our private equity funds are not recognized until potential uncertainties regarding the ultimate realizable amounts have been determined, including any potential for clawback.

Corporate segment net revenue consists primarily of investment gains and losses on the Company’s “seed investments” related to our Asset Management business and principal investments in private equity funds, net of hedging activities, as well as gains and losses on investments held in connection with Lazard Fund Interests (“LFI”) and interest income and interest expense. Corporate net revenue also can fluctuate due to changes in the fair value of debt and equity securities, as well as due to changes in interest and currency exchange rates and in the levels of cash, investments and indebtedness.

Corporate segment total assets represented 66% of Lazard’s consolidated total assets as of June 30, 2021, which are attributable to cash and cash equivalents, restricted cash associated with LGAC, investments in debt and equity securities, interests in alternative investment, debt, equity and private equity funds, deferred tax assets and certain other assets associated with LFB and LGAC.

Operating Expenses

The majority of Lazard’s operating expenses relate to compensation and benefits for managing directors and employees. Our compensation and benefits expense includes (i) salaries and benefits, (ii) amortization of the relevant portion of previously granted deferred incentive compensation awards, including (a) share-based incentive compensation under the Lazard Ltd 2018 Incentive Compensation Plan, as amended (the “2018 Plan”) and the Lazard Ltd 2008 Incentive Compensation Plan (the “2008 Plan”) and (b) LFI and other similar deferred compensation arrangements (see Note 13 of Notes to Condensed Consolidated Financial Statements), (iii) a provision for discretionary or guaranteed cash bonuses and profit pools and (iv) when applicable, severance payments. Compensation expense in any given period is dependent on many factors, including general economic and market conditions, our actual and forecasted operating and financial performance, staffing levels, estimated forfeiture rates, competitive pay conditions and the nature of revenues earned, as well as the mix between current and deferred compensation.

We believe that “awarded compensation and benefits expense” and the ratio of “awarded compensation and benefits expense” to “operating revenue,” both non-GAAP measures, when presented in conjunction with accounting principles generally accepted in the United States of America (“U.S. GAAP”) measures, are appropriate measures to assess the annual cost of compensation and provide a meaningful and useful basis for comparison of compensation and benefits expense between present, historical and future years. “Awarded compensation and benefits expense” for a given year is calculated using “adjusted compensation and benefits expense,” also a non-GAAP measure, as modified by the following items:

•

we deduct amortization expense recorded for U.S. GAAP purposes in the fiscal year associated with deferred incentive compensation awards;

•

we add incentive compensation with respect to the fiscal year, which is comprised of:

(i)

the deferred incentive compensation awards granted in the year-end compensation process with respect to the fiscal year (e.g., deferred incentive compensation awards granted in 2021 related to the 2020 year-end compensation process), including performance-based restricted stock unit (“PRSU”) and performance-based restricted participation unit (“PRPU”) awards (based on the target payout level);

(ii)

the portion of investments in people (e.g., “sign-on” bonuses or retention awards) and other special deferred incentive compensation awards that is applicable to the fiscal year the award becomes effective; and

(iii)

amounts in excess of the ~~contingent consideration associated~~target payout level for PRSU and PRPU awards at the end of their respective performance periods; and

•

we reduce the amounts in (i), (ii) and (iii) above by an estimate of future forfeitures with ~~business acquisitions.~~respect to such awards.

Compensation and benefits expense is the largest component of our operating expenses. We seek to maintain discipline with respect to compensation, including the rate at which we award deferred compensation. Our goal is to maintain a ratio of awarded compensation and benefits expense to operating revenue and a ratio of adjusted compensation and benefits expense to operating revenue over the cycle in the mid-to high-50s percentage range. While we have implemented policies and initiatives that we believe will assist us in maintaining ratios within this range, there can be no guarantee that we will continue to maintain such ratios, or that our policies or initiatives will not change, in the future. We may benefit from pressure on compensation costs within the financial services industry in future periods; however, increased competition for senior professionals, changes in the macroeconomic environment or the financial markets generally, lower operating revenue resulting from, for example, a decrease in M&A activity, our share of the M&A market or our AUM levels, changes in the mix of revenues from our businesses, investments in our businesses or various other factors could prevent us from achieving this goal.

Our operating expenses also include “non-compensation expense”, which includes costs for occupancy and equipment, marketing and business development, technology and information services, professional services, fund administration and outsourced services and other expenses. Our occupancy costs represent a significant portion of our aggregate operating expenses and are subject to change from time to time, particularly as leases for real property expire and are renewed or replaced with new, long-term leases for the same or other real property.

We believe that “adjusted non-compensation expense”, a non-GAAP measure, when presented in conjunction with U.S. GAAP measures provides a meaningful and useful basis for our investors to assess our operating results. For calculations with respect to “adjusted non-compensation expense”, see the table under “Consolidated Results of Operations” below.

Our operating expenses also include “amortization of intangible assets related to acquisitions”.

Provision for Income Taxes

See “Critical Accounting Policies and Estimates—Income Taxes” below and Notes 1615 and 1817 of Notes to Condensed Consolidated Financial Statements for additional information regarding income taxes, our deferred tax assets and the tax receivable agreement obligation.

Noncontrolling Interests

Noncontrolling interests primarily consist of (i) amounts related to Edgewater’s management vehicles that the Company is deemed to control but not own, (ii) LGAC interests (see Note 1 of Notes to Condensed Consolidated Financial Statements), (iii) profits interest participation rights and (iv) consolidated VIE interests held by employees. See Notes 12 and 2120 of Notes to Condensed Consolidated Financial Statements for information regarding the Company’s noncontrolling interests and consolidated VIEs.

Consolidated Results of Operations

Lazard’s condensed consolidated financial statements are presented in U.S. Dollars. Many of our non-U.S. subsidiaries have a functional currency (i.e., the currency in which operational activities are primarily conducted) that is other than the U.S. Dollar, generally the currency of the country in which the subsidiaries are domiciled. Such subsidiaries’ assets and liabilities are translated into U.S. Dollars using exchange rates as of the respective balance sheet date, while revenue and expenses are translated at average exchange rates during the respective periods based on the daily closing exchange rates. Adjustments that result from translating amounts from a subsidiary’s functional currency are reported as a component of stockholders’ equity. Foreign currency remeasurement gains and losses on transactions in non-functional currencies are included in the condensed consolidated statements of operations.

A portion of our net revenue is derived from transactions that are denominated in currencies other than the U.S. Dollar. Net revenue for the three month and six month periods ended June 30, 2020 was negatively impacted by exchange rate movements in comparison to the relevant prior year period. The majority of the impact to net revenue was offset by the impact of the exchange rate movements on our operating expenses during the periods denominated in currencies other than the U.S. Dollar.

The condensed consolidated financial statements are prepared in conformity with U.S. GAAP. Selected financial data derived from the Company’s reported condensed consolidated results of operations is set forth below, followed by a more detailed discussion of both the consolidated and business segment results.

	Three Months Ended						Six Months Ended						Three Months Ended						Six Months Ended
	June 30,						June 30,						June 30,						June 30,
	2020			2019			2020			2019			2021			2020			2021			2020
	($ in thousands)												($ in thousands)
Net Revenue	$	572,292		$	630,690		$	1,110,306		$	1,274,364		$	823,137		$	572,292		$	1,483,244		$	1,110,306
Operating Expenses:
Compensation and benefits		351,568			372,470			671,323			744,724			514,918			351,568			916,464			671,323
Non-compensation		124,404			151,493			258,120			299,780			141,943			124,404			266,199			258,120
Amortization and other acquisition-related costs		455			5,042			901			8,512
Amortization of intangible assets related to acquisitions														15			455			30			901
Total operating expenses		476,427			529,005			930,344			1,053,016			656,876			476,427			1,182,693			930,344
Operating Income		95,865			101,685			179,962			221,348			166,261			95,865			300,551			179,962
Provision for income taxes		22,789			28,172			48,555			51,359			41,345			22,789			84,809			48,555
Net Income		73,076			73,513			131,407			169,989			124,916			73,076			215,742			131,407
Less - Net Income (Loss) Attributable to Noncontrolling Interests		(382	)		7,736			(6,073	)		7,170			1,738			(382	)		5,264			(6,073	)
Net Income Attributable to Lazard Ltd	$	73,458		$	65,777		$	137,480		$	162,819		$	123,178		$	73,458		$	210,478		$	137,480
Operating Income, as a % of net revenue		16.8	%		16.1	%		16.2	%		17.4	%		20.2	%		16.8	%		20.3	%		16.2	%

The tables below describe the components of operating revenue, adjusted compensation and benefits expense, adjusted non-compensation expense, earnings from operations and related key ratios, which are non-GAAP measures used by the Company to manage its business. We believe such non-GAAP measures in conjunction with U.S. GAAP measures provide a meaningful and useful basis for comparison between present, historical and future periods, as described above.

Three Months Ended

Six Months Ended

June 30,

June 30,

2020

2019

2020

2019

($ in thousands)

Operating Revenue:

Net revenue

$
572,292

$
630,690

$
1,110,306

$
1,274,364

Adjustments:

Interest expense (a)

18,534

18,722

37,306

35,511

Distribution fees, reimbursable deal costs and bad debt
expense (b)

(21,936
)

(13,357
)

(38,320
)

(37,689
)
(Revenue) loss related to noncontrolling interests (c)

(2,173
)

(11,819
)

599

(14,090
)
(Gains) losses on investments pertaining to LFI (d)

(23,803
)

(6,484
)

(4,166
)

(20,354
)
Private equity investment (e)

-

11,948

-

11,948

Operating revenue

$
542,914

$
629,700

$
1,105,725

$
1,249,690

	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2021			2020			2021			2020
	($ in thousands)
Operating Revenue:
Net revenue	$	823,137		$	572,292		$	1,483,244		$	1,110,306
Adjustments:
Interest expense (a)		18,600			18,534			36,913			37,306
Distribution fees, reimbursable deal costs, bad debt expense and other (b)		(21,625	)		(21,936	)		(38,335	)		(38,320	)
(Revenue) loss related to noncontrolling interests (c)		(5,754	)		(2,173	)		(12,115	)		599
(Gains) losses on investments pertaining to LFI (d)		(16,491	)		(23,803	)		(23,978	)		(4,166	)
Losses associated with restructuring and closing of certain offices (e)		23,579			-			23,579			-
Operating revenue	$	821,446		$	542,914		$	1,469,308		$	1,105,725

(a)	Interest expense (excluding interest expense incurred by LFB) is added back in determining operating revenue because such expense relates to corporate financing activities and is not considered to be a cost directly related to the revenue of our business.

(b)

Represents certain distribution, introducer and management fees ~~reimbursable deal costs~~ paid to third parties, reimbursable deal costs and bad debt expense relating to fees that are deemed uncollectible for which an equal amount is excluded for purposes of determining adjusted non-compensation expense.

(c)	Revenue or loss related to the consolidation of noncontrolling interests is excluded from operating revenue because the Company has no economic interest in such amount.

(d)	Represents changes in the fair value of investments held in connection with LFI and other similar deferred compensation arrangements for which a corresponding equal amount is excluded from compensation and benefits expense.

(e)

Represents losses related to the ~~write-down~~reclassification of ~~a private equity investment~~currency translation adjustments to ~~its potential transaction value.~~earnings from accumulated other comprehensive loss associated with restructuring and closing of certain of our offices in the three month and six month periods ended June 30, 2021.

	Three Months Ended						Six Months Ended						Three Months Ended						Six Months Ended
	June 30,						June 30,						June 30,						June 30,
	2020			2019			2020			2019			2021			2020			2021			2020
	($ in thousands)												($ in thousands)
Adjusted Compensation and Benefits Expense:
Total compensation and benefits expense	$	351,568		$	372,470		$	671,323		$	744,724		$	514,918		$	351,568		$	916,464		$	671,323
Adjustments:
Noncontrolling interests (a)		(2,016	)		(3,908	)		(3,722	)		(5,798	)		(2,380	)		(2,016	)		(4,338	)		(3,722	)
(Charges) credits pertaining to LFI (b)		(23,803	)		(6,484	)		(4,166	)		(20,354	)		(16,491	)		(23,803	)		(23,978	)		(4,166	)
Expenses associated with restructuring and closing of certain offices														(7,287	)		-			(13,910	)		-
Adjusted compensation and benefits expense	$	325,749		$	362,078		$	663,435		$	718,572		$	488,760		$	325,749		$	874,238		$	663,435
Adjusted compensation and benefits expense, as a % of operating revenue		60.0	%		57.5	%		60.0	%		57.5	%		59.5	%		60.0	%		59.5	%		60.0	%

(a)	Expenses related to the consolidation of noncontrolling interests are excluded because Lazard has no economic interest in such amounts.

(b)	Represents changes in fair value of the compensation liability recorded in connection with LFI and other similar deferred incentive compensation awards for which a corresponding equal amount is excluded from operating revenue.

Three Months Ended

Six Months Ended

June 30,

June 30,

2020

2019

2020

2019

($ in thousands)

Adjusted Non-Compensation Expense:

Total non-compensation expense

$
124,404

$
151,493

$
258,120

$
299,780

Adjustments:

Expenses associated with ERP system implementation (a)

-

(7,626
)

-

(10,831
)
Expenses relating to office space reorganization (b)

(2,487
)

-

(6,151
)

-

Distribution fees, reimbursable deal costs and bad debt
expense (c)

(21,936
)

(13,357
)

(38,320
)

(37,689
)
Charges pertaining to senior debt refinancing (d)

-

(2,262
)

-

(6,505
)
Noncontrolling interests (e)

(364
)

(234
)

(1,400
)

(1,004
)
Adjusted non-compensation expense

$
99,617

$
128,014

$
212,249

$
243,751

Adjusted non-compensation expense, as a % of operating revenue

18.3
%

20.3
%

19.2
%

19.5
%

	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2021			2020			2021			2020
	($ in thousands)
Adjusted Non-Compensation Expense:
Total non-compensation expense	$	141,943		$	124,404		$	266,199		$	258,120
Adjustments:
Expenses relating to office space reorganization (a)		(1,237	)		(2,487	)		(2,653	)		(6,151	)
Distribution fees, reimbursable deal costs, bad debt expense and other (b)		(21,625	)		(21,936	)		(38,335	)		(38,320	)
Noncontrolling interests (c)		(1,837	)		(364	)		(2,516	)		(1,400	)
Credits (expenses) associated with restructuring and closing of certain offices		1,586			-			(1,385	)		-
Adjusted non-compensation expense	$	118,830		$	99,617		$	221,310		$	212,249
Adjusted non-compensation expense, as a % of operating revenue		14.5	%		18.3	%		15.1	%		19.2	%

(a)	Represents ~~expenses associated with the Enterprise Resource Planning (“ERP”) system implementation.~~

~~(b)~~

~~Represents~~ incremental rent expense, building depreciation and legal fees related to office space reorganization.

~~(c)~~(b)

Represents certain distribution, introducer and management fees ~~reimbursable deal costs~~ paid to third parties, reimbursable deal costs and bad debt expense relating to fees that are deemed uncollectible for which an equal amount is included for purposes of determining operating revenue.

~~(d)~~

In 2019, represents charges pertaining to the partial redemption of the Company’s 4.25% senior notes due 2020 (the “2020 Notes”) due to the non-operating nature of such transaction. See “—Liquidity and Capital Resources—Financing Activities” below.

~~(e)~~(c)

Expenses related to the consolidation of noncontrolling interests are excluded because the Company has no economic interest in such amounts.

	Three Months Ended						Six Months Ended						Three Months Ended						Six Months Ended
	June 30,						June 30,						June 30,						June 30,
	2020			2019			2020			2019			2021			2020			2021			2020
	($ in thousands)												($ in thousands)
Earnings From Operations:
Operating revenue	$	542,914		$	629,700		$	1,105,725		$	1,249,690		$	821,446		$	542,914		$	1,469,308		$	1,105,725
Deduct:
Adjusted compensation and benefits expense		(325,749	)		(362,078	)		(663,435	)		(718,572	)		(488,760	)		(325,749	)		(874,238	)		(663,435	)
Adjusted non-compensation expense		(99,617	)		(128,014	)		(212,249	)		(243,751	)		(118,830	)		(99,617	)		(221,310	)		(212,249	)
Earnings from operations	$	117,548		$	139,608		$	230,041		$	287,367		$	213,856		$	117,548		$	373,760		$	230,041
Earnings from operations, as a % of operating revenue		21.7	%		22.2	%		20.8	%		23.0	%		26.0	%		21.7	%		25.4	%		20.8	%

Headcount information is set forth below:

	As of						As of
	June 30, 2020		December 31, 2019		June 30, 2019		June 30, 2021		December 31, 2020		June 30, 2020
Headcount:
Managing Directors:
Financial Advisory		169		163		177		180		171		169
Asset Management		106		104		111		108		105		106
Corporate		22		19		17		22		21		22
Total Managing Directors		297		286		305		310		297		297
Other Business Segment Professionals and Support Staff:
Financial Advisory		1,319		1,355		1,364		1,336		1,384		1,319
Asset Management		970		986		1,012		1,033		1,012		970
Corporate		397		391		393		421		413		397
Total		2,983		3,018		3,074		3,100		3,106		2,983

Operating Results

The Company’s quarterly revenue and profits can fluctuate materially depending on the number, size and timing of completed transactions on which it advised, as well as seasonality, the performance of equity markets and other factors. Accordingly, the revenue and profits in any particular quarter may not be indicative of future results. Lazard management believes that annual results are the most meaningful basis for comparison among present, historical and future periods.

Three Months Ended June 30, ~~2020~~2021 versus June 30, ~~2019~~2020

The Company reported net income attributable to Lazard Ltd of ~~$73~~$123 million, as compared to net income attributable to Lazard Ltd of ~~$66~~$73 million in the ~~2019~~2020 period.

Net revenue ~~decreased $58~~increased $251 million, or 9%44%, with operating revenue ~~decreasing $87~~increasing $279 million, or ~~14%~~51%, as compared to the ~~2019~~2020 period. Fee revenue from investment banking and other advisory activities ~~decreased $25~~increased $171 million, or 8%56%, as compared to the ~~2019~~2020 period. Asset management fees, including incentive fees, ~~decreased $51~~increased $101 million, or ~~17%~~41%, as compared to the ~~2019~~2020 period. In the aggregate, interest income, other revenue and interest expense ~~increased $18~~decreased $21 million, as compared to the ~~2019~~2020 period.

Compensation and benefits expense ~~decreased $21~~increased $163 million, or 6%46%, as compared to the ~~2019 period.~~2020 period, primarily associated with increased operating revenue.

Adjusted compensation and benefits expense (which excludes certain items and which we believe allows for improved comparability between periods, as described above) was ~~$326~~$489 million, ~~a decrease~~an increase of ~~$36~~$163 million, or ~~10%~~50%, as compared to ~~$362~~$326 million in the ~~2019~~2020 period. The ratio of adjusted compensation and benefits expense to operating revenue was 59.5% for the 2021 period, as compared to 60.0% for the 2020 ~~period, as compared to 57.5% for the 2019~~ period.

Non-compensation expense ~~decreased $27~~increased $18 million, or ~~18%~~14%, as compared to the ~~2019 period, primarily due to decreased marketing and business development expenses.~~2020 period. Adjusted non-compensation expense ~~decreased $28~~increased $19 million, or ~~22%~~19%, as compared to the ~~2019~~2020 period. The ratio of adjusted non-compensation expense to operating revenue was 14.5% for the 2021 period, as compared to 18.3% for the 2020 ~~period, as compared to 20.3% for the 2019~~ period.

Amortization ~~and other acquisition-related costs decreased $5 million~~of intangible assets related to acquisitions remained substantially the same as compared the ~~2019~~2020 period.

Operating income ~~decreased $6~~increased $70 million, or 6%73%, as compared to the ~~2019~~2020 period.

Earnings from operations ~~decreased $22~~increased $96 million, or ~~16%~~82%, as compared to the ~~2019~~2020 period, and, as a percentage of operating revenue, was ~~21.7%~~26.0%, as compared to ~~22.2%~~21.7% in the ~~2019~~2020 period.

The provision for income taxes reflects an effective tax rate of ~~23.8%~~24.9%, as compared to ~~27.7%~~23.8% for the ~~2019~~2020 period. The ~~decrease~~increase in the effective tax rate principally relates to changes in the geographic mix of earnings, partially offset by ~~a reduction~~an increase in discrete ~~benefits from share-based incentive compensation.~~benefits.

Net income (loss) attributable to noncontrolling interests reflects income of $2 million in the 2021 period as compared to a loss of $0.4 million in the 2020 ~~period as compared to income of $8 million the 2019~~ period.

Six Months Ended June 30, ~~2020~~2021 versus June 30, ~~2019~~2020

The Company reported net income attributable to Lazard Ltd of ~~$137~~$210 million, as compared to net income attributable to Lazard Ltd of ~~$163~~$137 million in the ~~2019~~2020 period.

Net revenue ~~decreased $164~~increased $373 million, or ~~13%~~34%, with operating revenue ~~decreasing $144~~increasing $364 million, or ~~12%~~33%, as compared to the ~~2019~~2020 period. Fee revenue from investment banking and other advisory activities ~~decreased $63~~increased $191 million, or 9%32%, as compared to the ~~2019~~2020 period. Asset management fees, including incentive fees, ~~decreased $75~~increased $159 million, or ~~13%~~31%, as compared to the ~~2019~~2020 period. In the aggregate, interest income, other revenue and interest expense ~~decreased $27~~increased $23 million, as compared to the ~~2019~~2020 period.

Compensation and benefits expense ~~decreased $73~~increased $245 million, or ~~10%~~37%, as compared to the ~~2019 period.~~2020 period, primarily associated with increased operating revenue.

Adjusted compensation and benefits expense (which excludes certain items and which we believe allows for improved comparability between periods, as described above) was ~~$663~~$874 million, ~~a decrease~~an increase of ~~$55~~$211 million, or 8%32%, as compared to ~~$719~~ $663

million in the ~~2019~~2020 period. The ratio of adjusted compensation and benefits expense to operating revenue was 59.5% for the 2021 period, as compared to 60.0% for the 2020 ~~period, as compared to 57.5% for the 2019~~ period.

Non-compensation expense ~~decreased $42~~increased $8 million, or ~~14%~~3%, as compared to the ~~2019 period, primarily due to decreased marketing and business development expenses.~~2020 period. Adjusted non-compensation expense ~~decreased $32~~increased $9 million, or ~~13%~~4%, as compared to the ~~2019~~2020 period. The ratio of adjusted non-compensation expense to operating revenue was ~~19.2%~~15.1% for the ~~2020~~2021 period, as compared to ~~19.5%~~19.2% in the ~~2019~~2020 period.

Amortization ~~and other acquisition-related costs decreased $8 million~~of intangible assets related to acquisitions remained substantially the same as compared to the ~~2019~~2020 period.

Operating income ~~decreased $41~~increased $121 million, or ~~19%~~67%, as compared to the ~~2019~~2020 period.

Earnings from operations ~~decreased $57~~increased $144 million, or ~~20%~~62%, as compared to the ~~2019~~2020 period, and, as a percentage of operating revenue, was ~~20.8%~~25.4%, as compared to ~~23.0%~~20.8% in the ~~2019~~2020 period.

The provision for income taxes reflects an effective tax rate of ~~27.0%~~28.2%, as compared to ~~23.2%~~27.0% for the ~~2019~~2020 period. The increase in the effective tax rate principally relates to ~~a reduction in discrete benefits from share-based incentive compensation, partially offset by~~ changes in the geographic mix of ~~earnings.~~earnings and an increase in discrete charges.

Net income (loss) attributable to noncontrolling interests reflects income of $5 million as compared to a loss of $6 million ~~as compared to income of $7 million~~ in the ~~2019~~2020 period.

~~Business Segments~~

~~The following is a discussion of net revenue and operating income for the Company’s segments: Financial Advisory,~~ Asset Management

Net Revenue

365,255

254,849

712,745

537,370

Operating Expenses

269,314

195,049

501,417

399,818

Operating Income

95,941

59,800

211,328

137,552

Corporate

Net Revenue

5,942

12,637

147

(30,836

)

Operating Expenses

18,479

30,363

54,146

32,664

Operating Loss

(12,537

)

(17,726

)

(53,999

)

(63,500

)

Total

Net Revenue

823,137

572,292

1,483,244

1,110,306

Operating Expenses

656,876

476,427

1,182,693

930,344

Operating Income

166,261

95,865

300,551

179,962

	As Of
	June 30, 2021		December 31, 2020
Total Assets
Financial Advisory	$	1,196,078	$	1,181,783
Asset Management		958,946		958,588
Corporate		4,251,776		3,831,490
Total	$	6,406,800	$	5,971,861

20.	CONSOLIDATED VIEs

	June 30, 2021		December 31, 2020
ASSETS
Cash and cash equivalents	$	4,515	$	3,558
Customers and other receivables		10,383		160
Investments		219,670		158,370
Other assets		836		400
Total Assets	$	235,404	$	162,488

LIABILITIES
Deposits and other customer payables	$	10,346	$	104
Other liabilities		297		491
Total Liabilities	$	10,643	$	595

Item 2.

Management’s Discussion and ~~Corporate. Each segment’s operating expenses include (i)~~Analysis of Financial Condition and Results of Operations

The following discussion should be read in conjunction with Lazard Ltd’s condensed consolidated financial statements and the related notes included elsewhere in this Quarterly Report on Form 10-Q (the “Form 10-Q”), as well as Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”) included in our Annual Report on Form 10-K for the year ended December 31, 2020 (the “Form 10-K”). All references to “2021,” “2020,” “second quarter,” “first half” or “the period” refer to, as the context requires, the three month and six month periods ended June 30, 2021 and 2020.

Forward-Looking Statements and Certain Factors that May Affect Our Business

•

a decline in general economic conditions or the global or regional financial markets;

•

a decline in our revenues, for example due to a decline in overall mergers and acquisitions (“M&A”) activity, our share of the M&A market or our assets under management (“AUM”);

•

losses caused by financial or other problems experienced by third parties;

•

losses due to unidentified or unanticipated risks;

•

a lack of liquidity, i.e., ready access to funds, for use in our businesses; and

•

competitive pressure on our businesses and on our ability to retain and attract employees at current compensation levels.

Forward-looking statements include, but are not limited to, statements about:

•

financial goals, including ratios of compensation and benefits ~~expenses that are incurred directly~~expense to operating revenue;

•

ability to deploy surplus cash through dividends, share repurchases and debt repurchases;

•

ability to offset stockholder dilution through share repurchases;

•

possible or assumed future results of operations and operating cash flows;

•

strategies and investment policies;

•

financing plans and the availability of short-term borrowing;

•

competitive position;

•

future acquisitions, including the consideration to be paid and the timing of consummation;

•

potential growth opportunities available to our businesses;

•

potential impact of investments in ~~support~~our technology infrastructure and data science capabilities;

•

recruitment and retention of ~~the segment~~our managing directors and (ii) other operating expenses, which include directly incurred expenses for occupancy and equipment, marketing and business development, technology and information services, professional services, fund administration and outsourcing, and indirect support costs (includingemployees;

•

potential levels of compensation expense, including awarded compensation and benefits expense and ~~other~~adjusted compensation and benefits expense, and non-compensation expense;

•

potential operating ~~expenses related thereto) for administrative services. Such administrative services include, but are not limited to, accounting,~~performance, achievements, productivity improvements, efficiency and cost reduction efforts;

•

likelihood of success and impact of litigation;

•

expected tax ~~human resources, legal, information technology, facilities management~~rates, including effective tax rates;

•

changes in interest and ~~senior management activities. Such support costs are allocated~~tax rates;

•

availability of certain tax benefits, including certain potential deductions;

•

potential impact of certain events or circumstances on our financial statements and operations, including the ongoing COVID-19 pandemic;

•

changes in foreign currency exchange rates;

•

expectations with respect to the ~~relevant segments based on various statistical drivers such as revenue, headcount, square footage~~economy, the securities markets, the market for mergers, acquisitions, restructuring and other ~~factors.~~financial advisory activity, the market for asset management activity and other macroeconomic, regional and industry trends;

•

effects of competition on our business; and

•

impact of new or future legislation and regulation, including tax laws and regulations, on our business.

Business Summary

Our principal sources of revenue are derived from activities in the following business segments:

•

Financial Advisory, which offers corporate, partnership, institutional, government, sovereign and individual clients across the globe a wide array of financial advisory services regarding M&A, restructurings, capital advisory, shareholder advisory, sovereign advisory, capital raising and other strategic advisory matters, and

•

Our consolidated net revenue was derived from the following segments:

	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2021			2020			2021			2020
Financial Advisory		55	%		53	%		52	%		54	%
Asset Management		44			45			48			48
Corporate		1			2			-			(2	)
Total		100	%		100	%		100	%		100	%

Business Environment and Outlook

Our outlook with respect to our Financial Advisory and Asset Management businesses is described below.

•

Financial Advisory

~~The following table summarizes~~—During a very active M&A market we are focused on serving clients with our depth of expertise in capital structure, capital raising, debt negotiations and restructuring and exchange offers. Announced M&A transaction volumes have recovered due to liquid financial markets and a strong economic recovery. We still expect there to be elevated uncertainty in the ~~reported operating results attributable~~near term due to the ongoing health crisis and a more stringent regulatory market. However, fiscal and monetary stimulus in developed countries and the rollout of vaccines globally have created heightened levels of optimism and CEO confidence. The global scale and breadth of our Financial Advisory ~~segment:~~

Three Months Ended

Six Months Ended

June 30,

June 30,

2020

2019

2020

2019

($ in thousands)

Net Revenue

$
304,806

$
329,612

$
603,772

$
667,982

Operating Expenses

251,015

276,238

497,862

556,499

Operating Income

$
53,791

$
53,374

$
105,910

$
111,483

Operating Income, as a % of net revenue

17.6
%

16.2
%

17.5
%

16.7
%

~~Certain Lazard fee and transaction statistics for the Financial Advisory segment are set forth below:~~

Three Months Ended

Six Months Ended

June 30,

June 30,

2020

2019

2020

2019

Lazard Statistics:

Number of clients with fees greater than $1 million:

Financial Advisory

58

69

110

131

Percentage of total Financial Advisory net revenue from top 10
clients

51
%

39
%

32
%

26
%
Number of M&A transactions completed with values greater than
$500 million (a)

12

14

32

36

~~(a)~~

~~Source: Dealogic as of July 6, 2020.~~

The geographical distribution of Financial Advisory net revenue is set forth below in percentage terms and is based on the Lazard offices that generate Financial Advisory net revenue, which are located in the Americas (primarily in the U.S., Canada, and Latin America), EMEA (primarily in the U.K., France, Germany, Italy and Spain) and the Asia Pacific region (primarily in Australia) and therefore may not be reflective of the geography in which the clients are located.

Three Months Ended

Six Months Ended

June 30,

June 30,

2020

2019

2020

2019

Americas

71
%

73
%

65
%

69
%
EMEA

27

26

33

29

Asia Pacific

2

1

2

2

Total

100
%

100
%

100
%

100
%

~~The Company’s managing directors and many of its professionals have significant experience, and many of them are able to use this experience~~business allows us to advise on a wide range of strategic and restructuring transactions across a variety of industries. In addition, we continue to invest in our Financial Advisory business by selectively hiring talented senior professionals and continuing to focus on our M&A, restructuring and other ~~strategic~~ advisory ~~matters,~~services.

•

scope and size. However, continued uncertainties in capital markets arising from the COVID-19 pandemic may negatively impact our business in a manner that we cannot predict. Over the longer term, and depending ~~on clients’ needs. This flexibility allows Lazard~~upon local and global market conditions, we would expect an increasing share of our AUM to ~~better match its professionals with~~come from the ~~counter-cyclical business cycles~~developing economies around the globe, as their retirement systems evolve and individual wealth is increasingly deployed in the financial markets. Given our diversified investment platform and our ability to provide investment solutions for a global mix of ~~mergers~~clients, we believe we are positioned to benefit from opportunities across the asset management industry despite the current challenges that markets have created for that industry. We are continually developing new investment strategies that extend our existing platforms and assessing potential product acquisitions ~~and restructurings. While Lazard measures revenue by practice area, Lazard does not separately measure the costs or profitability of M&A services as compared to restructuring~~ or other ~~services. Accordingly,~~inorganic growth opportunities. Among other efforts, we have been particularly focused on continuing to incorporate environmental, social and corporate governance (“ESG”) considerations, as appropriate, into our investment research and launching strategies that use ESG and sustainability factors to drive long-term investment returns. In addition to these new ESG and sustainable strategies, recent examples of growth initiatives include the following: various Quantitative Equity strategies, new convertible bond strategies, thematically oriented strategies and a new long/short credit strategy.

Certain market data with respect to our Financial Advisory and Asset Management businesses is included below.

Financial Advisory

	Three Months Ended							Six Months Ended
	June 30,							June 30,
	2021		2020		% Incr / (Decr)			2021		2020		% Incr / (Decr)
	($ in billions)
Completed M&A Transactions:
All deals:
Value	$	996	$	911		9	%	$	2,069	$	1,623		27	%
Number		6,850		7,365		(7	)%		15,058		16,086		(6	)%
Deals Greater than $500 million:
Value	$	763	$	750		2	%	$	1,594	$	1,273		25	%
Number		318		220		45	%		630		489		29	%
Announced M&A Transactions:
All deals:
Value	$	1,557	$	475		228	%	$	2,999	$	1,141		163	%
Number		7,453		7,304		2	%		16,180		15,923		2	%
Deals Greater than $500 million:
Value	$	1,279	$	312		310	%	$	2,439	$	799		205	%
Number		449		171		163	%		912		395		131	%

Source: Dealogic as of July 7, 2021.

Asset Management

	Percentage Changes June 30, 2021 vs.
	March 31, 2021			December 31, 2020			June 30, 2020
MSCI World Index		8	%		13	%		40	%
Euro Stoxx		5	%		17	%		29	%
MSCI Emerging Market		5	%		8	%		41	%
S&P 500		9	%		15	%		41	%

Financial Statement Overview

Net Revenue

The Company earns performance-based incentive fees on various investment products, including traditional products and alternative investment funds, such as hedge funds and private equity funds.

For private equity funds, incentive fees may be earned in the form of a “carried interest” if profits arising from realized investments exceed a specified threshold. Typically, such carried interest is ultimately calculated on a whole-fund basis and, therefore, clawback of carried interest during the life of the fund can occur. As a result, incentive fees earned on our private equity funds are not recognized until potential uncertainties regarding the ultimate realizable amounts have been determined, including any potential for clawback.

Operating Expenses

The majority of Lazard’s operating expenses relate to compensation and benefits for managing directors and employees. Our compensation and benefits expense includes (i) salaries and benefits, (ii) amortization of the relevant portion of previously granted deferred incentive compensation awards, including (a) share-based incentive compensation under the Lazard Ltd 2018 Incentive Compensation Plan, as amended (the “2018 Plan”) and the Lazard Ltd 2008 Incentive Compensation Plan (the “2008 Plan”) and (b) LFI and other similar deferred compensation arrangements (see Note 13 of Notes to Condensed Consolidated Financial Statements), (iii) a provision for discretionary or guaranteed cash bonuses and profit pools and (iv) when applicable, severance payments. Compensation expense in any given period is dependent on many factors, including general economic and market conditions, our actual and forecasted operating and financial performance, staffing levels, estimated forfeiture rates, competitive pay conditions and the nature of revenues earned, as well as the mix between current and deferred compensation.

We believe that “awarded compensation and benefits expense” and the ratio of “awarded compensation and benefits expense” to “operating revenue,” both non-GAAP measures, when presented in conjunction with accounting principles generally accepted in the United States of America (“U.S. GAAP”) measures, are appropriate measures to assess the annual cost of compensation and provide a meaningful and useful basis for comparison of compensation and benefits expense between present, historical and future years. “Awarded compensation and benefits expense” for a given year is calculated using “adjusted compensation and benefits expense,” also a non-GAAP measure, as modified by the following items:

•

we deduct amortization expense recorded for U.S. GAAP purposes in the fiscal year associated with deferred incentive compensation awards;

•

we add incentive compensation with respect to the fiscal year, which is comprised of:

(i)

(ii)

(iii)

amounts in excess of the target payout level for PRSU and PRPU awards at the end of their respective performance periods; and

•

we reduce the amounts in ~~its Financial Advisory segment based on overall~~(i), (ii) and (iii) above by an estimate of future forfeitures with respect to such awards.

Compensation and benefits expense is the largest component of our operating expenses. We seek to maintain discipline with respect to compensation, including the rate at which we award deferred compensation. Our goal is to maintain a ratio of awarded compensation and benefits expense to operating revenue and a ratio of adjusted compensation and benefits expense to operating revenue over the cycle in the mid-to high-50s percentage range. While we have implemented policies and initiatives that we believe will assist us in maintaining ratios within this range, there can be no guarantee that we will continue to maintain such ratios, or that our policies or initiatives will not change, in the future. We may benefit from pressure on compensation costs within the financial services industry in future periods; however, increased competition for senior professionals, changes in the macroeconomic environment or the financial markets generally, lower operating revenue resulting from, for example, a decrease in M&A activity, our share of the M&A market or our AUM levels, changes in the mix of revenues from our businesses, investments in our businesses or various other factors could prevent us from achieving this goal.

Our operating expenses also include “amortization of intangible assets related to acquisitions”.

Provision for Income Taxes

See “Critical Accounting Policies and Estimates—Income Taxes” below and Notes 15 and 17 of Notes to Condensed Consolidated Financial Statements for additional information regarding income taxes, our deferred tax assets and the tax receivable agreement obligation.

Noncontrolling Interests

Noncontrolling interests primarily consist of (i) amounts related to Edgewater’s management vehicles that the Company is deemed to control but not own, (ii) LGAC interests (see Note 1 of Notes to Condensed Consolidated Financial Statements), (iii) profits interest participation rights and (iv) consolidated VIE interests held by employees. See Notes 12 and 20 of Notes to Condensed Consolidated Financial Statements for information regarding the Company’s noncontrolling interests and consolidated VIEs.

Consolidated Results of Operations

	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2021			2020			2021			2020
	($ in thousands)
Net Revenue	$	823,137		$	572,292		$	1,483,244		$	1,110,306
Operating Expenses:
Compensation and benefits		514,918			351,568			916,464			671,323
Non-compensation		141,943			124,404			266,199			258,120
Amortization of intangible assets related to acquisitions		15			455			30			901
Total operating expenses		656,876			476,427			1,182,693			930,344
Operating Income		166,261			95,865			300,551			179,962
Provision for income taxes		41,345			22,789			84,809			48,555
Net Income		124,916			73,076			215,742			131,407
Less - Net Income (Loss) Attributable to Noncontrolling Interests		1,738			(382	)		5,264			(6,073	)
Net Income Attributable to Lazard Ltd	$	123,178		$	73,458		$	210,478		$	137,480
Operating Income, as a % of net revenue		20.2	%		16.8	%		20.3	%		16.2	%

	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2021			2020			2021			2020
	($ in thousands)
Operating Revenue:
Net revenue	$	823,137		$	572,292		$	1,483,244		$	1,110,306
Adjustments:
Interest expense (a)		18,600			18,534			36,913			37,306
Distribution fees, reimbursable deal costs, bad debt expense and other (b)		(21,625	)		(21,936	)		(38,335	)		(38,320	)
(Revenue) loss related to noncontrolling interests (c)		(5,754	)		(2,173	)		(12,115	)		599
(Gains) losses on investments pertaining to LFI (d)		(16,491	)		(23,803	)		(23,978	)		(4,166	)
Losses associated with restructuring and closing of certain offices (e)		23,579			-			23,579			-
Operating revenue	$	821,446		$	542,914		$	1,469,308		$	1,105,725

(a)	Interest expense (excluding interest expense incurred by LFB) is added back in determining operating revenue because such expense relates to corporate financing activities and is not considered to be a cost directly related to the revenue of our business.

(b)	Represents certain distribution, introducer and management fees paid to third parties, reimbursable deal costs and bad debt expense relating to fees that are deemed uncollectible for which an equal amount is excluded for purposes of determining adjusted non-compensation expense.

(c)	Revenue or loss related to the consolidation of noncontrolling interests is excluded from operating ~~income margins.~~revenue because the Company has no economic interest in such amount.

~~Financial Advisory Results~~(d)

Represents changes in the fair value of ~~Operations~~

~~Financial Advisory’s quarterly revenue and profits can fluctuate materially depending on the number, size and timing of completed transactions on which it advised, as well as seasonality~~investments held in connection with LFI and other ~~factors. Accordingly, the revenue and profits in any particular quarter or period may not be indicative of future results. Lazard management believes that annual results are the most meaningful basis~~similar deferred compensation arrangements for ~~comparison among present, historical and future periods.~~

~~Three Months Ended June 30, 2020 versus June 30, 2019~~

~~Financial Advisory net revenue decreased $25 million, or 8%, as compared to the 2019 period. The decrease in Financial Advisory net revenue was primarily~~which a ~~result of a decrease in the number of M&A fees greater than $5 million, partially offset by higher Restructuring fees as compared to the 2019 period.~~

~~Operating expenses decreased $25 million, or 9%, as compared to the 2019 period, primarily due to decreases in~~corresponding equal amount is excluded from compensation and benefits expense.

(e)	Represents losses related to the reclassification of currency translation adjustments to earnings from accumulated other comprehensive loss associated with restructuring and closing of certain of our offices in the three month and six month periods ended June 30, 2021.

	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2021			2020			2021			2020
	($ in thousands)
Adjusted Compensation and Benefits Expense:
Total compensation and benefits expense	$	514,918		$	351,568		$	916,464		$	671,323
Adjustments:
Noncontrolling interests (a)		(2,380	)		(2,016	)		(4,338	)		(3,722	)
(Charges) credits pertaining to LFI (b)		(16,491	)		(23,803	)		(23,978	)		(4,166	)
Expenses associated with restructuring and closing of certain offices		(7,287	)		-			(13,910	)		-
Adjusted compensation and benefits expense	$	488,760		$	325,749		$	874,238		$	663,435
Adjusted compensation and benefits expense, as a % of operating revenue		59.5	%		60.0	%		59.5	%		60.0	%

(a)	Expenses related to the consolidation of noncontrolling interests are excluded because Lazard has no economic interest in such amounts.

(b)	Represents changes in fair value of the compensation liability recorded in connection with LFI and other similar deferred incentive compensation awards for which a corresponding equal amount is excluded from operating revenue.

	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2021			2020			2021			2020
	($ in thousands)
Adjusted Non-Compensation Expense:
Total non-compensation expense	$	141,943		$	124,404		$	266,199		$	258,120
Adjustments:
Expenses relating to office space reorganization (a)		(1,237	)		(2,487	)		(2,653	)		(6,151	)
Distribution fees, reimbursable deal costs, bad debt expense and other (b)		(21,625	)		(21,936	)		(38,335	)		(38,320	)
Noncontrolling interests (c)		(1,837	)		(364	)		(2,516	)		(1,400	)
Credits (expenses) associated with restructuring and closing of certain offices		1,586			-			(1,385	)		-
Adjusted non-compensation expense	$	118,830		$	99,617		$	221,310		$	212,249
Adjusted non-compensation expense, as a % of operating revenue		14.5	%		18.3	%		15.1	%		19.2	%

(a)	Represents incremental rent expense, building depreciation and ~~marketing~~legal fees related to office space reorganization.

(b)

Represents certain distribution, introducer and ~~business development expenses, partially offset by an increase in~~management fees paid to third parties, reimbursable deal costs and bad debt ~~expense.~~

~~Financial Advisory~~expense relating to fees that are deemed uncollectible for which an equal amount is included for purposes of determining operating ~~income was $54 million as compared to operating income of $53 million in the 2019 period and, as a percentage of net revenue, was 17.6%, as compared to 16.2% in the 2019 period.~~revenue.

~~Six Months Ended June 30, 2020 versus June 30, 2019~~(c)

~~Financial Advisory net revenue decreased $64 million, or 10%, as compared~~Expenses related to the ~~2019 period. The decrease~~consolidation of noncontrolling interests are excluded because the Company has no economic interest in ~~Financial Advisory net revenue was primarily a result of a decrease in the number of M&A fees greater than $5 million, partially offset by higher Restructuring fees as compared to the 2019~~such amounts.

	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2021			2020			2021			2020
	($ in thousands)
Earnings From Operations:
Operating revenue	$	821,446		$	542,914		$	1,469,308		$	1,105,725
Deduct:
Adjusted compensation and benefits expense		(488,760	)		(325,749	)		(874,238	)		(663,435	)
Adjusted non-compensation expense		(118,830	)		(99,617	)		(221,310	)		(212,249	)
Earnings from operations	$	213,856		$	117,548		$	373,760		$	230,041
Earnings from operations, as a % of operating revenue		26.0	%		21.7	%		25.4	%		20.8	%

Headcount information is set forth below:

	As of
	June 30, 2021		December 31, 2020		June 30, 2020
Headcount:
Managing Directors:
Financial Advisory		180		171		169
Asset Management		108		105		106
Corporate		22		21		22
Total Managing Directors		310		297		297
Other Business Segment Professionals and Support Staff:
Financial Advisory		1,336		1,384		1,319
Asset Management		1,033		1,012		970
Corporate		421		413		397
Total		3,100		3,106		2,983

Operating Results

Three Months Ended June 30, 2021 versus June 30, 2020

The Company reported net income attributable to Lazard Ltd of $123 million, as compared to net income attributable to Lazard Ltd of $73 million in the 2020 period.

Net revenue increased $251 million, or 44%, with operating revenue increasing $279 million, or 51%, as compared to the 2020 period. Fee revenue from investment banking and other advisory activities increased $171 million, or 56%, as compared to the 2020 period. Asset management fees, including incentive fees, increased $101 million, or 41%, as compared to the 2020 period. In the aggregate, interest income, other revenue and interest expense decreased $21 million, as compared to the 2020 period.

Compensation and benefits expense increased $163 million, or 46%, as compared to the 2020 period, primarily associated with increased operating revenue.

Adjusted compensation and benefits expense (which excludes certain items and which we believe allows for improved comparability between periods, as described above) was $489 million, an increase of $163 million, or 50%, as compared to $326 million in the 2020 period. The ratio of adjusted compensation and benefits expense to operating revenue was 59.5% for the 2021 period, as compared to 60.0% for the 2020 period.

Non-compensation expense increased $18 million, or 14%, as compared to the 2020 period. Adjusted non-compensation expense increased $19 million, or 19%, as compared to the 2020 period. The ratio of adjusted non-compensation expense to operating revenue was 14.5% for the 2021 period, as compared to 18.3% for the 2020 period.

Amortization of intangible assets related to acquisitions remained substantially the same as compared the 2020 period.

Operating income increased $70 million, or 73%, as compared to the 2020 period.

Earnings from operations increased $96 million, or 82%, as compared to the 2020 period, and, as a percentage of operating revenue, was 26.0%, as compared to 21.7% in the 2020 period.

The provision for income taxes reflects an effective tax rate of 24.9%, as compared to 23.8% for the 2020 period. The increase in the effective tax rate principally relates to changes in the geographic mix of earnings, partially offset by an increase in discrete benefits.

Net income (loss) attributable to noncontrolling interests reflects income of $2 million in the 2021 period as compared to a loss of $0.4 million in the 2020 period.

Six Months Ended June 30, 2021 versus June 30, 2020

The Company reported net income attributable to Lazard Ltd of $210 million, as compared to net income attributable to Lazard Ltd of $137 million in the 2020 period.

Net revenue increased $373 million, or 34%, with operating revenue increasing $364 million, or 33%, as compared to the 2020 period. Fee revenue from investment banking and other advisory activities increased $191 million, or 32%, as compared to the 2020 period. Asset management fees, including incentive fees, increased $159 million, or 31%, as compared to the 2020 period. In the aggregate, interest income, other revenue and interest expense increased $23 million, as compared to the 2020 period.

Compensation and benefits expense increased $245 million, or 37%, as compared to the 2020 period, primarily associated with increased operating revenue.

Adjusted compensation and benefits expense (which excludes certain items and which we believe allows for improved comparability between periods, as described above) was $874 million, an increase of $211 million, or 32%, as compared to $663

million in the 2020 period. The ratio of adjusted compensation and benefits expense to operating revenue was 59.5% for the 2021 period, as compared to 60.0% for the 2020 period.

Non-compensation expense increased $8 million, or 3%, as compared to the 2020 period. Adjusted non-compensation expense increased $9 million, or 4%, as compared to the 2020 period. The ratio of adjusted non-compensation expense to operating revenue was 15.1% for the 2021 period, as compared to 19.2% in the 2020 period.

Amortization of intangible assets related to acquisitions remained substantially the same as compared to the 2020 period.

Operating income increased $121 million, or 67%, as compared to the 2020 period.

Earnings from operations increased $144 million, or 62%, as compared to the 2020 period, and, as a percentage of operating revenue, was 25.4%, as compared to 20.8% in the 2020 period.

The provision for income taxes reflects an effective tax rate of 28.2%, as compared to 27.0% for the 2020 period. The increase in the effective tax rate principally relates to changes in the geographic mix of earnings and an increase in discrete charges.

Net income (loss) attributable to noncontrolling interests reflects income of $5 million as compared to a loss of $6 million in the 2020 period.

Operating expenses decreased $59 million, or 11%, as compared to the 2019 period, primarily due to decreases in compensation and benefits expense and marketing and business development expenses, partially offset by an increase in bad debt expense.

Financial Advisory operating income was $106 million, a decrease of $5 million, or 5%, as compared to operating income of $111 million in the 2019 period and, as a percentage of net revenue, was 17.5%, as compared to 16.7% in the 2019 period.

Asset Management

~~The following table shows the composition of AUM for the Asset Management segment:~~

As of

June 30,
2020

December 31,
2019

($ in millions)

AUM by Asset Class:

Equity:

Emerging Markets

$
28,937

$
40,612

Global

45,178

49,759

Local

43,477

48,985

Multi-Regional

55,923

66,185

Total Equity

173,515

205,541

Fixed Income:

Emerging Markets

12,412

14,387

Global

9,883

9,233

Local

5,436

5,450

Multi-Regional

9,153

9,193

Total Fixed Income

36,884

38,263

Alternative Investments

2,028

2,149

Private Equity

1,412

1,385

Cash Management

865

901

Total AUM

$
214,704

$
248,239

Net Revenue

365,255

254,849

712,745

537,370

Operating Expenses

269,314

195,049

501,417

399,818

Operating Income

95,941

59,800

211,328

137,552

Corporate

Net Revenue

5,942

12,637

147

(30,836

)

Operating Expenses

18,479

30,363

54,146

32,664

Operating Loss

(12,537

)

(17,726

)

(53,999

)

(63,500

)

Total

Net Revenue

823,137

572,292

1,483,244

1,110,306

Operating Expenses

656,876

476,427

1,182,693

930,344

Operating Income

166,261

95,865

300,551

179,962

	As Of
	June 30, 2021		December 31, 2020
Total Assets
Financial Advisory	$	1,196,078	$	1,181,783
Asset Management		958,946		958,588
Corporate		4,251,776		3,831,490
Total	$	6,406,800	$	5,971,861

~~Total AUM at June 30, 2020 was $215 billion,~~ 20.

CONSOLIDATED VIEs

	June 30, 2021		December 31, 2020
ASSETS
Cash and cash equivalents	$	4,515	$	3,558
Customers and other receivables		10,383		160
Investments		219,670		158,370
Other assets		836		400
Total Assets	$	235,404	$	162,488

LIABILITIES
Deposits and other customer payables	$	10,346	$	104
Other liabilities		297		491
Total Liabilities	$	10,643	$	595

Item 2.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

The following discussion should be read in conjunction with Lazard Ltd’s condensed consolidated financial statements and the related notes included elsewhere in this Quarterly Report on Form 10-Q (the “Form 10-Q”), as well as Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”) included in our Annual Report on Form 10-K for the year ended December 31, 2020 (the “Form 10-K”). All references to “2021,” “2020,” “second quarter,” “first half” or “the period” refer to, as the context requires, the three month and six month periods ended June 30, 2021 and 2020.

Forward-Looking Statements and Certain Factors that May Affect Our Business

•

a ~~decrease of $33 billion,~~decline in general economic conditions or ~~13%, as compared to total AUM of $248 billion at December 31, 2019~~the global or regional financial markets;

•

a decline in our revenues, for example due to a decline in overall mergers and acquisitions (“M&A”) activity, our share of the M&A market ~~depreciation, net outflows~~or our assets under management (“AUM”);

•

losses caused by financial or other problems experienced by third parties;

•

losses due to unidentified or unanticipated risks;

•

a lack of liquidity, i.e., ready access to funds, for use in our businesses; and

•

competitive pressure on our businesses and on our ability to retain and attract employees at current compensation levels.

Forward-looking statements include, but are not limited to, statements about:

•

financial goals, including ratios of compensation and benefits expense to operating revenue;

•

ability to deploy surplus cash through dividends, share repurchases and debt repurchases;

•

ability to offset stockholder dilution through share repurchases;

•

possible or assumed future results of operations and operating cash flows;

•

strategies and investment policies;

•

financing plans and the availability of short-term borrowing;

•

competitive position;

•

future acquisitions, including the consideration to be paid and the timing of consummation;

•

potential growth opportunities available to our businesses;

•

potential impact of investments in our technology infrastructure and data science capabilities;

•

recruitment and retention of our managing directors and employees;

•

potential levels of compensation expense, including awarded compensation and benefits expense and adjusted compensation and benefits expense, and non-compensation expense;

•

potential operating performance, achievements, productivity improvements, efficiency and cost reduction efforts;

•

likelihood of success and impact of litigation;

•

expected tax rates, including effective tax rates;

•

changes in interest and tax rates;

•

availability of certain tax benefits, including certain potential deductions;

•

potential impact of certain events or circumstances on our financial statements and operations, including the ongoing COVID-19 pandemic;

•

changes in foreign currency exchange ~~depreciation. Average~~rates;

•

effects of competition on our business; and

•

impact of new or future legislation and regulation, including tax laws and regulations, on our business.

Business Summary

Our principal sources of revenue are derived from activities in the following business segments:

•

Financial Advisory, which offers corporate, partnership, institutional, government, sovereign and individual clients across the globe a wide array of financial advisory services regarding M&A, restructurings, capital advisory, shareholder advisory, sovereign advisory, capital raising and other strategic advisory matters, and

•

Our consolidated net revenue was derived from the following segments:

	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2021			2020			2021			2020
Financial Advisory		55	%		53	%		52	%		54	%
Asset Management		44			45			48			48
Corporate		1			2			-			(2	)
Total		100	%		100	%		100	%		100	%

Business Environment and Outlook

Our outlook with respect to our Financial Advisory and Asset Management businesses is described below.

•

Financial Advisory—During a very active M&A market we are focused on serving clients with our depth of expertise in capital structure, capital raising, debt negotiations and restructuring and exchange offers. Announced M&A transaction volumes have recovered due to liquid financial markets and a strong economic recovery. We still expect there to be elevated uncertainty in the near term due to the ongoing health crisis and a more stringent regulatory market. However, fiscal and monetary stimulus in developed countries and the rollout of vaccines globally have created heightened levels of optimism and CEO confidence. The global scale and breadth of our Financial Advisory business allows us to advise on a wide range of strategic and restructuring transactions across a variety of industries. In addition, we continue to invest in our Financial Advisory business by selectively hiring talented senior professionals and continuing to focus on our M&A, restructuring and other advisory services.

•

Certain market data with respect to our Financial Advisory and Asset Management businesses is included below.

Financial Advisory

	Three Months Ended							Six Months Ended
	June 30,							June 30,
	2021		2020		% Incr / (Decr)			2021		2020		% Incr / (Decr)
	($ in billions)
Completed M&A Transactions:
All deals:
Value	$	996	$	911		9	%	$	2,069	$	1,623		27	%
Number		6,850		7,365		(7	)%		15,058		16,086		(6	)%
Deals Greater than $500 million:
Value	$	763	$	750		2	%	$	1,594	$	1,273		25	%
Number		318		220		45	%		630		489		29	%
Announced M&A Transactions:
All deals:
Value	$	1,557	$	475		228	%	$	2,999	$	1,141		163	%
Number		7,453		7,304		2	%		16,180		15,923		2	%
Deals Greater than $500 million:
Value	$	1,279	$	312		310	%	$	2,439	$	799		205	%
Number		449		171		163	%		912		395		131	%

Source: Dealogic as of July 7, 2021.

Asset Management

	Percentage Changes June 30, 2021 vs.
	March 31, 2021			December 31, 2020			June 30, 2020
MSCI World Index		8	%		13	%		40	%
Euro Stoxx		5	%		17	%		29	%
MSCI Emerging Market		5	%		8	%		41	%
S&P 500		9	%		15	%		41	%

Financial Statement Overview

Net Revenue

The Company earns performance-based incentive fees on various investment products, including traditional products and alternative investment funds, such as hedge funds and private equity funds.

For private equity funds, incentive fees may be earned in the form of a “carried interest” if profits arising from realized investments exceed a specified threshold. Typically, such carried interest is ultimately calculated on a whole-fund basis and, therefore, clawback of carried interest during the life of the fund can occur. As a result, incentive fees earned on our private equity funds are not recognized until potential uncertainties regarding the ultimate realizable amounts have been determined, including any potential for clawback.

Operating Expenses

The majority of Lazard’s operating expenses relate to compensation and benefits for managing directors and employees. Our compensation and benefits expense includes (i) salaries and benefits, (ii) amortization of the relevant portion of previously granted deferred incentive compensation awards, including (a) share-based incentive compensation under the Lazard Ltd 2018 Incentive Compensation Plan, as amended (the “2018 Plan”) and the Lazard Ltd 2008 Incentive Compensation Plan (the “2008 Plan”) and (b) LFI and other similar deferred compensation arrangements (see Note 13 of Notes to Condensed Consolidated Financial Statements), (iii) a provision for discretionary or guaranteed cash bonuses and profit pools and (iv) when applicable, severance payments. Compensation expense in any given period is dependent on many factors, including general economic and market conditions, our actual and forecasted operating and financial performance, staffing levels, estimated forfeiture rates, competitive pay conditions and the nature of revenues earned, as well as the mix between current and deferred compensation.

We believe that “awarded compensation and benefits expense” and the ratio of “awarded compensation and benefits expense” to “operating revenue,” both non-GAAP measures, when presented in conjunction with accounting principles generally accepted in the United States of America (“U.S. GAAP”) measures, are appropriate measures to assess the annual cost of compensation and provide a meaningful and useful basis for comparison of compensation and benefits expense between present, historical and future years. “Awarded compensation and benefits expense” for a given year is calculated using “adjusted compensation and benefits expense,” also a non-GAAP measure, as modified by the following items:

•

we deduct amortization expense recorded for U.S. GAAP purposes in the fiscal year associated with deferred incentive compensation awards;

•

we add incentive compensation with respect to the fiscal year, which is comprised of:

(i)

(ii)

(iii)

amounts in excess of the target payout level for PRSU and PRPU awards at the end of their respective performance periods; and

•

we reduce the amounts in (i), (ii) and (iii) above by an estimate of future forfeitures with respect to such awards.

Compensation and benefits expense is the largest component of our operating expenses. We seek to maintain discipline with respect to compensation, including the rate at which we award deferred compensation. Our goal is to maintain a ratio of awarded compensation and benefits expense to operating revenue and a ratio of adjusted compensation and benefits expense to operating revenue over the cycle in the mid-to high-50s percentage range. While we have implemented policies and initiatives that we believe will assist us in maintaining ratios within this range, there can be no guarantee that we will continue to maintain such ratios, or that our policies or initiatives will not change, in the future. We may benefit from pressure on compensation costs within the financial services industry in future periods; however, increased competition for senior professionals, changes in the macroeconomic environment or the financial markets generally, lower operating revenue resulting from, for example, a decrease in M&A activity, our share of the M&A market or our AUM levels, changes in the mix of revenues from our businesses, investments in our businesses or various other factors could prevent us from achieving this goal.

Our operating expenses also include “amortization of intangible assets related to acquisitions”.

Provision for Income Taxes

Noncontrolling Interests

Noncontrolling interests primarily consist of (i) amounts related to Edgewater’s management vehicles that the Company is deemed to control but not own, (ii) LGAC interests (see Note 1 of Notes to Condensed Consolidated Financial Statements), (iii) profits interest participation rights and (iv) consolidated VIE interests held by employees. See Notes 12 and 20 of Notes to Condensed Consolidated Financial Statements for information regarding the Company’s noncontrolling interests and consolidated VIEs.

Consolidated Results of Operations

	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2021			2020			2021			2020
	($ in thousands)
Net Revenue	$	823,137		$	572,292		$	1,483,244		$	1,110,306
Operating Expenses:
Compensation and benefits		514,918			351,568			916,464			671,323
Non-compensation		141,943			124,404			266,199			258,120
Amortization of intangible assets related to acquisitions		15			455			30			901
Total operating expenses		656,876			476,427			1,182,693			930,344
Operating Income		166,261			95,865			300,551			179,962
Provision for income taxes		41,345			22,789			84,809			48,555
Net Income		124,916			73,076			215,742			131,407
Less - Net Income (Loss) Attributable to Noncontrolling Interests		1,738			(382	)		5,264			(6,073	)
Net Income Attributable to Lazard Ltd	$	123,178		$	73,458		$	210,478		$	137,480
Operating Income, as a % of net revenue		20.2	%		16.8	%		20.3	%		16.2	%

	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2021			2020			2021			2020
	($ in thousands)
Operating Revenue:
Net revenue	$	823,137		$	572,292		$	1,483,244		$	1,110,306
Adjustments:
Interest expense (a)		18,600			18,534			36,913			37,306
Distribution fees, reimbursable deal costs, bad debt expense and other (b)		(21,625	)		(21,936	)		(38,335	)		(38,320	)
(Revenue) loss related to noncontrolling interests (c)		(5,754	)		(2,173	)		(12,115	)		599
(Gains) losses on investments pertaining to LFI (d)		(16,491	)		(23,803	)		(23,978	)		(4,166	)
Losses associated with restructuring and closing of certain offices (e)		23,579			-			23,579			-
Operating revenue	$	821,446		$	542,914		$	1,469,308		$	1,105,725

(a)	Interest expense (excluding interest expense incurred by LFB) is added back in determining operating revenue because such expense relates to corporate financing activities and is not considered to be a cost directly related to the revenue of our business.

(b)	Represents certain distribution, introducer and management fees paid to third parties, reimbursable deal costs and bad debt expense relating to fees that are deemed uncollectible for which an equal amount is excluded for purposes of determining adjusted non-compensation expense.

(c)	Revenue or loss related to the consolidation of noncontrolling interests is excluded from operating revenue because the Company has no economic interest in such amount.

(d)	Represents changes in the fair value of investments held in connection with LFI and other similar deferred compensation arrangements for which a corresponding equal amount is excluded from compensation and benefits expense.

(e)

Represents losses related to the reclassification of currency translation adjustments to earnings from accumulated other comprehensive loss associated with restructuring and closing of certain of our offices in the three month and six month periods ended June 30, ~~2020 decreased 12% and 8% as compared~~2021.

	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2021			2020			2021			2020
	($ in thousands)
Adjusted Compensation and Benefits Expense:
Total compensation and benefits expense	$	514,918		$	351,568		$	916,464		$	671,323
Adjustments:
Noncontrolling interests (a)		(2,380	)		(2,016	)		(4,338	)		(3,722	)
(Charges) credits pertaining to LFI (b)		(16,491	)		(23,803	)		(23,978	)		(4,166	)
Expenses associated with restructuring and closing of certain offices		(7,287	)		-			(13,910	)		-
Adjusted compensation and benefits expense	$	488,760		$	325,749		$	874,238		$	663,435
Adjusted compensation and benefits expense, as a % of operating revenue		59.5	%		60.0	%		59.5	%		60.0	%

(a)	Expenses related to the ~~three month and six month periods ended June 30, 2019.~~consolidation of noncontrolling interests are excluded because Lazard has no economic interest in such amounts.

As of June 30, 2020, approximately 87% of our AUM was managed on behalf of institutional clients, including corporations, labor unions, public pension funds, insurance companies and banks, and through sub-advisory relationships, mutual fund sponsors, broker-dealers and registered advisors, as compared to 86% as of December 31, 2019. As of June 30, 2020, approximately 13% of our AUM was managed on behalf of individual client relationships, which are principally with family offices and individuals, as compared to 14% as of December 31, 2019.(b)

As of June 30, 2020, AUM with foreign currency exposure represented approximately 69% of our total AUM, as compared to 67% as of December 31, 2019. AUM with foreign currency exposure generally declinesRepresents changes in fair value ~~with the strengthening~~ of the ~~U.S. Dollar~~compensation liability recorded in connection with LFI and ~~increases in value as the U.S. Dollar weakens, with all~~ other ~~factors held constant.~~

~~The following~~similar deferred incentive compensation awards for which a corresponding equal amount is ~~a summary of changes in AUM by asset class for the three month and six month periods ended June 30, 2020 and 2019:~~excluded from operating revenue.

Three Months Ended June 30, 2020

AUM
Beginning
Balance

Inflows (a)

Outflows (a)

Net
Flows

Market Value
Appreciation/
(Depreciation)

Foreign
Exchange
Appreciation/
(Depreciation)

AUM
Ending
Balance

($ in millions)

Equity

$
154,641

$
8,009

$
(14,040
)

$
(6,031
)

$
23,080

$
1,825

$
173,515

Fixed Income

34,321

2,199

(2,253
)

(54
)

2,026

591

36,884

Other

4,086

218

(101
)

117

73

29

4,305

Total

$
193,048

$
10,426

$
(16,394
)

$
(5,968
)

$
25,179

$
2,445

$
214,704

~~(a)~~

Inflows in the Equity asset class were primarily attributable to the Global, Local and Multi-Regional platforms, and inflows in the Fixed Income asset class were primarily attributable to the Multi-Regional and Global platforms. Outflows in the Equity asset class were primarily attributable to the Multi-Regional, Emerging Markets, and Local equity platforms, and outflows in the Fixed Income asset class were primarily attributable to the Multi-Regional and Global platforms.

	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2021			2020			2021			2020
	($ in thousands)
Adjusted Non-Compensation Expense:
Total non-compensation expense	$	141,943		$	124,404		$	266,199		$	258,120
Adjustments:
Expenses relating to office space reorganization (a)		(1,237	)		(2,487	)		(2,653	)		(6,151	)
Distribution fees, reimbursable deal costs, bad debt expense and other (b)		(21,625	)		(21,936	)		(38,335	)		(38,320	)
Noncontrolling interests (c)		(1,837	)		(364	)		(2,516	)		(1,400	)
Credits (expenses) associated with restructuring and closing of certain offices		1,586			-			(1,385	)		-
Adjusted non-compensation expense	$	118,830		$	99,617		$	221,310		$	212,249
Adjusted non-compensation expense, as a % of operating revenue		14.5	%		18.3	%		15.1	%		19.2	%

Six Months Ended June 30, 2020

AUM
Beginning
Balance

Inflows (a)

Outflows (a)

Net
Flows

Market Value
Appreciation/
(Depreciation)

Foreign
Exchange
Appreciation/
(Depreciation)

AUM
Ending
Balance

($ in millions)

Equity

$
205,541

$
14,602

$
(24,438
)

$
(9,836
)

$
(19,003
)

$
(3,187
)

$
173,515

Fixed Income

38,263

4,641

(5,740
)

(1,099
)

629

(909
)

36,884

Other

4,435

468

(414
)

54

(134
)

(50
)

4,305

Total

$
248,239

$
19,711

$
(30,592
)

$
(10,881
)

$
(18,508
)

$
(4,146
)

$
214,704

(a)	Represents incremental rent expense, building depreciation and legal fees related to office space reorganization.

(b)	Represents certain distribution, introducer and management fees paid to third parties, reimbursable deal costs and bad debt expense relating to fees that are deemed uncollectible for which an equal amount is included for purposes of determining operating revenue.

(c)	Expenses related to the consolidation of noncontrolling interests are excluded because the Company has no economic interest in such amounts.

	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2021			2020			2021			2020
	($ in thousands)
Earnings From Operations:
Operating revenue	$	821,446		$	542,914		$	1,469,308		$	1,105,725
Deduct:
Adjusted compensation and benefits expense		(488,760	)		(325,749	)		(874,238	)		(663,435	)
Adjusted non-compensation expense		(118,830	)		(99,617	)		(221,310	)		(212,249	)
Earnings from operations	$	213,856		$	117,548		$	373,760		$	230,041
Earnings from operations, as a % of operating revenue		26.0	%		21.7	%		25.4	%		20.8	%

Headcount information is set forth below:

	As of
	June 30, 2021		December 31, 2020		June 30, 2020
Headcount:
Managing Directors:
Financial Advisory		180		171		169
Asset Management		108		105		106
Corporate		22		21		22
Total Managing Directors		310		297		297
Other Business Segment Professionals and Support Staff:
Financial Advisory		1,336		1,384		1,319
Asset Management		1,033		1,012		970
Corporate		421		413		397
Total		3,100		3,106		2,983

~~(a)~~

Inflows in the Equity asset class were primarily attributable to the Global, Multi-Regional and Local platforms, and inflows in the Fixed Income asset class were primarily attributable to the Global and Multi-Regional platforms. Outflows in the Equity asset class were primarily attributable to the Multi-Regional, Emerging Markets and Global equity platforms, and outflows in the Fixed Income asset class were primarily attributable to the Emerging Markets, Global and Multi-Regional platforms.

Operating Results

Three Months Ended June 30, 2021 versus June 30, 2020

The Company reported net income attributable to Lazard Ltd of $123 million, as compared to net income attributable to Lazard Ltd of $73 million in the 2020 period.

Compensation and benefits expense increased $163 million, or 46%, as compared to the 2020 period, primarily associated with increased operating revenue.

Amortization of intangible assets related to acquisitions remained substantially the same as compared the 2020 period.

Operating income increased $70 million, or 73%, as compared to the 2020 period.

Earnings from operations increased $96 million, or 82%, as compared to the 2020 period, and, as a percentage of operating revenue, was 26.0%, as compared to 21.7% in the 2020 period.

Net income (loss) attributable to noncontrolling interests reflects income of $2 million in the 2021 period as compared to a loss of $0.4 million in the 2020 period.

Six Months Ended June 30, 2021 versus June 30, 2020

The Company reported net income attributable to Lazard Ltd of $210 million, as compared to net income attributable to Lazard Ltd of $137 million in the 2020 period.

Compensation and benefits expense increased $245 million, or 37%, as compared to the 2020 period, primarily associated with increased operating revenue.

million in the 2020 period. The ratio of adjusted compensation and benefits expense to operating revenue was 59.5% for the 2021 period, as compared to 60.0% for the 2020 period.

Amortization of intangible assets related to acquisitions remained substantially the same as compared to the 2020 period.

Operating income increased $121 million, or 67%, as compared to the 2020 period.

Earnings from operations increased $144 million, or 62%, as compared to the 2020 period, and, as a percentage of operating revenue, was 25.4%, as compared to 20.8% in the 2020 period.

Net income (loss) attributable to noncontrolling interests reflects income of $5 million as compared to a loss of $6 million in the 2020 period.

Business Segments

The following is a discussion of net revenue and operating income for the Company’s segments: Financial Advisory, Asset Management and Corporate. Each segment’s operating expenses include (i) compensation and benefits expenses that are incurred directly in support of the segment and (ii) other operating expenses, which include directly incurred expenses for occupancy and equipment, marketing and business development, technology and information services, professional services, fund administration and outsourcing, and indirect support costs (including compensation and benefits expense and other operating expenses related thereto) for administrative services. Such administrative services include, but are not limited to, accounting, tax, human resources, legal, information technology, facilities management and senior management activities. Such support costs are allocated to the relevant segments based on various statistical drivers such as revenue, headcount, square footage and other factors.

Financial Advisory

The following table summarizes the reported operating results attributable to the Financial Advisory segment:

	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2021			2020			2021			2020
	($ in thousands)
Net Revenue	$	451,940		$	304,806		$	770,352		$	603,772
Operating Expenses		369,083			251,015			627,130			497,862
Operating Income	$	82,857		$	53,791		$	143,222		$	105,910
Operating Income, as a % of net revenue		18.3	%		17.6	%		18.6	%		17.5	%

Certain Lazard fee and transaction statistics for the Financial Advisory segment are set forth below:

	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2021			2020			2021			2020
Lazard Statistics:
Number of clients with fees greater than $1 million:
Financial Advisory		96			58			169			110
Percentage of total Financial Advisory net revenue from top 10 clients		35	%		51	%		24	%		32	%
Number of M&A transactions completed with values greater than $500 million (a)		12			13			37			35

Three Months Ended June 30, 2019

AUM
Beginning
Balance

Inflows

Outflows

Net
Flows

Market Value
Appreciation/
(Depreciation)

Foreign
Exchange
Appreciation/
(Depreciation)

AUM
Ending
Balance

($ in millions)

Equity

$
195,095

$
5,232

$
(11,389
)

$
(6,157
)

$
6,393

$
527

$
195,858

Fixed Income

35,008

2,345

(1,312
)

1,033

255

293

36,589

Other

4,876

278

(400
)

(122
)

254

11

5,019

Total

$
234,979

$
7,855

$
(13,101
)

$
(5,246
)

$
6,902

$
831

$
237,466

Six Months Ended June 30, 2019

AUM
Beginning
Balance

Inflows

Outflows

Net
Flows

Market Value
Appreciation/
(Depreciation)

Foreign
Exchange
Appreciation/
(Depreciation)

AUM
Ending
Balance

($ in millions)

Equity

$
176,998

$
11,630

$
(18,618
)

$
(6,988
)

$
25,957

$
(109
)

$
195,858

Fixed Income

32,938

4,963

(3,196
)

1,767

1,823

61

36,589

Other

4,798

797

(784
)

13

210

(2
)

5,019

Total

$
214,734

$
17,390

$
(22,598
)

$
(5,208
)

$
27,990

$
(50
)

$
237,466

(a)	AsSource: Dealogic as of July ~~29, 2020, AUM was $224.3 billion, a $9.6 billion increase since June 30, 2020.~~7, 2021.

The geographical distribution of Financial Advisory net revenue is set forth below in percentage terms and is based on the Lazard offices that generate Financial Advisory net revenue, which are located in the Americas (U.S., Canada, and Latin America), EMEA (primarily in the U.K., France, Germany, Italy and Spain) and the Asia Pacific region and therefore may not be reflective of the geography in which the clients are located.

	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2021			2020			2021			2020
Americas		67	%		71	%		62	%		65	%
EMEA		33			27			37			33
Asia Pacific		-			2			1			2
Total		100	%		100	%		100	%		100	%

The Company’s managing directors and many of its professionals have significant experience, and many of them are able to use this experience to advise on M&A, restructuring and other strategic advisory matters, depending on clients’ needs. This flexibility allows Lazard to better match its professionals with the counter-cyclical business cycles of mergers and acquisitions and restructurings. While Lazard measures revenue by practice area, Lazard does not separately measure the costs or profitability of M&A services as compared to restructuring or other services. Accordingly, Lazard measures performance in its Financial Advisory segment based on overall segment operating revenue and operating income margins.

Financial Advisory Results of Operations

Financial Advisory’s quarterly revenue and profits can fluctuate materially depending on the number, size and timing of completed transactions on which it advised, as well as seasonality and other factors. Accordingly, the revenue and profits in any particular quarter or period may not be indicative of future results. Lazard management believes that annual results are the most meaningful basis for comparison among present, historical and future periods.

Three Months Ended June 30, 2021 versus June 30, 2020

Financial Advisory net revenue increased $147 million, or 48%, as compared to the 2020 period. The increase in Financial Advisory net revenue was primarily a result of an increase in the number of fees greater than $10 million as compared to the 2020 period.

Operating expenses increased $118 million, or 47%, as compared to the 2020 period, primarily due to increases in compensation and benefits expense associated with increased operating revenue.

Financial Advisory operating income was $83 million, an increase of $29 million, or 54%, as compared to operating income of $54 million in the 2020 period and, as a percentage of net revenue, was 18.3%, as compared to 17.6% in the 2020 period.

Six Months Ended June 30, 2021 versus June 30, 2020

Financial Advisory net revenue increased $167 million, or 28%, as compared to the 2020 period. The increase in Financial Advisory net revenue was primarily a result of an increase in the number of fees greater than $1 million as compared to the 2020 period.

Operating expenses increased $129 million, or 26%, as compared to the 2020 period, primarily due to increases in compensation and benefits expense associated with increased operating revenue.

Financial Advisory operating income was $143 million, an increase of $37 million, or 35%, as compared to operating income of $106 million in the 2020 period and, as a percentage of net revenue, was 18.6%, as compared to 17.5% in the 2020 period.

Asset Management

The following table shows the composition of AUM for the Asset Management segment:

	As of
	June 30, 2021		December 31, 2020
	($ in millions)
AUM by Asset Class:
Equity:
Emerging Markets	$	32,363	$	33,254
Global		61,874		56,246
Local		53,917		48,672
Multi-Regional		76,405		71,560
Total Equity		224,559		209,732
Fixed Income:
Emerging Markets		13,213		13,651
Global		14,617		11,962
Local		5,788		5,600
Multi-Regional		13,532		12,571
Total Fixed Income		47,150		43,784
Alternative Investments		3,529		2,748
Private Equity		1,343		1,420
Cash Management		797		958
Total AUM	$	277,378	$	258,642

Total AUM at June 30, 2021 was $277 billion, an increase of $19 billion, or 7%, as compared to total AUM of $259 billion at December 31, 2020 due to market appreciation, partially offset by foreign exchange depreciation and net outflows. Average AUM for the three month and six month periods ended June 30, 2021 increased 32% and 25% as compared to the three month and six month periods ended June 30, 2020.

As of both June 30, 2021 and December 31, 2020, approximately 87% of our AUM was managed on behalf of institutional clients, including corporations, labor unions, public pension funds, insurance companies and banks, and through sub-advisory relationships, mutual fund sponsors, broker-dealers and registered advisors. As of both June 30, 2021 and December 31, 2020, approximately 13% of our AUM was managed on behalf of individual client relationships, which are principally with family offices and individuals.

As of June 30, 2021, AUM with foreign currency exposure represented approximately 67% of our total AUM, as compared to 69% at December 31, 2020. AUM with foreign currency exposure generally declines in value with the strengthening of the U.S. Dollar and increases in value as the U.S. Dollar weakens, with all other factors held constant.

The following is a summary of changes in AUM by asset class for the three month and six month periods ended June 30, 2021 and 2020:

	Three Months Ended June 30, 2021
	AUM Beginning Balance		Inflows (a)		Outflows (a)			Net Flows			Market Value Appreciation/ (Depreciation)		Foreign Exchange Appreciation/ (Depreciation)		AUM Ending Balance
	($ in millions)
Equity	$	215,459	$	6,257	$	(9,534	)	$	(3,277	)	$	11,524	$	853	$	224,559
Fixed Income		44,249		3,704		(1,767	)		1,937			615		349		47,150
Other		5,144		702		(190	)		512			3		10		5,669
Total	$	264,852	$	10,663	$	(11,491	)	$	(828	)	$	12,142	$	1,212	$	277,378

(a)

Inflows in ~~AUM was due to market appreciation of $6.5 billion and foreign exchange appreciation of $4.3 billion, partially offset by net outflows of $1.2 billion.~~

~~Average AUM for~~ the ~~three month and six month periods ended June 30, 2020 and 2019 for each significant~~Equity asset class ~~is set forth below. Average AUM generally represents the average of the monthly ending AUM balances for the period.~~

Three Months Ended

Six Months Ended

June 30,

June 30,

2020

2019

2020

2019

($ in millions)

Average AUM by Asset Class:

Equity

$
168,465

$
196,171

$
174,434

$
192,555

Fixed Income

35,775

35,669

36,336

35,148

Alternative Investments

1,962

2,606

2,005

2,649

Private Equity

1,410

1,391

1,404

1,404

Cash Management

842

1,141

829

984

Total Average AUM

$
208,454

$
236,978

$
215,008

$
232,740

~~The following table summarizes the reported operating results~~were primarily attributable to the ~~Asset Management segment:~~

Three Months Ended

Six Months Ended

June 30,

June 30,

2020

2019

2020

2019

($ in thousands)

Net Revenue

$
254,849

$
315,591

$
537,370

$
617,424

Operating Expenses

195,049

219,021

399,818

426,369

Operating Income

$
59,800

$
96,570

$
137,552

$
191,055

Operating Income, as a % of net revenue

23.5
%

30.6
%

25.6
%

30.9
%

~~The geographical distribution of Asset Management net revenue is set forth below in percentage terms,~~Multi-Regional, Global and ~~is based on the Lazard offices that manage~~Emerging Markets platforms, and ~~distribute the respective AUM amounts. Such geographical distribution may not be reflective of the geography of the investment products or clients.~~

Three Months Ended

Six Months Ended

June 30,

June 30,

2020

2019

2020

2019

Americas

52
%

57
%

52
%

56
%
EMEA

36

32

36

33

Asia Pacific

12

11

12

11

Total

100
%

100
%

100
%

100
%

~~Asset Management Results of Operations~~

Asset Management’s quarterly revenue and profits in any particular quarter or period may not be indicative of future results and may fluctuate based on the performance of the equity and other capital markets. Lazard management believes that annual results are the most meaningful basis for comparison among present, historical and future periods.

~~Three Months Ended June 30, 2020 versus June 30, 2019~~

Asset Management net revenue decreased $61 million, or 19%, as compared to the 2019 period. Management fees and other revenue was $254 million, a decrease of $57 million, or 18%, as compared to $311 millioninflows in the ~~2019 period,~~Fixed Income asset class were primarily ~~due to a decrease in average AUM and change in asset mix. Incentive fees were $1 million, a decrease of $4 million as compared to $5 million in the 2019 period.~~

Operating expenses decreased $24 million, or 11%, as compared to the 2019 period primarily due to decreases in compensation and benefits expense, marketing and business development expenses and fund distribution related fees.

Asset Management operating income was $60 million, a decrease of $37 million, or 38%, as compared to operating income of $97 million in the 2019 period and as a percentage of net revenue, was 23.5%, as compared to 30.6% in the 2019 period.

~~Six Months Ended June 30, 2020 versus June 30, 2019~~

Asset Management net revenue decreased $80 million, or 13%, as compared to the 2019 period. Management fees and other revenue was $535 million, a decrease of $77 million, or 13%, as compared to $612 million in the 2019 period, primarily due to a decrease in average AUM and change in asset mix. Incentive fees were $2 million, a decrease of $4 million as compared to $6 million in the 2019 period.

Operating expenses decreased $27 million, or 6%, as compared to the 2019 period primarily due to decreases in compensation and benefits expense, marketing and business development expenses and fund distribution related fees.

Asset Management operating income was $138 million, a decrease of $54 million, or 28%, as compared to operating income of $191 million in the 2019 period and, as a percentage of net revenue, was 25.6%, as compared to 30.9% in the 2019 period.

~~Corporate~~

~~The following table summarizes the reported operating results~~ attributable to the ~~Corporate segment:~~Global and Multi-Regional platforms. Outflows in the Equity asset class were primarily attributable to the Multi-Regional, Emerging Markets and Global equity platforms, and outflows in the Fixed Income asset class were primarily attributable to the Global platform.

	Six Months Ended June 30, 2021
	AUM Beginning Balance		Inflows (a)		Outflows (a)			Net Flows			Market Value Appreciation/ (Depreciation)			Foreign Exchange Appreciation/ (Depreciation)			AUM Ending Balance
	($ in millions)
Equity	$	209,732	$	13,818	$	(20,861	)	$	(7,043	)	$	24,303		$	(2,433	)	$	224,559
Fixed Income		43,784		7,498		(3,713	)		3,785			482			(901	)		47,150
Other		5,126		1,402		(651	)		751			(163	)		(45	)		5,669
Total	$	258,642	$	22,718	$	(25,225	)	$	(2,507	)	$	24,622		$	(3,379	)	$	277,378

Three Months Ended

Six Months Ended

June 30,

June 30,

2020

2019

2020

2019

($ in thousands)

Interest Income

$
702

$
3,187

$
2,702

$
6,028

Interest Expense

(18,811
)

(18,997
)

(37,850
)

(36,013
)
Net Interest (Expense)

(18,109
)

(15,810
)

(35,148
)

(29,985
)
Other Revenue (Expense)

30,746

1,297

4,312

18,943

Net Revenue (Expense)

12,637

(14,513
)

(30,836
)

(11,042
)
Operating Expenses

30,363

33,746

32,664

70,148

Operating Income (Loss)

$
(17,726
)

$
(48,259
)

$
(63,500
)

$
(81,190
)

~~Corporate Results of Operations~~(a)

~~Corporate operating results~~Inflows in ~~any particular quarter or period may not be indicative of future results and may fluctuate based on a variety of factors. Lazard management believes that annual results are~~ the ~~most meaningful basis for comparison among present, historical and future periods.~~

~~Three Months Ended June 30, 2020 versus June 30, 2019~~

~~Net interest expense increased $2 million, or 15%, as compared~~Equity asset class were primarily attributable to the ~~2019 period.~~

~~Other revenue increased $29 million as compared~~Multi-Regional, Global and Emerging Markets platforms, and inflows in the Fixed Income asset class were primarily attributable to the ~~2019 period primarily due to higher income~~Global and Multi-Regional platforms. Outflows in the ~~2020 period~~Equity asset class were primarily attributable to ~~investments held~~the Multi-Regional, Emerging Markets and Global equity platforms, and outflows in ~~connection with LFI.~~

~~Operating expenses decreased $3 million as compared~~the Fixed Income asset class were primarily attributable to the ~~2019 period.~~

~~Six Months Ended June 30, 2020 versus June 30, 2019~~

~~Net interest expense increased $5 million, or 17%, as compared to the 2019 period.~~

~~Other revenue decreased $15 million as compared to the 2019 period primarily due to lower income in the 2020 period attributable to investments held in connection with LFI.~~

~~Operating expenses decreased $37 million as compared to the 2019 period, primarily due to a decrease in compensation~~Global and ~~benefits expense, which reflected~~Emerging Markets platforms.

	Three Months Ended June 30, 2020
	AUM Beginning Balance		Inflows		Outflows			Net Flows			Market Value Appreciation/ (Depreciation)		Foreign Exchange Appreciation/ (Depreciation)		AUM Ending Balance
	($ in millions)
Equity	$	154,641	$	8,009	$	(14,040	)	$	(6,031	)	$	23,080	$	1,825	$	173,515
Fixed Income		34,321		2,199		(2,253	)		(54	)		2,026		591		36,884
Other		4,086		218		(101	)		117			73		29		4,305
Total	$	193,048	$	10,426	$	(16,394	)	$	(5,968	)	$	25,179	$	2,445	$	214,704

	Six Months Ended June 30, 2020
	AUM Beginning Balance		Inflows		Outflows			Net Flows			Market Value Appreciation/ (Depreciation)			Foreign Exchange Appreciation/ (Depreciation)			AUM Ending Balance
	($ in millions)
Equity	$	205,541	$	14,602	$	(24,438	)	$	(9,836	)	$	(19,003	)	$	(3,187	)	$	173,515
Fixed Income		38,263		4,641		(5,740	)		(1,099	)		629			(909	)		36,884
Other		4,435		468		(414	)		54			(134	)		(50	)		4,305
Total	$	248,239	$	19,711	$	(30,592	)	$	(10,881	)	$	(18,508	)	$	(4,146	)	$	214,704

As of July 23, 2021, AUM was $277.6 billion, a $0.2 billion increase since June 30, 2021. The increase in AUM was due to market appreciation of $2.5 billion, partially offset by foreign exchange depreciation of $1.3 billion and net outflows of $1.0 billion.

Average AUM for the three month and six month periods ended June 30, 2021 and 2020 for each significant asset class is set forth below. Average AUM generally represents the average of the monthly ending AUM balances for the period.

	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2021		2020		2021		2020
	($ in millions)
Average AUM by Asset Class:
Equity	$	223,617	$	168,465	$	217,807	$	174,434
Fixed Income		46,725		35,775		45,530		36,336
Alternative Investments		3,404		1,962		3,161		2,005
Private Equity		1,330		1,410		1,340		1,404
Cash Management		775		842		819		829
Total Average AUM	$	275,851	$	208,454	$	268,657	$	215,008

The following table summarizes the reported operating results attributable to the Asset Management segment:

	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2021			2020			2021			2020
	($ in thousands)
Net Revenue	$	365,255		$	254,849		$	712,745		$	537,370
Operating Expenses		269,314			195,049			501,417			399,818
Operating Income	$	95,941		$	59,800		$	211,328		$	137,552
Operating Income, as a % of net revenue		26.3	%		23.5	%		29.6	%		25.6	%

The geographical distribution of Asset Management net revenue is set forth below in percentage terms, and is based on the Lazard offices that manage and distribute the respective AUM amounts. Such geographical distribution may not be reflective of the geography of the investment products or clients.

	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2021			2020			2021			2020
Americas		47	%		52	%		46	%		52	%
EMEA		43			36			44			36
Asia Pacific		10			12			10			12
Total		100	%		100	%		100	%		100	%

Asset Management Results of Operations

Three Months Ended June 30, 2021 versus June 30, 2020

Asset Management net revenue increased $110 million, or 43%, as compared to the 2020 period. Management fees and other revenue was $331 million, an increase of $77 million, or 30%, as compared to $254 million in the 2020 period, primarily due to an increase in average AUM. Incentive fees were $34 million, an increase of $33 million as compared to $1 million in the 2020 period.

Operating expenses increased $74 million, or 38%, as compared to the 2020 period primarily due to increases in compensation and benefits expense associated with increased operating revenue.

Asset Management operating income was $96 million, an increase of $36 million, or 60%, as compared to operating income of $60 million in the 2020 period and as a percentage of net revenue, was 26.3%, as compared to 23.5% in the 2020 period.

Six Months Ended June 30, 2021 versus June 30, 2020

Asset Management net revenue increased $175 million, or 33%, as compared to the 2020 period. Management fees and other revenue was $645 million, an increase of $110 million, or 21%, as compared to $535 million in the 2020 period, primarily due to an increase in average AUM. Incentive fees were $67 million, an increase of $65 million as compared to $2 million in the 2020 period.

Operating expenses increased $102 million, or 25%, as compared to the 2020 period primarily due to increases in compensation and benefits expense associated with increased operating revenue.

Asset Management operating income was $211 million, an increase of $74 million, or 54%, as compared to operating income of $138 million in the 2020 period and, as a percentage of net revenue, was 29.6%, as compared to 25.6% in the 2020 period.

Corporate

The following table summarizes the reported operating results attributable to the Corporate segment:

	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2021			2020			2021			2020
	($ in thousands)
Interest Income	$	685		$	702		$	1,151		$	2,702
Interest Expense		(18,663	)		(18,811	)		(37,466	)		(37,850	)
Net Interest (Expense)		(17,978	)		(18,109	)		(36,315	)		(35,148	)
Other Revenue (Expense)		23,920			30,746			36,462			4,312
Net Revenue (Expense)		5,942			12,637			147			(30,836	)
Operating Expenses		18,479			30,363			54,146			32,664
Operating Income (Loss)	$	(12,537	)	$	(17,726	)	$	(53,999	)	$	(63,500	)

Corporate Results of Operations

Corporate operating results in any particular quarter or period may not be indicative of future results and may fluctuate based on a variety of factors. Lazard management believes that annual results are the most meaningful basis for comparison among present, historical and future periods.

Three Months Ended June 30, 2021 versus June 30, 2020

Net interest expense remained substantially the same as compared to the 2020 period.

Other revenue decreased $7 million, or 22%, as compared to the 2020 period primarily due to lower income in the 2021 period attributable to investments held in connection with LFI.

Operating expenses decreased $12 million, or 39%, as compared to the 2020 period, primarily due to a decrease in compensation and benefits expense, including a decrease in charges pertaining to LFI.

Six Months Ended June 30, 2021 versus June 30, 2020

Net interest expense remained substantially the same as compared to the 2020 period.

Other revenue increased $32 million as compared to the 2020 period primarily due to higher income in the 2021 period attributable to investments held in connection with LFI.

Operating expenses increased $21 million, or 66%, as compared to the 2020 period, primarily due to an increase in compensation and benefits expense, including an increase in charges pertaining to LFI.

Cash Flows

The Company’s cash flows are influenced primarily by the timing of the receipt of Financial Advisory and Asset Management fees, the timing of distributions to shareholders, payments of incentive compensation to managing directors and employees and purchases of common stock. Cash flows were also affected in 2019 by Lazard Group’s issuance of $500 million aggregate principal amount of its 4.375% senior notes maturing in 2029 (the “2029 Notes”) and the redemption of the 2020 Notes.

M&A and other advisory and Asset Management fees are generally collected within 60 days of billing, while Restructuring fee collections may extend beyond 60 days, particularly those that involve bankruptcies with court-ordered holdbacks. Fees from our Private Capital Advisory activities are generally collected over a four-year period from billing and typically include an interest component.

The Company makes cash payments for, or in respect of, a significant portion of its incentive compensation during the first three months of each calendar year with respect to the prior year’s results. ~~The Company also paid a special dividend in February 2019.~~

Summary of Cash Flows:

	Six Months Ended						Six Months Ended
	June 30,						June 30,
	2020			2019			2021			2020
	($ in millions)						($ in millions)
Cash Provided By (Used In):
Operating activities:
Net income	$	131		$	170		$	216		$	131
Adjustments to reconcile net income to net cash provided by operating activities (a)		289			292			352			289
Other operating activities (b)		(420	)		(379	)		(553	)		(420	)
Net cash provided by (used in) operating activities		0			83			15			-
Investing activities		(25	)		(18	)		(17	)		(25	)
Financing activities (c)		(314	)		(87	)		201			(314	)
Effect of exchange rate changes		(24	)		(9	)		(62	)		(24	)
Net Decrease in Cash and Cash Equivalents and Restricted Cash		(363	)		(31	)
Net Increase (Decrease) in Cash and Cash Equivalents and Restricted Cash								137			(363	)
Cash and Cash Equivalents and Restricted Cash (d):
Beginning of Period		2,456			2,292			2,569			2,456
End of Period	$	2,093		$	2,261		$	2,706		$	2,093

(a)	Consists of the following:

	Six Months Ended				Six Months Ended
	June 30,				June 30,
	2020		2019		2021		2020
	($ in millions)				($ in millions)
Depreciation and amortization of property	$	17	$	16	$	19	$	17
Noncash lease expense		33		27		36		33
Currency translation adjustment reclassification						23		-
Amortization of deferred expenses and share-based incentive compensation		215		227		230		215
Deferred tax provision		23		7		44		23
Amortization and other acquisition-related costs		1		8
Loss on extinguishment of debt		-		7
Amortization of intangible assets related to acquisitions						-		1
Total	$	289	$	292	$	352	$	289

(b)	Includes net changes in operating assets and liabilities.

(c)

Consists primarily of purchases of shares of common stock, tax withholdings related to the settlement of vested RSUs, vested restricted stock awards and vested PRSUs, common stock dividends, changes in customer deposits, distributions to noncontrolling interest holders and activity relating to borrowings ~~(including~~and in ~~2019,~~2021, contributions from redeemable noncontrolling interests and payments of underwriting fees and other offering costs associated with the ~~issuance of the 2029 Notes and the redemption of the 2020 Notes).~~LGAC IPO.

(d)	Cash and cash equivalents and restricted cash consists of cash and cash equivalents, deposits with banks and short-term investments and ~~cash deposited with clearing organizations and other segregated~~restricted cash.

Liquidity and Capital Resources

The Company’s liquidity and capital resources are derived from operating activities, financing activities and equity offerings.

Operating Activities

Net revenue, operating income and cash receipts fluctuate significantly between periods and could be affected by various risks and uncertainties, including, but not limited to, the ongoing effects of the COVID-19 pandemic. In the case of Financial Advisory, fee receipts are generally dependent upon the successful completion of client transactions, the occurrence and timing of which is irregular and not subject to Lazard’s control.

Liquidity is significantly impacted by cash payments for, or in respect of, incentive compensation, a significant portion of which are made during the first three months of the year. As a consequence, cash on hand generally declines in the beginning of the year and gradually builds over the remainder of the year. We also pay certain tax advances during the year on behalf of certain managing directors, which serve to reduce their respective incentive compensation payments. We expect this seasonal pattern of cash flow to continue.

Liquidity is also affected by the level of deposits and other customer payables, principally at LFB. To the extent that such deposits and other customer payables rise or fall, this has a corresponding impact on liquidity held at LFB, with the majority of such amounts generally being recorded in “deposits with banks and short-term investments”. In the first half of ~~2020,~~2021, as reflected on the condensed consolidated statements of financial condition, both “deposits with banks and short-term investments” and “deposits and other customer payables” ~~decreased~~were relatively flat as compared to December 31, ~~2019, due to a lower~~2020, and reflect the level of LFB customer-related demand deposits, primarily from clients and funds managed by LFG.

Lazard’s condensed consolidated financial statements are presented in U.S. Dollars. Many of Lazard’s non-U.S. subsidiaries have a functional currency (i.e., the currency in which operational activities are primarily conducted) that is other than the U.S. Dollar, generally the currency of the country in which such subsidiaries are domiciled. Such subsidiaries’ assets and liabilities are translated into U.S. Dollars at the respective balance sheet date exchange rates, while revenue and expenses are translated at average exchange rates during the year based on the daily closing exchange rates. Adjustments that result from translating amounts from a subsidiary’s functional currency are reported as a component of stockholders’ equity. Foreign currency remeasurement gains and losses on transactions in non-functional currencies are included on the condensed consolidated statements of operations.

We regularly monitor our liquidity position, including cash levels, investments in U.S. Treasury securities, credit lines, principal investment commitments, interest and principal payments on debt, capital expenditures, dividend payments, purchases of shares of common stock and matters relating to liquidity and to compliance with regulatory net capital requirements. At June 30, ~~2020,~~2021, Lazard had approximately ~~$897~~$980 million of cash, with such amount including approximately ~~$448~~$551 million held at Lazard’s operations outside

the U.S. Lazard provides for income taxes on substantially all of its foreign earnings. We expect that no material amount of additional taxes would be recognized upon receipt of dividends or distributions of such earnings from our foreign operations.

As of June 30, ~~2020,~~2021, Lazard had approximately ~~$168~~$213 million in unused lines of credit available to it, including a ~~$150~~$200 million, ~~five-year,~~three-year, senior revolving credit facility with a group of lenders ~~(the “Existing Credit Agreement”), which was amended and restated in its entirety~~that expires in July ~~2020 by the Amended~~2023 (the “Amended and Restated Credit ~~Agreement (as defined below),~~Agreement”) and unused lines of credit available to LFB of approximately ~~$17~~$12 million.

The ~~Existing~~Amended and Restated Credit Agreement contains customary terms and conditions, including limitations on consolidations, mergers, indebtedness and certain payments, as well as financial condition covenants relating to leverage and interest coverage ratios. Lazard Group’s obligations under the ~~Existing~~Amended and Restated Credit Agreement may be accelerated upon customary events of default, including non-payment of principal or interest, breaches of covenants, cross-defaults to other material debt, a change in control and specified bankruptcy events. Borrowings under the Amended and Restated Credit Agreement generally will bear interest at LIBOR plus an applicable margin for specific interest periods determined based on Lazard Group’s highest credit rating from an internationally recognized credit agency.

As long as the lenders’ commitments remain in effect, any loan pursuant to the ~~Existing~~Amended and Restated Credit Agreement remains outstanding and unpaid or any other amount is due to the lending bank group, the ~~Existing~~Amended and Restated Credit Agreement includes financial covenants that require that Lazard Group not permit (i) its Consolidated Leverage Ratio (as defined in the ~~Existing~~Amended and Restated Credit Agreement) for the 12-month period ending on the last day of any fiscal quarter to be greater than 3.25 to 1.00, provided that the Consolidated Leverage Ratio may be greater than 3.25 to 1.00 for two (consecutive or nonconsecutive) quarters so long as it is not greater than 3.50 to 1.00 on the last day of any such quarter, or (ii) its Consolidated Interest Coverage Ratio (as defined in the ~~Existing~~Amended and Restated Credit Agreement) for the 12-month period ending on the last day of any fiscal quarter to be less than 3.00 to 1.00. For the 12-month period ended June 30, ~~2020,~~2021, Lazard Group was in compliance with such ratios, with its Consolidated Leverage Ratio being ~~1.88~~1.50 to 1.00 and its Consolidated Interest Coverage Ratio being ~~11.89~~15.14 to 1.00. In any event, no amounts were outstanding under the ~~Existing~~Amended and Restated Credit Agreement as of June 30, ~~2020.~~2021.

In addition, the ~~Existing~~Amended and Restated Credit Agreement contains certain other covenants (none of which relate to financial condition), events of default and other customary ~~provisions.~~provisions and also contains customary LIBOR-replacement mechanics. At June 30, ~~2020,~~2021, the Company was in compliance with all of these provisions.

Lazard’s annual cash flow generated from operations historically has been sufficient to enable it to meet its annual obligations. We believe that our cash flows from operating activities should be sufficient for us to fund our current obligations for the next 12 months.

On July 22, 2020, Lazard Group entered into the Amended and Restated Credit Agreement for a three-year, $200 million senior revolving credit facility with a group of lenders, which expires in July 2023 (the “Amended and Restated Credit Agreement”). The Amended and Restated Credit Agreement amends and restates the Existing Credit Agreement in its entirety. Borrowings under the Amended and Restated Credit Agreement generally will bear interest at LIBOR plus an applicable margin for specific interest periods determined based on Lazard Group’s highest credit rating from an internationally recognized credit agency. The Amended and Restated Credit Agreement contains certain covenants, events of default and other customary provisions, which are substantially similar to those in the Existing Credit Agreement, and also contains customary LIBOR-replacement mechanics.

Financing Activities

The table below sets forth our corporate indebtedness as of June 30, ~~2020~~2021 and December 31, ~~2019.~~2020. The agreements with respect to this indebtedness are discussed in more detail in our condensed consolidated financial statements and related notes included elsewhere in this Form 10-Q and in our Form 10-K.

		Outstanding as of													Outstanding as of
		June 30, 2020						December 31, 2019							June 30, 2021						December 31, 2020
Senior Debt	Maturity Date	Principal		Unamortized Debt Costs		Carrying Value		Principal		Unamortized Debt Costs		Carrying Value		Maturity Date	Principal		Unamortized Debt Costs		Carrying Value		Principal		Unamortized Debt Costs		Carrying Value
		($ in millions)													($ in millions)
Lazard Group 2025 Senior Notes	2025	$	400.0	$	2.2	$	397.8	$	400.0	$	2.4	$	397.6	2025	$	400.0	$	1.7	$	398.3	$	400.0	$	2.0	$	398.0
Lazard Group 2027 Senior Notes	2027		300.0		2.6		297.4		300.0		2.8		297.2	2027		300.0		2.2		297.8		300.0		2.4		297.6
Lazard Group 2028 Senior Notes	2028		500.0		7.4		492.6		500.0		7.8		492.2	2028		500.0		6.1		493.9		500.0		6.6		493.4
Lazard Group 2029 Senior Notes	2029		500.0		7.0		493.0		500.0		7.4		492.6	2029		500.0		6.0		494.0		500.0		6.3		493.7
		$	1,700.0	$	19.2	$	1,680.8	$	1,700.0	$	20.4	$	1,679.6		$	1,700.0	$	16.0	$	1,684.0	$	1,700.0	$	17.3	$	1,682.7

During March 2019, Lazard Group completed an offering of the 2029 Notes. Lazard Group used a portion of the net proceeds of the 2029 Notes to redeem or otherwise retire the remaining 2020 Notes in transactions that occurred during March 2019 and April 2019.

The indenture and supplemental indentures relating to Lazard Group’s senior notes contain certain covenants (none of which relate to financial condition), events of default and other customary provisions. At June 30, ~~2020,~~2021, the Company was in compliance with all of these provisions. We may, to the extent required and subject to restrictions contained in our financing arrangements, use other financing sources, which may cause us to be subject to additional restrictions or covenants.

See Note 10 of Notes to Condensed Consolidated Financial Statements for additional information regarding senior debt.

Stockholders’ Equity

At June 30, ~~2020,~~2021, total stockholders’ equity was ~~$684~~$932 million, as compared to ~~$682~~$999 million at December 31, ~~2019,~~2020, including ~~$601~~$827 million and ~~$610~~$912 million attributable to Lazard Ltd on the respective dates. The net activity in stockholders’ equity during the six month period ended June 30, ~~2020~~2021 is reflected in the table below (in millions of dollars):

Stockholders’ Equity - January 1, 2020	$	682
Adjustment for cumulative effect on prior years from the adoption of new accounting guidance		(8	)
Balance, as adjusted January 1, 2020		674
Stockholders’ Equity - January 1, 2021				$	999
Increase (decrease) due to:
Net income		131			216
Other comprehensive loss		(15	)
Other comprehensive income					12
Amortization of share-based incentive compensation		141			144
Purchase of common stock		(95	)		(234	)
Settlement of share-based incentive compensation (a)		(70	)		(67	)
Common stock dividends		(98	)		(99	)
Change in redemption value of redeemable noncontrolling interests					(40	)
Other - net		16			1
Stockholders’ Equity - June 30, 2020	$	684
Stockholders’ Equity - June 30, 2021				$	932

(a)

The tax withholding portion of share-based compensation is settled in cash, not shares.

The Board of Directors of Lazard has issued a series of authorizations to repurchase common stock, which help offset the dilutive effect of our share-based incentive compensation plans. During a given year the Company intends to repurchase at least as many shares as it expects to ultimately issue pursuant to such compensation plans in respect of year-end incentive compensation attributable to the prior year. The rate at which the Company purchases shares in connection with this annual objective may vary from period to period due to a variety of factors. Purchases with respect to such program are set forth in the table below:

Six Months Ended June 30:	Number of Shares Purchased		Average Price Per Share		Number of Shares Purchased		Average Price Per Share
2019		9,715,003	$	36.20
2020		2,912,035	$	32.70		2,912,035	$	32.70
2021						5,329,541	$	43.86

As of June 30, ~~2020,~~2021, a total of ~~$306~~$366 million of share repurchase authorization remained available under the Company’s share repurchase program, ~~$6 million~~ of which $66 million will expire on December 31, ~~2020~~2021 and $300 million of which will expire on December 31, ~~2021.~~2022.

On July 29, ~~2020,~~2021, the Board of Directors of Lazard declared a quarterly dividend of $0.47 per share on our common stock. The dividend is payable on August ~~21, 2020~~20, 2021 to stockholders of record on August ~~10, 2020.~~9, 2021.

See Notes 12 and 13 of Notes to Condensed Consolidated Financial Statements for additional information regarding Lazard’s stockholders’ equity and incentive plans, respectively.

Regulatory Capital

We actively monitor our regulatory capital base. Our principal subsidiaries are subject to regulatory requirements in their respective jurisdictions to ensure their general financial soundness and liquidity, which require, among other things, that we comply

with rules regarding certain minimum capital requirements, record-keeping, reporting procedures, relationships with customers, experience and training requirements for employees and certain other requirements and procedures. These regulatory requirements may restrict the flow of funds to and from affiliates. See Note 1918 of Notes to Condensed Consolidated Financial Statements for further information. These regulations differ in the U.S., the U.K., France and other countries in which we operate. Our capital structure is designed to provide each of our subsidiaries with capital and liquidity consistent with its business and regulatory requirements. For a discussion of regulations relating to us, see Item 1, “Business—Regulation” included in our Form 10-K.

Contractual Obligations

The following table sets forth information relating to Lazard’s contractual obligations as of June 30, ~~2020:~~2021:

	Contractual Obligations Payment Due by Period										Contractual Obligations Payment Due by Period
	Total		Less than 1 Year		1-3 Years		3-5 Years		More than 5 Years		Total		Less than 1 Year		1-3 Years		3-5 Years		More than 5 Years
	($ in thousands)										($ in thousands)
Senior debt (including interest)	$	2,238,542	$	70,250	$	140,500	$	539,792	$	1,488,000	$	2,168,292	$	70,250	$	140,500	$	524,792	$	1,432,750
Operating leases (exclusive of $14,548 of committed sublease income)		757,718		44,418		155,374		127,714		430,212
Operating leases (exclusive of $8,117 of committed sublease income)												687,104		45,134		141,345		124,759		375,866
Investment capital funding commitments (a)		6,056		6,056		-		-		-		5,604		5,604		-		-		-
Total (b)	$	3,002,316	$	120,724	$	295,874	$	667,506	$	1,918,212	$	2,861,000	$	120,988	$	281,845	$	649,551	$	1,808,616

(a)

Unfunded commitments to private equity investments consolidated but not owned by Lazard of ~~$11,155~~$9,225 are excluded. Such commitments are required to be funded by capital contributions from noncontrolling interest holders. See Note 6 of Notes to Condensed Consolidated Financial Statements. These amounts are generally due on demand and therefore are presented in the “less than 1 year” category.

(b)

The table above excludes contingent obligations, given the inability to make a reasonably reliable estimate of the timing of the amounts of any such payments. The table above also excludes any possible payments for uncertain tax positions and payments pursuant to the Company’s tax receivable agreement, given that the actual amount and timing of payments under the tax receivable agreement could differ materially from our estimates. At June 30, ~~2020,~~2021, a tax receivable agreement obligation of ~~$221,890~~$211,236 was recorded on the condensed consolidated statements of financial condition. See “Critical Accounting Policies and Estimates – Income Taxes” below. See also Notes 11, 13, 14, 1615 and 1817 of Notes to Condensed Consolidated Financial Statements regarding information in connection with commitments, incentive plans, employee benefit plans, income taxes and tax receivable agreement obligations, respectively.

Critical Accounting Policies and Estimates

~~Management’s discussion and analysis~~The preparation of ~~our condensed consolidated financial condition and results of operations is based upon our~~Lazard’s condensed consolidated financial statements, which have been prepared in conformity with U.S. ~~GAAP. The preparation of Lazard’s condensed consolidated financial statements~~GAAP, requires us to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenue and expenses, and related disclosure of contingent assets and liabilities. On an ongoing basis, Lazard evaluates its estimates, including those related to revenue recognition, income taxes (including the impact on the tax receivable agreement obligation), investing activities and goodwill. Lazard bases these estimates on historical experience and various other assumptions that it believes to be reasonable under the

circumstances, the results of which form the basis for making judgments, including judgments regarding the carrying values of assets and liabilities, that are not readily apparent from other sources. Actual results may differ from these estimates.

Lazard believes that the critical accounting policies set forth below comprise the most significant estimates and judgments used in the preparation of its condensed consolidated financial statements.

Revenue Recognition

Lazard generates substantially all of its net revenue from providing Financial Advisory and Asset Management services to clients. Lazard recognizes revenue when the following criteria are met:

•

a contract with a client has been identified;

•

the performance obligations in the contract have been identified;

•

the fee or other transaction price has been determined;

•

the fee or other transaction price has been allocated to each performance obligation in the contract; and

•

the Company has satisfied the applicable performance obligation.

The Company earns performance-based incentive fees on various investment products, including traditional products and alternative investment funds such as hedge funds and private equity funds. See “Financial Statement Overview” for a description of our revenue recognition policies on such fees. If, in Lazard’s judgment, collection of a fee is not probable, Lazard will not recognize revenue until the uncertainty is removed. We maintain an allowance for doubtful accounts to provide coverage for estimated losses from our receivables. We determine the adequacy of the allowance under CECL by (i) applying a bad debt charge-off rate based on historical charge-off experience; (ii) estimating the probability of loss based on our analysis of the client’s creditworthiness and specifically reserve against exposures where we determine the receivables are impaired, which may include situations where a fee is in dispute or litigation has commenced; and (iii) performing qualitative assessments to monitor economic risks that may require additional adjustments.

With respect to fees receivable from Financial Advisory activities, such receivables are generally deemed past due when they are outstanding 60 days from the date of invoice, except for certain transactions that include specific contractual payment terms which may vary from approximately one month to four years following the invoice date (as is the case for certain Private Capital Advisory fees) or may be subject to court approval (as is the case with ~~Restructuring~~restructuring activities that include bankruptcy proceedings). In such cases, receivables are deemed past due when payment is not received by the agreed-upon contractual date or the court approval date, respectively. Financial Advisory fee receivables past due, from the date of the invoice or specific contractual payment terms, in excess of 180 days are fully provided for unless there is evidence that the balance is collectible. Notwithstanding our policy for receivables past due, any receivables that we determine are impaired result in specific reserves against such exposures. Asset Management fees are fully provided for when such receivables are outstanding 12 months after the invoice date. In addition, the Company specifically reserves against exposures relating to Asset Management fees where we determine receivables are impaired prior to being outstanding for 12 months.

Compensation Liabilities

Annual discretionary compensation represents a significant portion of our annual compensation and benefits expense. We allocate the estimated amount of such annual discretionary compensation to interim periods in proportion to the amount of operating revenue earned in such periods based on an assumed annual ratio of awarded compensation and benefits expense to operating revenue. See “Financial Statement Overview—Operating Expenses” for more information on our periodic compensation and benefits expense.

Income Taxes

As part of the process of preparing our consolidated financial statements, we estimate our income taxes for each of our tax-paying entities in its respective jurisdiction. In addition to estimating actual current tax liabilities for these jurisdictions, we also must account for the tax effects of differences between the financial reporting and tax reporting of items, such as basis adjustments, compensation and benefits expense, and depreciation and amortization. Differences which are temporary in nature result in deferred tax assets and liabilities. Significant judgment is required in determining our provision for income taxes, our deferred tax assets and liabilities, any valuation allowance recorded against our deferred tax assets and our unrecognized tax benefits.

We recognize a deferred tax asset if it is more likely than not (defined as a likelihood of greater than 50%) that a tax benefit will be accepted by a taxing authority. The measurement of deferred tax assets and liabilities is based upon currently enacted tax rates in

the applicable jurisdictions. At December 31, ~~2019,~~2020, on a consolidated basis, we recorded gross deferred tax assets of approximately ~~$737~~$717 million, with such amount partially offset by a valuation allowance of approximately ~~$76~~$82 million (as described below).

Subsequent to the initial recognition of deferred tax assets, we also must continually assess the likelihood that such deferred tax assets will be realized. If we determine that we may not fully derive the benefit from a deferred tax asset, we consider whether it would be appropriate to apply a valuation allowance against the applicable deferred tax asset, taking into account all available information. The ultimate realization of a deferred tax asset for a particular entity depends, among other things, on the generation of taxable income by such entity in the applicable jurisdiction.

We consider multiple possible sources of taxable income when assessing a valuation allowance against a deferred tax asset, including:

•

future reversals of existing taxable temporary differences;

•

future taxable income exclusive of reversing temporary differences and carryforwards;

•

taxable income in prior carryback years; and

•

tax-planning strategies.

The assessment regarding whether a valuation allowance is required or should be adjusted also considers all available information, including the following:

•

nature, frequency, magnitude and duration of any past losses and current operating results;

•

duration of statutory carryforward periods;

•

historical experience with tax attributes expiring unused; and

•

near-term and medium-term financial outlook.

The weight we give to any particular item is, in part, dependent upon the degree to which it can be objectively verified. We give greater weight to the recent results of operations of a relevant entity. Pre-tax operating losses on a three year cumulative basis or lack of sustainable profitability are considered objectively verifiable evidence and will generally outweigh a projection of future taxable income.

Certain of our tax-paying entities have individually experienced losses on a cumulative three year basis or have tax attributes that may expire unused. In addition, one of our tax-paying entities has recorded a valuation allowance on substantially all of its deferred tax assets due to the combined effect of operating losses in certain subsidiaries of that entity as well as foreign taxes that together substantially offset any U.S. tax liability. Taking into account all available information, we cannot determine that it is more likely than not that deferred tax assets held by these entities will be realized. Consequently, we have recorded valuation allowances on ~~$76~~$82 million of deferred tax assets held by these entities as of December 31, ~~2019.~~2020.

We record tax positions taken or expected to be taken in a tax return based upon our estimates regarding the amount that is more likely than not to be realized or paid, including in connection with the resolution of any related appeals or other legal processes. Accordingly, we recognize liabilities for certain unrecognized tax benefits based on the amounts that are more likely than not to be settled with the relevant taxing authority. Such liabilities are evaluated periodically as new information becomes available and any changes in the amounts of such liabilities are recorded as adjustments to “income tax expense.” Liabilities for unrecognized tax benefits involve significant judgment and the ultimate resolution of such matters may be materially different from our estimates.

In addition to the discussion above regarding deferred tax assets and associated valuation allowances, as well as unrecognized tax benefit liability estimates, other factors affect our provision for income taxes, including changes in the geographic mix of our business, the level of our annual pre-tax income, transfer pricing and intercompany transactions.

See Item 1A, “Risk Factors” in our Form 10-K and Note 1615 of Notes to Condensed Consolidated Financial Statements for additional information related to income taxes.

Amended and Restated Tax Receivable Agreement

During the period ended June 30, 2015, we released substantially all of our valuation allowance against deferred tax assets. As a result, we accrued a corresponding liability during the period ended June 30, 2015 for amounts relating to theThe Second Amended and Restated Tax Receivable Agreement, dated as of October 26, 2015 (the ~~“Amended and Restated Tax Receivable Agreement”~~“TRA”), between Lazard and LTBP Trust (the “Trust”)~~. See Note 18~~ provides for payments by our subsidiaries to the owners of ~~Notes to Condensed Consolidated Financial Statements for additional information regarding~~ the ~~Amended and Restated Tax Receivable Agreement.~~Trust, who include certain of our executive officers.

The amount of the ~~Amended and Restated Tax Receivable Agreement~~TRA liability is an undiscounted amount based upon ~~currently enacted~~the current tax laws ~~including the Tax Act, the current~~and structure of the Company and various assumptions regarding potential future operating profitability. The assumptions reflected in the estimate involve significant judgment, and if our structure or income assumptions were to change, ~~or our annual taxable income were to increase,~~ we could be required to accelerate payments under the ~~Amended and Restated Tax Receivable Agreement.~~TRA. As such, the actual amount and timing of payments under the ~~Amended and Restated Tax Receivable Agreement~~TRA could differ materially from our estimates. ~~Any changes in~~See Note 17 of Notes to Condensed Consolidated Financial Statements for additional information regarding the amount of the estimated liability would be recorded as a non-compensation expense in the condensed consolidated statement of operations. Adjustments, if necessary, to the related deferred tax assets would be recorded through income tax expense.TRA.

The cumulative liability relating to our obligations under the ~~Amended and Restated Tax Receivable Agreement~~TRA recorded as of June 30, ~~2020~~2021 and December 31, ~~2019~~2020 was ~~$222~~$211 million and ~~$247~~$221 million, respectively, and is recorded in “tax receivable agreement obligation” on the condensed consolidated statements of financial condition.

Investments

Investments consist primarily of ~~interest-bearing deposits,~~ debt and equity securities, and interests in alternative investment, debt, equity and private equity funds.

These investments ~~with the exception of interest-bearing deposits,~~ are carried at fair value on the condensed consolidated statements of financial condition, and any increases or decreases in the fair value of these investments are reflected in earnings. The fair value of investments is generally based upon market prices or the net asset value (“NAV”) or its equivalent for investments in funds. See Note 6 of Notes to Condensed Consolidated Financial Statements for additional information on the measurement of the fair value of investments.

Lazard is subject to market and credit risk on investments held. As such, gains and losses on investment positions held, which arise from sales or changes in the fair value of the investments, are not predictable and can cause periodic fluctuations in net income.

Data relating to investments is set forth below:

	June 30, 2020		December 31, 2019		June 30, 2021		December 31, 2020
	($ in thousands)				($ in thousands)
Seed investments by asset class:
Equities (a)	$	89,727	$	93,535	$	108,495	$	82,699
Fixed income		11,839		13,923		10,292		10,977
Alternative investments		21,904		5,850		23,783		22,113
Total seed investments		123,470		113,308		142,570		115,789
Other investments owned:
Private equity (b)		19,885		23,588		21,612		20,675
Interest-bearing deposits		-		517
Fixed income and other (c)		25,113		124,670		200,489		125,565
Total other investments owned		44,998		148,775		222,101		146,240
Subtotal		168,468		262,083		364,671		262,029
Add:
Private equity consolidated, not owned (d)		15,801		10,774		18,394		16,892
LFI (e)		339,097		259,138		484,642		379,611
Total investments	$	523,366	$	531,995	$	867,707	$	658,532

(a)	At June 30, ~~2020~~2021 and December 31, ~~2019,~~2020, seed investments in directly owned equity securities were invested as follows:

	June 30, 2020			December 31, 2019			June 30, 2021			December 31, 2020
Percentage invested in:
Financials		20	%		26	%		13	%		16	%
Consumer		34			32			36			38
Industrial		14			15			14			12
Technology		21			16			26			21
Other		11			11			11			13
Total		100	%		100	%		100	%		100	%

(b)

Private equity investments include investments related to certain legacy businesses and co-investments in private equity funds managed by our Asset Management business. Co-investments owned were $17 million ~~and $20 million~~ as of both June 30, ~~2020~~2021 and December 31, ~~2019, respectively.~~2020.

(c)	At June 30, 2021 and December 31, ~~2019,~~2020, includes investments in U.S. Treasury securities of ~~approximately~~$175 million and $100 million, respectively, with original maturities of greater than three months and less than one year.

(d)

Represents private equity investments that are consolidated but owned by noncontrolling interests, and therefore do not subject the Company to market or credit risk. The applicable noncontrolling interests are presented within “stockholders’ equity” on the condensed consolidated statements of financial condition.

(e)

Composed of investments held in connection with LFI and other similar deferred compensation arrangements. The market risk associated with such investments is equally offset by the market risk associated with the derivative liability with respect to awards expected to vest. The Company is subject to market risk associated with any portion of such investments that employees may forfeit. See “—Risk Management—Risks Related to Derivatives” for risk management information relating to derivatives. LFI investments held in entities in which the Company maintained a controlling interest were ~~$151~~$215 million in ten entities as of June 30, 2021, as compared to $155 million in nine entities as of ~~June 30, 2020, as compared to $93 million in eight entities as of~~ December 31, ~~2019.~~2020.

At June 30, ~~2020~~2021 and December 31, ~~2019,~~2020, total investments with a fair value of ~~$523~~$868 million and ~~$531~~$659 million, respectively, included ~~$52~~$60 million and ~~$34~~$53 million, respectively, or ~~10%~~7% and 6%8%, respectively, of investments that were classified using NAV or its equivalent as a practical expedient. See Notes 5 and 6 of Notes to Condensed Consolidated Financial Statements for additional information regarding investments measured at fair value, including the levels of fair value within which such measurements of fair value fall.

As of June 30, ~~2020~~2021 and December 31, ~~2019,~~2020, the Company held seed investments of approximately ~~$123~~$143 million and ~~$113~~$116 million, respectively. Seed investments held in entities in which the Company maintained a controlling interest were ~~$67~~$77 million in nine entities as of June 30, ~~2020,~~2021, as compared to ~~$47~~$59 million in seven entities as of December 31, ~~2019.~~2020.

As of June 30, ~~2020~~2021 and December 31, ~~2019,~~2020, the Company did not consolidate or deconsolidate any seed investment entities or LFI investment entities with the exception of the consolidation of certain LFI funds (see Note 2120 of Notes to the Condensed Consolidated Financial Statements). As such, 100% of the recorded balance of seed investments and substantially all of LFI investments as of June 30, ~~2020~~2021 and December 31, ~~2019~~2020 represented the Company’s economic interest in the seed and LFI investments. See “—Consolidation of Variable Interest Entities” below for more information on the Company’s policy regarding the consolidation of seed and LFI investment entities.

For additional information regarding risks associated with our investments, see “Risk Management—Investments” below as well as Item 1A, “Risk Factors—Other Business Risks—Our results of operations may be affected by fluctuations in the fair value of positions held in our investment portfolios” in our Form 10-K.

Assets Under Management

AUM primarily consists of debt and equity instruments, which have a value that is readily available based on either prices quoted on a recognized exchange or prices provided by external pricing services.

Prices of equity and debt securities and other instruments that comprise our AUM are provided by well-recognized, independent, third-party vendors. Such third-party vendors rely on prices provided by external pricing services which are obtained from recognized exchanges or markets, or, for certain fixed income securities, from an evaluated bid or other similarly sourced price.

Either directly, or through our third-party vendors, we perform a variety of regular due diligence procedures on our pricing service providers. Those procedures include oversight by our internal operations group, review of the pricing service providers’ internal control frameworks, review of the pricing service providers’ valuation methodologies, reconciliation to client custodial account values and comparison of significant pricing differences.

Goodwill

In accordance with current accounting guidance, goodwill has an indefinite life and is tested for impairment annually, as of November 1, or more frequently if circumstances indicate impairment may have occurred. The Company performs a qualitative evaluation about whether it is more likely than not that the fair value of a reporting unit is less than its carrying amount in lieu of actually calculating the fair value of the reporting unit. See Note 9 of Notes to Condensed Consolidated Financial Statements for additional information regarding goodwill.

Consolidation

The condensed consolidated financial statements include the accounts of Lazard Group and entities in which it has a controlling interest. Lazard determines whether it has a controlling interest in an entity by first evaluating whether the entity is a voting interest entity (“VOE”) or a variable interest entity (“VIE”) under U.S. GAAP.

•

Voting Interest Entities. VOEs are entities in which (i) the total equity investment at risk is sufficient to enable the entity to finance itself independently and (ii) the equity holders have the obligation to absorb losses, the right to receive residual returns and the right to make decisions about the entity’s activities. Lazard is required to consolidate a VOE if it holds a majority of the voting interest in such VOE.

•

Variable Interest Entities. VIEs are entities that lack one or more of the characteristics of a VOE. If Lazard has a variable interest, or a combination of variable interests, in a VIE, it is required to analyze whether it needs to consolidate such VIE. Lazard is required to consolidate a VIE if we are the primary beneficiary having (i) the power to direct the activities of the VIE that most significantly impact the VIE’s economic performance and (ii) the obligation to absorb losses of, or receive benefits from, the VIE that could be potentially significant to the VIE.

Lazard’s involvement with various entities that are VOEs or VIEs primarily arises from LFI investments and investment management contracts with fund entities in our Asset Management business. Lazard is not required to consolidate such entities because, with the exception of certain seed and LFI investments, as discussed below, we do not hold more than an inconsequential equity interest in such entities and we do not hold other variable interests (including our investment management agreements, which do not meet the definition of variable interests) in such entities.

Lazard makes seed and LFI investments in certain entities that are considered VOEs and VIEs and often require consolidation as a result of our investment. The impact of seed and LFI investment entities that require consolidation on the condensed consolidated financial statements, including any consolidation or deconsolidation of such entities, is not material to our financial statements. Our exposure to loss from entities in which we have made such investments is limited to the extent of our investment in, or investment commitment to, such entities. See “Critical Accounting Policies and Estimates—Investments” above for more information regarding our investments.

Generally, when the Company initially invests to seed an investment entity, the Company is the majority owner of the entity. Our majority ownership in seed investment entities represents a controlling interest, except when we are the general partner in such entities and the third-party investors have the right to replace the general partner. To the extent material, we consolidate seed and LFI investment entities in which we own a controlling interest, and we would deconsolidate any such entity when we no longer have a controlling interest in such entity.

Risk Management

Investments

The Company has investments in a variety of asset classes, primarily debt and equity securities, and interests in alternative investments, debt, equity and private equity funds. The Company makes investments primarily to seed strategies in our Asset Management business or to reduce exposure arising from LFI and other similar deferred compensation arrangements. The Company measures its net economic exposure to market and other risks arising from investments that it owns, excluding (i) investments held in connection with LFI and other similar deferred compensation arrangements, (ii) investments in funds owned entirely by the noncontrolling interest holders of certain acquired entities and (iii) interest-bearing deposits with maturities over 90 days that allow daily withdrawals without principal penalties.

Risk sensitivities include the effects of economic hedging. For equity market price risk, investment portfolios and their corresponding hedges are beta-adjusted to the All-Country World equity index. Fair value and sensitivity measurements presented herein are based on various portfolio exposures at a particular point in time and may not be representative of future results. Risk exposures may change as a result of ongoing portfolio activities and changing market conditions, among other things.

Equity Market Price Risk—At June 30, ~~2020~~2021 and December 31, ~~2019,~~2020, the Company’s exposure to equity market price risk in its investment portfolio, which primarily relates to investments in equity securities, equity funds and hedge funds, was approximately ~~$105~~$125 million and ~~$85~~$95 million, respectively. The Company hedges market exposure arising from a significant portion of our equity investment portfolios by entering into total return swaps. The Company estimates that a hypothetical 10% adverse change in market prices would result in a net decrease of approximately ~~$0.1~~$0.3 million and ~~$1.0~~$0.2 million in the carrying value of such investments as of June 30, ~~2020~~2021 and December 31, ~~2019,~~2020, respectively, including the effect of the hedging transactions.

Interest Rate/Credit Spread Risk—At June 30, ~~2020~~2021 and December 31, ~~2019,~~2020, the Company’s exposure to interest rate and credit spread risk in its investment portfolio related to investments in debt securities or funds which invest primarily in debt securities was ~~$47~~$218 million and ~~$153~~$139 million, respectively. The Company hedges market exposure arising from a portion of our debt investment portfolios by entering into total return swaps. The Company estimates that a hypothetical 100 basis point adverse change in interest rates or credit spreads would result in a decrease of approximately ~~$1.1~~$0.6 million and $1.0 million in the carrying value of such investments as of June 30, ~~2020~~2021 and December 31, ~~2019,~~2020, respectively, including the effect of the hedging transactions.

Foreign Exchange Rate Risk—At June 30, ~~2020~~2021 and December 31, ~~2019,~~2020, the Company’s exposure to foreign exchange rate risk in its investment portfolio, which primarily relates to investments in foreign currency denominated equity and debt securities, was ~~$43~~$71 million and ~~$37~~$48 million, respectively. A significant portion of the Company’s foreign currency exposure related to our equity and debt investment portfolios is hedged through the aforementioned total return swaps. The Company estimates that a 10% adverse change in foreign exchange rates versus the U.S. Dollar would result in a decrease of approximately ~~$0.1~~$2.3 million and ~~$0.2~~$0.4 million in the carrying value of such investments as of June 30, ~~2020~~2021 and December 31, ~~2019,~~2020, respectively, including the effect of the hedging transactions.

Private Equity—The Company invests in private equity primarily as a part of its co-investment activities and in connection with certain legacy businesses. At June 30, ~~2020~~2021 and December 31, ~~2019,~~2020, the Company’s exposure to changes in fair value of such investments was approximately ~~$20~~$22 million and ~~$24~~$21 million, respectively. The Company estimates that a hypothetical 10% adverse change in fair value would result in a decrease of approximately ~~$2.0~~$2.2 million and ~~$2.4~~$2.1 million in the carrying value of such investments as of June 30, ~~2020~~2021 and December 31, ~~2019,~~2020, respectively.

Risks Related to Receivables

We maintain an allowance for doubtful accounts to provide coverage for probable losses from our receivables. We determine the adequacy of the allowance by estimating the probability of loss based on our analysis of the client’s creditworthiness, among other things, and specifically provide for exposures where we determine the receivables are impaired. At June 30, ~~2020,~~2021, total receivables amounted to ~~$652~~$819 million, net of an allowance for doubtful accounts of ~~$41~~$36 million. As of that date, Financial Advisory and Asset Management fees, and customers and other receivables comprised ~~80%~~79% and ~~20%~~21% of total receivables, respectively. At December 31, ~~2019,~~2020, total receivables amounted to ~~$663~~$743 million, net of an allowance for doubtful accounts of ~~$27~~$37 million. As of that date, Financial Advisory and Asset Management fees, and customers and other receivables comprised ~~81%~~84% and ~~19%~~16% of total receivables, respectively. See also “Critical Accounting Policies and Estimates—Revenue Recognition” above and Note 4 of Notes to Condensed Consolidated Financial Statements for additional information regarding receivables.

LFB engages in lending activities, including commitments to extend credit (primarily for clients of LFG). At June 30, ~~2020~~2021 and December 31, ~~2019, customer~~2020, customers and other receivables included ~~$81~~$123 million and ~~$76~~$100 million, respectively, of LFB loans, with such loans being fully collateralized and closely monitored for counterparty creditworthiness.

Credit Concentrations

To reduce the exposure to concentrations of credit, the Company monitors large exposures to individual counterparties.

Risks Related to Derivatives

Lazard enters into forward foreign currency exchange contracts and interest rate swaps to hedge exposures to currency exchange rates and interest rates and uses total return swap contracts on various equity and debt indices to hedge a portion of its market exposure with respect to certain seed investments related to our Asset Management business. Derivative contracts are recorded at fair value. Derivative assets amounted to ~~$7 million and~~ $1 million at both June 30, ~~2020~~2021 and December 31, ~~2019, respectively,~~2020, and derivative liabilities, excluding the derivative liability arising from the Company’s obligation pertaining to LFI and other similar deferred compensation arrangements and the derivative liability for warrants exercisable for LGAC Class A ordinary shares that were issued in connection with the LGAC IPO (the “LGAC Warrants”) amounted to $1$2 million and ~~$10~~$3 million at such respective dates.

The Company records the LGAC Warrants as derivative liabilities at fair value, which amounted to $13 million at June 30, 2021, with remeasurement gains and losses recorded in earnings.

The Company also records derivative liabilities relating to its obligations pertaining to LFI awards and other similar deferred compensation arrangements, the fair value of which is based on the value of the underlying investments, adjusted for estimated forfeitures. Changes in the fair value of the derivative liabilities are equally offset by the changes in the fair value of investments

which are expected to be delivered upon settlement of LFI awards. Derivative liabilities relating to LFI amounted to ~~$275~~$395 million and ~~$226~~$311 million at June 30, ~~2020~~2021 and December 31, ~~2019,~~2020, respectively.

Risks Related to Cash and Cash Equivalents and Corporate Indebtedness

A significant portion of the Company’s indebtedness has fixed interest rates, while its cash and cash equivalents generally have market interest rates. Based on account balances as of June 30, ~~2020,~~2021, Lazard estimates that its annual operating income relating to cash and cash equivalents would increase by approximately $9$10 million in the event interest rates were to increase by 1% and decrease by approximately $9$10 million if rates were to decrease by 1%.

As of June 30, ~~2020,~~2021, the Company’s cash and cash equivalents totaled approximately ~~$897~~$980 million. Substantially all of the Company’s cash and cash equivalents were invested in (i) highly liquid institutional money market funds (a significant majority of which were invested solely in U.S. Government or agency money market funds), (ii) in short-term interest bearing and non-interest bearing accounts at a number of leading banks throughout the world, and (iii) in short-term certificates of deposit from such banks. Cash and cash equivalents are constantly monitored. On a regular basis, management reviews its investment profile as well as the credit profile of its list of depositor banks in order to adjust any deposit or investment thresholds as necessary.

Operational Risk

Operational risk is inherent in all of our businesses and may, for example, manifest itself in the form of errors, breaches in the system of internal controls, employee misconduct, business interruptions, fraud, including fraud perpetrated by third parties, or legal actions due to operating deficiencies or noncompliance. The Company maintains a framework including policies and a system of internal controls designed to monitor and manage operational risk and provide management with timely and accurate information. Management within each of the operating companies is primarily responsible for its operational risk programs. The Company has in place business continuity and disaster recovery programs that manage its capabilities to provide services in the case of a disruption. We purchase insurance policies designed to help protect the Company against accidental loss and losses that may significantly affect our financial objectives, personnel, property or our ability to continue to meet our responsibilities to our various stakeholder groups.

Recent Accounting Developments

For a discussion of recently issued accounting developments and their impact or potential impact on Lazard’s consolidated financial statements, see Note 2 of Notes to Condensed Consolidated Financial Statements.

Item 3.

Quantitative and Qualitative Disclosures About Market Risk

Risk Management

Quantitative and qualitative disclosures about market risk are included under the caption “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Risk Management”.

Item 4.

Controls and Procedures

Our management, including our Chief Executive Officer and Chief Financial Officer, evaluated the effectiveness of our disclosure controls and procedures pursuant to Rule 13a-15 under the Exchange Act as of the end of the period covered by this quarterly report. Based on that evaluation, our Chief Executive Officer and Chief Financial Officer have concluded that, as of the end of the period covered by this quarterly report, our disclosure controls and procedures (as defined in Rule 13a-15(e) under the Exchange Act) are effective to ensure that information we are required to disclose in reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in Securities and Exchange Commission rules and forms, and that such information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure.

In addition, no change in our internal control over financial reporting (as defined in Rule 13a-15(f) under the Exchange Act) occurred during our most recent fiscal quarter that has materially affected, or is likely to materially affect, our internal control over financial reporting.

PART II. OTHER INFORMATION

Item 1.

Legal Proceedings

The Company is involved from time to time in judicial, governmental, regulatory and arbitration proceedings and inquiries concerning matters arising in connection with the conduct of our businesses, including proceedings initiated by former employees alleging wrongful termination. The Company reviews such matters on a case-by-case basis and establishes any required accrual if a loss is probable and the amount of such loss can be reasonably estimated. The Company experiences significant variation in its revenue and earnings on a quarterly basis. Accordingly, the results of any pending matter or matters could be significant when compared to the Company’s earnings in any particular fiscal quarter. The Company believes, however, based on currently available information, that the results of any pending matters, in the aggregate, will not have a material effect on its business or financial condition.

Item 1A.

Risk Factors

~~In addition to~~There were no material changes from the risk factors previously disclosed in the Company’s Annual Report on Form 10-K for the year ended December 31, ~~2019, the risk factor set forth below updates the risk factor previously disclosed in the Company’s Quarterly Report on Form 10-Q for the period ended March 31,~~ 2020.

~~Our business, financial condition and results of operations could be materially adversely affected by the COVID-19 pandemic.~~

The recent outbreak of a novel strain of coronavirus (“COVID-19”) is now affecting the global community and our business, financial condition and results of operations. The nature and severity of the impact is highly uncertain, and the extent to which COVID-19 affects our operations and heightens the risks described in the section entitled “Risk Factors” in our Form 10-K will depend largely on future developments, including the course of the pandemic and the extent of actions that have been or may be taken to contain or address its impact. These actions, many of which have already been implemented in various jurisdictions worldwide, include, but are not limited to, declarations of states of emergency, business closures (including the complete or partial closure of many of our offices), restrictions on businesses’ ability to pay dividends or make distributions, restrictions on in-person meetings and travel, or other similar restrictions and limitations. While such actions may be, or have been, relaxed or suspended, they may also be reinstated as the pandemic continues to evolve, and the relaxation or suspension of such actions may not be successful in restarting economic activity. The scope and timing of any such actions or reinstatements is difficult to predict.

Moreover, the COVID-19 pandemic has adversely affected the economies in impacted countries and regions, including those in which our businesses operate, and the global financial markets, including the global debt and equity capital markets, which are experiencing, and may continue to experience, significant volatility. The pandemic has led to an economic downturn, including a sharp drop in aggregate demand and, particularly in the U.S., a high level of unemployment, that could adversely affect our business, financial condition and results of operations and could have a negative impact on our Financial Advisory and Asset Management businesses. Disruptions to, and volatility in, the global financial markets as a result of the COVID-19 pandemic may result in a decrease in the volume and value of M&A transactions, thereby reducing the demand for our Financial Advisory services and increasing price competition among financial services companies seeking such engagements, which may adversely affect our financial condition and results of operations. Those same market disruptions may result in a decrease in our AUM resulting in lower investment advisory fees for our Asset Management business, may also affect our ability to effect transactions for our Asset Management clients and may negatively impact the liquidity of the assets held in our client portfolios. Furthermore, any such disruptions to the global financial markets may affect our ability to incur debt or issue equity on acceptable terms, or at all, to fund our working capital requirements or refinance existing indebtedness, or to make acquisitions and other investments. Additionally, we have exposure to many different industries and counterparties, and we routinely execute transactions with counterparties in the financial services industry, including brokers and dealers, commercial banks, investment banks, mutual and hedge funds and other institutional clients. Many of these transactions expose us to credit risk in the event our counterparty or client defaults~~, which defaults could become more frequent or widespread due to the impact of the COVID-19 pandemic~~.

Our efforts to mitigate the impact of the COVID-19 pandemic have required, and will continue to require, a significant investment of time and resources across our businesses. In response to recommendations or orders by governmental institutions limiting certain business or commercial activities in jurisdictions in which we operate around the world, we have taken, and may take further, preventative or protective actions, including instituting policies requiring employees who are capable of performing their functions remotely to do so. These arrangements may result in reduced productivity and limitations on the ability of our managing directors and employees to communicate or interact, which may adversely impact our business, financial condition and results of operations. Furthermore, given the unprecedented number of employees performing their functions remotely, we have reinforced policies, procedures and guidelines that we believe are reasonably designed to protect the confidentiality of our and our clients’

confidential information, but there can be no assurance that these measures will be adequate. Any unauthorized disclosure of such information could result in legal action, regulatory sanctions and reputational or financial harm.

Similarly, due to the unprecedented number of employees continuously deploying the remote working capabilities of our information systems, including on home networks or through increased use of mobile technologies, we face a heightened risk of operational interruptions and security breaches involving such systems. Additionally, such home and mobile technology resources could be more susceptible to interruptions and security breaches than our dedicated business resources. There can be no assurance that protective measures and policies we have instituted in an effort to reduce the likelihood and severity of such interruptions and breaches, including as a result of cyber attacks, will be adequate. For additional information regarding operational risks with respect to our businesses, which may be exacerbated by COVID-19 and the associated actions taken to contain or address its impact, see the Risk Factors entitled “A failure in or breach of our information systems or infrastructure, or those of third parties with which we do business, including as a result of cyber attacks, could disrupt our businesses, lead to reputational harm and legal liability or otherwise impact our ability to operate our business” in our Form 10-K.

Certain of our third party vendors or service providers may take, have taken or may take further preventative or protective actions, including instituting policies requiring their respective employees who are capable of performing their functions remotely to do so and implementing or expanding back-up procedures and capabilities, and may be experiencing a growing demand for their services. ~~Any failure of or interruption to their systems or any back-up procedures and capabilities as a result of such actions or such growth in demand could materially adversely affect our~~ ~~business, financial condition and results of operations~~. ~~For additional information risks related to our reliance on vendor systems, see the Risk Factor entitled “Other operational risks may disrupt our businesses, result in regulatory action against us or limit our growth” in our Form 10-K.~~

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

None.

Issuer Repurchases of Equity Securities

The following table sets forth information regarding Lazard’s purchases of its common stock on a monthly basis during the second quarter of ~~2020.~~2021. Share repurchases are recorded on a trade date basis.

Period	Total Number of Shares Purchased		Average Price Paid per Share		Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs		Approximate Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs			Total Number of Shares Purchased		Average Price Paid per Share		Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs		Approximate Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs
April 1 – April 30, 2020
April 1 – April 30, 2021
Share Repurchase Program (1)		-	$	-		-	$	305.6	million		850,000	$	45.54		850,000	$	438.6	million
Employee Transactions (2)		5,934	$	32.67		-		-			6,506	$	43.26		-		-
May 1 – May 31, 2020
May 1 – May 31, 2021
Share Repurchase Program (1)		-	$	-		-	$	305.6	million		760,000	$	46.11		760,000	$	403.6	million
Employee Transactions (2)		47,277	$	24.83		-		-			7,538	$	46.43		-		-
June 1 – June 30, 2020
June 1 – June 30, 2021
Share Repurchase Program (1)		-	$	-		-	$	305.6	million		820,000	$	45.54		820,000	$	366.3	million
Employee Transactions (2)		109,848	$	26.92		-		-			3,322	$	47.01		-		-
Total
Share Repurchase Program (1)		-	$	-		-	$	305.6	million		2,430,000	$	45.72		2,430,000	$	366.3	million
Employee Transactions (2)		163,059	$	26.52		-		-			17,366	$	45.35		-		-

(1)	Since ~~2018~~2019 and through the six months ended June 30, ~~2020,~~2021, the Board of Directors of Lazard authorized the repurchase of common stock as set forth in the table below.

~~Date~~	~~Repurchase~~ ~~Authorization~~		~~Expiration~~
	~~($ in thousands)~~
~~April 2018~~	$	~~300,000~~	~~December 31, 2020~~
~~October 2018~~	$	~~300,000~~	~~December 31, 2020~~
~~February 2019~~	$	~~300,000~~	~~December 31, 2020~~
~~October 2019~~	$	~~300,000~~	~~December 31, 2021~~

Date	Repurchase Authorization		Expiration
	($ in thousands)
February 2019	$	300,000	December 31, 2020
October 2019	$	300,000	December 31, 2021
April 2021	$	300,000	December 31, 2022

A significant portion of the Company’s purchases under the share repurchase program are used to offset a portion of the shares that have been or will be issued under the 2008 Plan and the 2018 Plan. Purchases under the share repurchase program may be made in the open market or through privately negotiated transactions. The rate at which the Company purchases shares in connection with the share repurchase program may vary from quarter to quarter due to a variety of factors. Amounts shown in this line item include repurchases of common stock and exclude the shares of common stock withheld by the Company to meet the minimum statutory tax withholding requirements as described below.

(2)

Under the terms of the 2008 Plan and the 2018 Plan, upon the vesting of RSUs, PRSUs, DSUs and delivery of restricted common stock, shares of common stock may be withheld by the Company to meet the minimum statutory tax withholding requirements. During the three month period ended June 30, ~~2020,~~2021, the Company satisfied such obligations in lieu of issuing (i) ~~111,595~~4,050 shares of common stock upon the vesting or settlement of ~~424,120~~44,746 RSUs and ~~PRSUs and~~ (ii) ~~51,464~~13,316 shares of common stock upon the vesting of ~~188,606~~73,579 shares of restricted common stock.

Item 3.

Defaults Upon Senior Securities

None.

Item 4.

Mine Safety Disclosures

Not applicable.

Item 5.

Other Information

None.

PART IV

Item 6.

Exhibits

3.1		Certificate of Incorporation and Memorandum of Association of the Registrant (incorporated by reference to Exhibit 3.1 to the Registrant’s Registration Statement (File No. 333-121407) on Form S-1/A filed on March 21, 2005).

3.2		Certificate of Incorporation on Change of Name of the Registrant (incorporated by reference to Exhibit 3.2 to the Registrant’s Registration Statement (File No. 333-121407) on Form S-1/A filed on March 21, 2005).

3.3		Amended and Restated Bye-Laws of Lazard Ltd (incorporated by reference to Exhibit 3.3 to the Registrant’s Quarterly Report (File No. 001-32492) on Form 10-Q filed on June 16, 2005).

3.4		First Amendment to Amended and Restated Bye-Laws of Lazard Ltd (incorporated by reference to Exhibit 3.4 to the Registrant’s Quarterly Report (File No. 001-32492) on Form 10-Q filed on May 9, 2008).

3.5		Second Amendment to the Amended and Restated Bye-Laws of Lazard Ltd (incorporated by reference to Exhibit 3.5 to the Registrant’s Quarterly Report (File No. 001-32492) on Form 10-Q filed on April 30, 2010).

4.1		Form of Specimen Certificate for Class A common stock (incorporated by reference to Exhibit 4.1 to the Registrant’s Registration Statement (File No. 333-121407) on Form S-1/A filed on April 11, 2005).

4.2		Indenture, dated as of May 10, 2005, by and between Lazard Group LLC and The Bank of New York, as Trustee (incorporated by reference to Exhibit 4.1 to Lazard Group LLC’s Registration Statement (File No. 333-126751) on Form S-4 filed on July 21, 2005).

4.3		Sixth Supplemental Indenture, dated as of February 13, 2015, between Lazard Group LLC and The Bank of New York Mellon, as trustee (incorporated by reference to Exhibit 4.1 of the Registrant’s Current Report on Form 8-K (File No. 001-32492) filed on February 13, 2015).

4.4		Seventh Supplemental Indenture, dated as of November 4, 2016, between Lazard Group LLC and The Bank of New York Mellon, as trustee (incorporated by reference to Exhibit 4.1 of the Registrant’s Current Report on Form 8-K (File No. 001-32492) filed on November 7, 2016).

4.5		Eighth Supplemental Indenture, dated as of September 19, 2018, between Lazard Group LLC and the Bank of New York Mellon, as trustee (incorporated by reference to Exhibit 4.1 to the Registrant’s Current Report on Form 8-K (File No. 001-32492) filed on September 19, 2018.

4.6		Ninth Supplemental Indenture, dated as of March 11, 2019, between Lazard Group LLC and The Bank of New York Mellon, as trustee (incorporated by reference to Exhibit 4.1 to the Registrant’s Current Report on Form 8-K (File No. 001-32492) filed on March 11, 2019)

4.7		Form of Senior Note (included in Exhibits 4.3, 4.4, 4.5, and 4.6).

10.1		Amended and Restated Operating Agreement of Lazard Group LLC, dated as of February 4, 2019 (incorporated by reference to Exhibit 99.1 to Registrant’s Current Report (File No. 001-32492) on Form 8-K filed on February 5, 2019).

10.2		Second Amended and Restated Tax Receivable Agreement, dated as of October 26, 2015, by and among Ltd Sub A, Ltd Sub B and LTBP Trust (incorporated by reference to Exhibit 10.2 to the Registrant’s Quarterly Report (File No. 001-32492) on Form 10-Q filed on October 28, 2015).

10.3		Lease, dated as of January 27, 1994, by and between Rockefeller Center Properties and Lazard Frères & Co. LLC (incorporated by reference to Exhibit 10.19 to the Registrant’s Registration Statement (File No. 333-121407) on Form S-1/A filed on February 11, 2005).

10.4		Fourth Amendment dated as of February 16, 2011, by and among RCPI Landmark Properties, L.L.C. (as the successor in interest to Rockefeller Center Properties), RCPI 30 Rock 22234849, L.L.C. and Lazard Group LLC (as the successor in interest to Lazard Frères & Co. LLC), to the Lease dated as of January 27, 1994, by and among Rockefeller Center Properties and Lazard Frères & Co. LLC (incorporated by reference to Exhibit 10.16 to the Registrant’s Quarterly Report (File No. 001-32492) on Form 10-Q filed on April 29, 2011).

10.5*		Lazard Ltd 2005 Equity Incentive Plan (incorporated by reference to Exhibit 10.21 to the Registrant’s Registration Statement (File No. 333-121407) on Form S-1/A filed on May 2, 2005).

10.6*		Lazard Ltd 2008 Incentive Compensation Plan (incorporated by reference to Annex B to the Registrant’s Definitive Proxy Statement on Schedule 14A (File No. 001-32492) filed on March 24, 2008).

10.7*		Lazard Ltd ~~2016 French Sub-plan (incorporated by reference to Annex B to the Registrant’s Definitive Proxy Statement on Schedule 14A (File No. 001-32492) filed on March 10, 2016).~~

10.8*		~~Lazard Ltd~~ 2018 Incentive Compensation Plan (incorporated by reference to Annex B to the Registrant’s Definitive Proxy Statement on Schedule 14A (File No. 001-32492) filed on March 15, 2018).

10.9* 10.8*		Amended and Restated Agreement relating to Retention and Noncompetition and Other Covenants, dated as of March 29, 2019, by and among the Registrant, Lazard Group LLC and Kenneth M. Jacobs (incorporated by reference to Exhibit 10.1 to the Registrant’s Current Report on Form 8-K (File No. 001-32492) filed on April 3, 2019).

10.1010.9		Amended and Restated Agreement relating to Retention and Noncompetition and Other Covenants, dated as of March 29, 2019, by and among the Registrant, Lazard Group LLC and Ashish Bhutani (incorporated by reference to Exhibit 10.3 to the Registrant’s Current Report on Form 8-K (File No. 001-32492) filed on April 3, 2019).

10.1110.10		Amended and Restated Agreement relating to Retention and Noncompetition and Other Covenants, dated as of March 29, 2019, by and among the Registrant, Lazard Group LLC and Scott D. Hoffman (incorporated by reference to Exhibit 10.4 to the Registrant’s Current Report on Form 8-K (File No. 001-32492) filed on April 3, 2019).

10.1210.11		Amended and Restated Agreement relating to Retention and Noncompetition and Other Covenants, dated as of March 29, 2019, by and among the Registrant, Lazard Group LLC and Evan L. Russo (incorporated by reference to Exhibit 10.2 to the Registrant’s Current Report on Form 8-K (File No. ~~001-324927)~~001-32492) filed on April 3, 2019).

10.1310.12		Amended and Restated Agreement relating to Retention and Noncompetition and Other Covenants, dated as of March 29, 2019, by and among the Registrant, Lazard Group LLC and Alexander F. Stern (incorporated by reference to Exhibit 10.5 to the Registrant’s Current Report on Form 8-K (File No. 001-32492) filed on April 3, 2019).

10.13*		Agreement relating to Retention and Noncompetition and Other Covenants, dated as of February 25, 2021, by and among the Registrant, Lazard Group LLC and Peter Orszag (incorporated by reference to Exhibit 10.13 to the Registrant’s Quarterly Report on Form 10-Q (File No. 001-32492) filed on May 4, 2021).

10.14*		Form of Award Letter for Annual Grant of Deferred Stock Units to Non-Executive Directors (incorporated by reference to Exhibit 99.1 to the Registrant’s Current Report on Form 8-K (File No. 001-32492) filed on September 8, 2005).

10.15*		Form of Agreement evidencing a grant of Restricted Stock Units to Executive Officers under the 2008 Incentive Compensation Plan (incorporated by reference to Exhibit 10.41 to the Registrant’s Annual Report (File No. 001-32492) on Form 10-K filed on March 2, 2009).

10.16*		Form of Agreement evidencing a grant of Deferred Cash Award to Executive Officers (incorporated by reference to Exhibit 10.42 to the Registrant’s Annual Report (File No. 001-32492) on Form 10-K filed on March 2, 2009).

10.17*		Directors’ Fee Deferral Unit Plan (incorporated by reference to Exhibit 10.39 to the Registrant’s Quarterly Report on Form 10-Q (File No. 001-32492) ~~on Form 10-Q~~ filed on May 11, 2006).

~~10.18~~10.16		Amended and Restated Credit Agreement, dated as of July 22, 2020, among Lazard Group LLC, the Banks from time to time parties thereto, and Citibank, N.A., as Administrative ~~Agent.~~Agent (incorporated by reference to Exhibit 10.18 to the Registrant’s Quarterly Report on Form 10-Q (File No. 001-32492) filed on August 4, 2020).

10.19*		Form of Agreement evidencing a grant of Lazard Fund Interests to Named Executive Officers (incorporated by reference to Exhibit 10.55 to the Registrant’s Quarterly Report (File No. 001-32492) on Form 10-Q filed on May 1, 2013).

10.20*		Form of Agreement evidencing a February 20, 2014 grant of Performance-Based Stock Units under the 2008 Incentive Compensation Plan (incorporated by reference to Exhibit 10.55 to the Registrant’s Quarterly Report (File No. 001-32492) on Form 10-Q filed May 6, 2014).

10.21*		Agreement between the Company and Kenneth M. Jacobs, dated as of February 20, 2014, evidencing a grant of Performance-Based Stock Units under the 2008 Incentive Compensation Plan (incorporated by reference to Exhibit 10.56 to the Registrant’s Quarterly Report (File No. 001-32492) on Form 10-Q filed on May 6, 2014).

10.22*		Form of Agreement evidencing a grant of Restricted Stock under the 2008 Incentive Compensation Plan (incorporated by reference to Exhibit 10.55 to the Registrant’s Quarterly Report (File No. 001-32492) on Form 10-Q filed on April 30, 2010).

10.23*		Form of Agreement evidencing a grant of Lazard Fund Interests (incorporated by reference to Exhibit 10.55 to the Registrant’s Quarterly Report (File No. 001-32492) on Form 10-Q filed on April 29, 2011).

10.2410.17		Form of Agreement for Performance-Based Profits Interest Participation Right Units under the 2018 Incentive Compensation Plan (incorporated by reference to Exhibit 10.24 to the Registrant’s Quarterly Report on Form 10-Q (File No. 001-32492) ~~on Form 10-Q~~ filed on April 30, 2019).

10.18*		First Amendment to the Lazard Ltd 2018 Incentive Compensation Plan (incorporated by reference to Annex B to the Registrant’s Definitive Proxy Statement on Schedule 14A (File No. 001-32492) filed on March 16, 2021).

10.19*		Form of Agreement evidencing grant of Performance-Based Restricted Participation Units under the 2018 Incentive Compensation Plan (incorporated by reference to Exhibit 10.19 to the Registrant’s Quarterly Report on Form 10-Q (File No. 001-32492) filed on May 4, 2021).

10.20*		Form of Agreement evidencing grant of Lazard Fund Interests to Named Executive Officers under the 2018 Incentive Compensation Plan (incorporated by reference to Exhibit 10.20 to the Registrant’s Quarterly Report on Form 10-Q (File No. 001-32492) filed on May 4, 2021).

10.21*		Form of Agreement for Profits Interest Participation Right Units under the 2018 Compensation Plan (incorporated by reference to Exhibit 10.21 to the Registrant’s Quarterly Report on Form 10-Q (File No. 001-32492) filed on May 4, 2021).

31.1		Rule 13a-14(a) Certification of Kenneth M. Jacobs.

31.2		Rule 13a-14(a) Certification of Evan L. Russo.

32.1		Section 1350 Certification for Kenneth M. Jacobs.

32.2		Section 1350 Certification for Evan L. Russo.

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*	Management contract or compensatory plan or arrangement.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

Dated: August ~~4, 2020~~2, 2021

	LAZARD LTD

	By:		/s/ Evan L. Russo
	Name:		Evan L. Russo
	Title:		Chief Financial Officer

	By:		/s/ Dominick Ragone
	Name:		Dominick Ragone
	Title:		Chief Accounting Officer

Year Ending December 31,	Amortization Expense
2020 (July 1 through December 31)	$	880
2021		60
2022		60
2023		60
2024		30
Total amortization expense	$	1,090

	Accrued
	Compensation			Other
	and Benefits			Liabilities			Total
Balance, January 1, 2020	$	20,210		$	5,068		$	25,278
Less:
Costs paid or otherwise settled		(17,675	)		(5,068	)		(22,743	)
Balance, June 30, 2020	$	2,535		$	-		$	2,535

	Percentage Changes June 30, 2020 vs.
	March 31, 2020			December 31, 2019			June 30, 2019
MSCI World Index		20	%		(5	)%		3	%
Euro Stoxx		18	%		(12	)%		(4	)%
MSCI Emerging Market		18	%		(10	)%		(3	)%
S&P 500		21	%		(3	)%		8	%