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 ~~March 31,~~June 30, 2022


☐	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 ~~April~~July 22, 2022, there were 112,766,091 shares of the Registrant’s common stock outstanding (including ~~14,871,148~~20,011,746 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 ~~March 31,~~June 30, 2022 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		3539

Item 3. Quantitative and Qualitative Disclosures About Market Risk		5965

Item 4. Controls and Procedures		5965

Part II. Other Information

Item 1. Legal Proceedings		6066

Item 1A. Risk Factors		6066

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds		6066

Item 3. Defaults Upon Senior Securities		6167

Item 4. Mine Safety Disclosures		6167

Item 5. Other Information		6167

Item 6. Exhibits		6268

Signatures		6571

PART I. FINANCIAL INFORMATION

Item 1.

Financial Statements (Unaudited)

		Page

Condensed Consolidated Statements of Financial Condition as of ~~March 31,~~June 30, 2022 and December 31, 2021		2

Condensed Consolidated Statements of Operations for the three month and six month periods ended ~~March 31,~~June 30, 2022 and 2021		4

Condensed Consolidated Statements of Comprehensive Income for the three month and six month periods ended ~~March 31,~~June 30, 2022 and 2021		5

Condensed Consolidated Statements of Cash Flows for the ~~three~~six month periods ended ~~March 31,~~June 30, 2022 and 2021		6

Condensed Consolidated Statements of Changes in Stockholders’ Equity and Redeemable Noncontrolling Interests for the three month and six month periods ended ~~March 31,~~June 30, 2022 and 2021		7

Notes to Condensed Consolidated Financial Statements		911

LAZARD LTD

CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION

~~MARCH 31,~~JUNE 30, 2022 AND DECEMBER 31, 2021

(UNAUDITED)

(dollars in thousands, except for per share data)

	March 31,		December 31,		June 30,		December 31,
	2022		2021		2022		2021
ASSETS
Cash and cash equivalents	$	878,167	$	1,465,022	$	907,472	$	1,465,022
Deposits with banks and short-term investments		1,638,519		1,347,544		1,700,961		1,347,544
Restricted cash		615,225		617,448		617,057		617,448
Receivables (net of allowance for doubtful accounts of $33,813 and $33,957 at March 31, 2022 and December 31, 2021, respectively):
Receivables (net of allowance for doubtful accounts of $30,271 and $33,957 at June 30, 2022 and December 31, 2021, respectively):
Fees		659,768		669,464		582,960		669,464
Customers and other		156,872		136,345		156,742		136,345
		816,640		805,809		739,702		805,809
Investments		869,844		1,007,339		787,139		1,007,339
Property (net of accumulated amortization and depreciation of $373,366 and $367,507 at March 31, 2022 and December 31, 2021, respectively)		249,406		250,005
Property (net of accumulated amortization and depreciation of $371,545 and $367,507 at June 30, 2022 and December 31, 2021, respectively)						231,502		250,005
Operating lease right-of-use assets		452,192		466,054		435,450		466,054
Goodwill and other intangible assets (net of accumulated amortization of $70,277 and $70,221 at March 31, 2022 and December 31, 2021, respectively)		379,615		379,571
Goodwill and other intangible assets (net of accumulated amortization of $70,207 and $70,221 at June 30, 2022 and December 31, 2021, respectively)						378,004		379,571
Deferred tax assets		429,227		435,308		408,187		435,308
Other assets		519,511		373,081		506,322		373,081
Total Assets	$	6,848,346	$	7,147,181	$	6,711,796	$	7,147,181

See notes to condensed consolidated financial statements.

LAZARD LTD

CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION

~~MARCH 31,~~JUNE 30, 2022 AND DECEMBER 31, 2021

(UNAUDITED)

(dollars in thousands, except for per share data)

	March 31,			December 31,			June 30,			December 31,
	2022			2021			2022			2021
LIABILITIES, REDEEMABLE NONCONTROLLING INTERESTS AND STOCKHOLDERS’ EQUITY
Liabilities:
Deposits and other customer payables	$	1,748,858		$	1,442,701		$	1,831,825		$	1,442,701
Accrued compensation and benefits		501,325			972,303			494,464			972,303
Operating lease liabilities		536,910			552,522			520,025			552,522
Tax receivable agreement obligation		192,489			213,434			192,473			213,434
Senior debt		1,685,849			1,685,227			1,686,471			1,685,227
Deferred tax liabilities		15,884			1,827			13,606			1,827
Other liabilities		622,403			626,203			570,265			626,203
Total Liabilities		5,303,718			5,494,217			5,309,129			5,494,217
Commitments and contingencies
Redeemable noncontrolling interests		575,000			575,000			575,710			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 March 31, 2022 and December 31, 2021, 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, 2022 and December 31, 2021, including shares held by subsidiaries as indicated below)								1,128			1,128
Additional paid-in-capital		-			144,729			71,918			144,729
Retained earnings		1,583,005			1,560,636			1,628,182			1,560,636
Accumulated other comprehensive loss, net of tax		(237,626	)		(223,847	)		(290,029	)		(223,847	)
		1,346,507			1,482,646			1,411,199			1,482,646
Class A common stock held by subsidiaries, at cost (12,371,148 and 12,046,140 shares at March 31, 2022 and December 31, 2021, respectively)		(496,681	)		(507,426	)
Class A common stock held by subsidiaries, at cost (18,240,059 and 12,046,140 shares at June 30, 2022 and December 31, 2021, respectively)								(695,537	)		(507,426	)
Total Lazard Ltd Stockholders’ Equity		849,826			975,220			715,662			975,220
Noncontrolling interests		119,802			102,744			111,295			102,744
Total Stockholders’ Equity		969,628			1,077,964			826,957			1,077,964
Total Liabilities, Redeemable Noncontrolling Interests and Stockholders’ Equity	$	6,848,346		$	7,147,181		$	6,711,796		$	7,147,181

See notes to condensed consolidated financial statements.

LAZARD LTD

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

FOR THE THREE MONTH AND SIX MONTH PERIODS ENDED ~~MARCH 31,~~JUNE 30, 2022 AND 2021

(UNAUDITED)

(dollars in thousands, except for per share data)

	Three Months Ended				Three Months Ended					Six Months Ended
	March 31,				June 30,					June 30,
	2022		2021		2022			2021		2022			2021
REVENUE
Investment banking and other advisory fees	$	389,739	$	317,831	$	405,091		$	475,161	$	794,830		$	792,992
Asset management fees		315,052		326,950		269,011			346,465		584,063			673,415
Interest income		1,761		1,354		4,062			1,280		5,823			2,634
Other		9,592		33,769		(17,506	)		20,358		(7,914	)		54,127
Total revenue		716,144		679,904		660,658			843,264		1,376,802			1,523,168
Interest expense		21,252		19,797		21,112			20,127		42,364			39,924
Net revenue		694,892		660,107		639,546			823,137		1,334,438			1,483,244
OPERATING EXPENSES
Compensation and benefits		396,841		401,546		363,830			514,918		760,671			916,464
Occupancy and equipment		31,239		34,748		29,409			29,875		60,648			64,623
Marketing and business development		14,123		6,651		22,673			9,332		36,796			15,983
Technology and information services		37,931		33,670		42,067			35,774		79,998			69,444
Professional services		16,029		14,948		16,549			19,996		32,578			34,944
Fund administration and outsourced services		29,703		29,279		28,551			31,302		58,254			60,581
Amortization of intangible assets related to acquisitions		15		15		15			15		30			30
Other		9,283		4,960		10,614			15,664		19,897			20,624
Total operating expenses		535,164		525,817		513,708			656,876		1,048,872			1,182,693
OPERATING INCOME		159,728		134,290		125,838			166,261		285,566			300,551
Provision for income taxes		38,753		43,464		34,187			41,345		72,940			84,809
NET INCOME		120,975		90,826		91,651			124,916		212,626			215,742
LESS - NET INCOME ATTRIBUTABLE TO NONCONTROLLING INTERESTS		7,099		3,526
LESS - NET INCOME (LOSS) ATTRIBUTABLE TO NONCONTROLLING INTERESTS						(3,829	)		1,738		3,270			5,264
NET INCOME ATTRIBUTABLE TO LAZARD LTD	$	113,876	$	87,300	$	95,480		$	123,178	$	209,356		$	210,478
ATTRIBUTABLE TO LAZARD LTD CLASS A COMMON STOCKHOLDERS:
WEIGHTED AVERAGE SHARES OF COMMON STOCK OUTSTANDING:
Basic		102,547,277		107,291,560		98,660,173			106,746,654		100,603,724			107,019,107
Diluted		108,186,642		115,822,294		102,753,336			113,603,478		105,469,988			114,712,885
NET INCOME PER SHARE OF COMMON STOCK:
Basic	$	1.09	$	0.80	$	0.96		$	1.14	$	2.05		$	1.94
Diluted	$	1.05	$	0.75	$	0.92		$	1.08	$	1.97		$	1.83

See notes to condensed consolidated financial statements.

LAZARD LTD

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

FOR THE THREE MONTH AND SIX MONTH PERIODS ENDED ~~MARCH 31,~~JUNE 30, 2022 AND 2021

(UNAUDITED)

(dollars in thousands)

	Three Months Ended						Three Months Ended						Six Months Ended
	March 31,						June 30,						June 30,
	2022			2021			2022			2021			2022			2021
NET INCOME	$	120,975		$	90,826		$	91,651		$	124,916		$	212,626		$	215,742
OTHER COMPREHENSIVE INCOME (LOSS), NET OF TAX:
Currency translation adjustments		(18,068	)		(19,743	)
Currency translation adjustments:
Currency translation adjustments before reclassification								(61,700	)		5,502			(79,690	)		(14,241	)
Adjustment for items reclassified to earnings								205			23,579			127			23,579
Employee benefit plans:
Actuarial gain (net of tax expense of $788 and $762 for the three months ended March 31, 2022 and 2021, respectively		3,439			1,065
Adjustment for items reclassified to earnings (net of tax expense of $267 and $381 for the three months ended March 31, 2022 and 2021, respectively)		849			1,336
OTHER COMPREHENSIVE LOSS, NET OF TAX		(13,780	)		(17,342	)
Actuarial gain (loss) (net of tax expense (benefit) of $1,816 and $(373) for the three months ended June 30, 2022 and 2021, respectively, and $2,604 and $389 for the six months ended June 30, 2022 and 2021, respectively)								8,287			(1,477	)		11,726			(412	)
Adjustment for items reclassified to earnings (net of tax expense of $248 and $483 for the three months ended June 30, 2022 and 2021, respectively, and $515 and $864 for the six months ended June 30, 2022 and 2021, respectively)								805			1,458			1,654			2,794
OTHER COMPREHENSIVE INCOME (LOSS) , NET OF TAX								(52,403	)		29,062			(66,183	)		11,720
COMPREHENSIVE INCOME		107,195			73,484			39,248			153,978			146,443			227,462
LESS - COMPREHENSIVE INCOME ATTRIBUTABLE TO NONCONTROLLING INTERESTS		7,098			3,527
LESS - COMPREHENSIVE INCOME (LOSS) ATTRIBUTABLE TO NONCONTROLLING INTERESTS								(3,829	)		1,737			3,269			5,264
COMPREHENSIVE INCOME ATTRIBUTABLE TO LAZARD LTD	$	100,097		$	69,957		$	43,077		$	152,241		$	143,174		$	222,198

See notes to condensed consolidated financial statements.

LAZARD LTD

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

FOR THE ~~THREE~~SIX MONTH PERIODS ENDED ~~MARCH 31,~~JUNE 30, 2022 AND 2021

(UNAUDITED)

(dollars in thousands)

	Three Months Ended						Six Months Ended
	March 31,						June 30,
	2022			2021			2022			2021
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income	$	120,975		$	90,826		$	212,626		$	215,742
Adjustments to reconcile net income to net cash provided by (used in) operating activities:
Depreciation and amortization of property		10,258			9,361			21,045			18,938
Noncash lease expense		17,089			17,210			32,487			36,242
Currency translation adjustment reclassification								127			23,579
Amortization of deferred expenses and share-based incentive compensation		90,633			100,271			212,538			229,919
Amortization of intangible assets related to acquisitions		15	��		15			30			30
Deferred tax provision		26,261			29,673			43,398			43,641
(Increase) decrease in operating assets and increase (decrease) in operating liabilities:
Receivables-net		(15,160	)		(7,486	)		46,339			(83,982	)
Investments		44,236			(202,534	)		112,536			(290,595	)
Other assets		(26,435	)		(16,134	)		(62,425	)		(22,527	)
Accrued compensation and benefits and other liabilities		(481,402	)		(144,542	)		(533,600	)		(155,910	)
Net cash used in operating activities		(213,530	)		(123,340	)
Net cash provided by operating activities								85,101			15,077
CASH FLOWS FROM INVESTING ACTIVITIES:
Additions to property		(13,510	)		(7,498	)		(19,697	)		(17,370	)
Disposals of property		2			628			213			602
Net cash used in investing activities		(13,508	)		(6,870	)		(19,484	)		(16,768	)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from:
Contributions from noncontrolling interests		191			-			208			316
LGAC IPO		-			575,000			-			575,000
Customer deposits, net		302,342			-			514,610			63,539
Payments for:
Customer deposits, net		-			(58,739	)
Distributions to noncontrolling interests		(4,474	)		(1,020	)		(9,462	)		(2,737	)
Payments under tax receivable agreement		(20,945	)		(10,215	)		(20,961	)		(10,215	)
Payments of LGAC IPO underwriting fees and other offering costs		-			(9,308	)		-			(9,352	)
Purchase of Class A common stock		(175,797	)		(122,652	)		(375,185	)		(233,745	)
Class A common stock dividends		(46,664	)		(49,441	)		(92,676	)		(98,964	)
Settlement of share-based incentive compensation in satisfaction of tax withholding requirements		(58,005	)		(64,804	)		(58,739	)		(65,592	)
LFI Consolidated Funds redemptions		(10,976	)		-			(13,219	)		-
Other financing activities		(4,915	)		(14,302	)		(6,750	)		(17,435	)
Net cash provided by (used in) financing activities		(19,243	)		244,519			(62,174	)		200,815
EFFECT OF EXCHANGE RATE CHANGES ON CASH AND CASH EQUIVALENTS AND RESTRICTED CASH		(51,822	)		(79,205	)		(207,967	)		(62,414	)
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS AND RESTRICTED CASH		(298,103	)		35,104			(204,524	)		136,710
CASH AND CASH EQUIVALENTS AND RESTRICTED CASH— January 1		3,430,014			2,568,827			3,430,014			2,568,827
CASH AND CASH EQUIVALENTS AND RESTRICTED CASH— March 31	$	3,131,911		$	2,603,931
CASH AND CASH EQUIVALENTS AND RESTRICTED CASH— June 30							$	3,225,490		$	2,705,537

RECONCILIATION OF CASH AND CASH EQUIVALENTS AND RESTRICTED CASH WITHIN THE CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION:
	March 31,			December 31,			June 30,			December 31,
	2022			2021			2022			2021
Cash and cash equivalents	$	878,167		$	1,465,022		$	907,472		$	1,465,022
Deposits with banks and short-term investments		1,638,519			1,347,544			1,700,961			1,347,544
Restricted cash		615,225			617,448			617,057			617,448
TOTAL CASH AND CASH EQUIVALENTS AND RESTRICTED CASH	$	3,131,911		$	3,430,014		$	3,225,490		$	3,430,014

See notes to condensed consolidated financial statements.

LAZARD LTD

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

FOR THE THREE MONTH PERIOD ENDED ~~MARCH 31,~~JUNE 30, 2021

(UNAUDITED)

(dollars in thousands)

					Additional						Accumulated Other Comprehensive			Class A Common Stock						Total Lazard Ltd						Total			Redeemable						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		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		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		$	-
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									87,300												87,300			3,526			90,826												123,178												123,178			1,738			124,916
Other comprehensive income (loss) - net of tax												(17,343	)								(17,343	)		1			(17,342	)														29,063									29,063			(1	)		29,062
Amortization of share-based incentive compensation						65,906															65,906			2,285			68,191									72,078															72,078			3,618			75,696
Dividend equivalents						5,859			(6,381	)											(522	)		(1,731	)		(2,253	)								4,104			(4,438	)											(334	)		(1,731	)		(2,065	)
Class A common stock dividends ($0.47 per share)									(49,441	)											(49,441	)					(49,441	)											(49,523	)											(49,523	)					(49,523	)
Purchase of Class A common stock															2,899,541			(122,652	)		(122,652	)					(122,652	)																	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 $1,089						(132,822	)		(47,902	)					(3,054,052	)		114,831			(65,893	)					(65,893	)
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						(30,315	)								(898,607	)		30,315			-						-									(5,278	)								(113,357	)		5,278			-						-
Dividend equivalents						55			(55	)											-						-									3			(3	)											-						-
Distributions to noncontrolling interests, net																					-			(1,020	)		(1,020	)																							-			(1,401	)		(1,401	)
LFI Consolidated Funds																					-			7,775			7,775																								-			(264	)		(264	)
Contribution from redeemable noncontrolling interests, net																					-						-			534,075																					-			-			-			671
Change in redemption value of redeemable noncontrolling interests						(44,122	)														(44,122	)		3,197			(40,925	)		40,925						(648	)														(648	)		1,319			671			(671	)
Balance - March 31, 2021		112,766,091	$	1,128	$	-		$	1,278,907		$	(255,711	)		6,675,269		$	(259,319	)	$	765,005		$	101,694		$	866,699		$	575,000
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 STATEMENTS 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:
Net income									210,478												210,478			5,264			215,742
Other comprehensive income - 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	)
LFI Consolidated Funds																					-			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

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

FOR THE THREE MONTH PERIOD ENDED ~~MARCH 31,~~JUNE 30, 2022

(UNAUDITED)

(dollars in thousands)

					Additional						Accumulated Other Comprehensive			Class A Common Stock						Total Lazard Ltd						Total			Redeemable							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			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			Shares		$		Capital			Earnings			Net of Tax			Shares			$			Equity			Interests			Equity			Interests
Balance - January 1, 2022		112,766,091	$	1,128	$	144,729		$	1,560,636		$	(223,847	)		12,046,140		$	(507,426	)	$	975,220		$	102,744		$	1,077,964		$	575,000
Balance - April 1, 2022																																	112,766,091	$	1,128	$	-		$	1,583,005		$	(237,626	)		12,371,148		$	(496,681	)	$	849,826		$	119,802		$	969,628		$	575,000
Comprehensive income (loss):
Net income									113,876												113,876			4,439			118,315			2,660
Net income (loss)																																								95,480												95,480			(6,675	)		88,805			2,846
Other comprehensive loss - net of tax												(13,779	)								(13,779	)		(1	)		(13,780	)															(52,403	)								(52,403	)		-			(52,403	)
Amortization of share-based incentive compensation						50,766															50,766			2,671			53,437										67,482															67,482			5,267			72,749
Dividend equivalents						4,003			(4,284	)											(281	)		(4,627	)		(4,908	)									4,086			(4,292	)											(206	)		(1,624	)		(1,830	)
Class A common stock dividends ($0.47 per share)									(46,664	)											(46,664	)					(46,664	)												(46,012	)											(46,012	)					(46,012	)
Purchase of Class A common stock															4,717,821			(175,797	)		(175,797	)					(175,797	)																		5,881,061			(199,388	)		(199,388	)					(199,388	)
Delivery of Class A common stock in connection with share-based incentive compensation and related tax benefit of $6,137						(201,360	)		(40,559	)					(4,392,813	)		186,542			(55,377	)		3,509			(51,868	)
Delivery of Class A common stock in connection with share-based incentive compensation and related tax benefit of $121																																					(1,145	)		1						(12,150	)		532			(612	)		(1	)		(613	)
Distributions to noncontrolling interests, net																					-			(4,283	)		(4,283	)																								-			(4,971	)		(4,971	)
LFI Consolidated Funds																					-			14,552			14,552																									-			(1,144	)		(1,144	)
Change in redemption value of redeemable noncontrolling interests						1,862															1,862			798			2,660			(2,660	)						1,495															1,495			641			2,136			(2,136	)
Balance - March 31, 2022		112,766,091	$	1,128	$	-		$	1,583,005		$	(237,626	)		12,371,148		$	(496,681	)	$	849,826		$	119,802		$	969,628		$	575,000
Balance - June 30, 2022																																	112,766,091	$	1,128	$	71,918		$	1,628,182		$	(290,029	)		18,240,059		$	(695,537	)	$	715,662		$	111,295		$	826,957		$	575,710

See notes to condensed consolidated financial statements.

LAZARD LTD

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

FOR THE SIX MONTH PERIOD ENDED JUNE 30, 2022

(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, 2022		112,766,091	$	1,128	$	144,729		$	1,560,636		$	(223,847	)		12,046,140		$	(507,426	)	$	975,220		$	102,744		$	1,077,964		$	575,000
Comprehensive income (loss):
Net income (loss)									209,356												209,356			(2,236	)		207,120			5,506
Other comprehensive loss - net of tax												(66,182	)								(66,182	)		(1	)		(66,183	)
Amortization of share-based incentive compensation						118,248															118,248			7,938			126,186
Dividend equivalents						8,089			(8,576	)											(487	)		(6,251	)		(6,738	)
Class A common stock dividends ($0.94 per share)									(92,676	)											(92,676	)					(92,676	)
Purchase of Class A common stock															10,598,882			(375,185	)		(375,185	)					(375,185	)
Delivery of Class A common stock in connection with share-based incentive compensation and related tax benefit of $6,258						(202,505	)		(40,558	)					(4,404,963	)		187,074			(55,989	)		3,508			(52,481	)
Distributions to noncontrolling interests, net																					-			(9,254	)		(9,254	)
LFI Consolidated Funds																					-			13,408			13,408
Change in redemption value of redeemable noncontrolling interests						3,357															3,357			1,439			4,796			(4,796	)
Balance - June 30, 2022		112,766,091	$	1,128	$	71,918		$	1,628,182		$	(290,029	)		18,240,059		$	(695,537	)	$	715,662		$	111,295		$	826,957		$	575,710

See notes to condensed consolidated financial statements.

810

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 that specializes 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 ~~March 31,~~June 30, 2022 and December 31, 2021. 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, shareholder advisory, capital raising, sovereign advisory and other strategic advisory matters; and

•

Asset Management, which offers a broad range of global investment solutions and investment and wealth 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 certain 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, 2021. The accompanying December 31, 2021 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 ~~period~~and six month periods ended ~~March 31,~~June 30, 2022 are not indicative of the results to be expected for any future interim or annual period.

911

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 and its subsidiaries including 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 19).

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

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 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 Company’s subsidiary, is the sponsor of LGAC. LGAC is considered to be a VIE. The Company holds a controlling financial interest in LGAC through the sponsor’s ownership of Class B founder shares of LGAC. As a result, both LGAC and the sponsor are consolidated in the Company’s financial statements.

The proceeds from the LGAC IPO of $575,000 are held in a trust account, until the earlier of: (i) the completion of a Business Combination and (ii) the distribution of the funds in the trust account to the LGAC shareholders in connection with the redemption of LGAC’s Class A ordinary shares, subject to certain conditions. The cash held in the trust account is recorded in “Restricted Cash” on the condensed consolidated statements of financial condition.

Transaction costs, which consisted of a net underwriting fee of $8,500, $20,125 of non-cash deferred underwriting fees (included in “other liabilities” on the condensed consolidated statements of financial condition) and $852 of other offering costs, were charged against the gross proceeds of the LGAC IPO, consistent with SEC Staff Accounting Bulletin (SAB) Topic 5.

“Redeemable noncontrolling interests” of ~~$575,000~~$575,710 associated with the publicly held LGAC Class A ordinary shares are recorded on the Company’s condensed consolidated statements of financial condition as of ~~March 31,~~June 30, 2022 at redemption value and 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 will adjust the carrying value of redeemable noncontrolling interests to equal the redemption value at the end of each reporting period. Increases or decreases in the carrying amount of redeemable noncontrolling interests shall be affected by credits or charges to additional paid-in-capital and noncontrolling interests attributable to certain members of LGACo 1 LLC based on pro rata ownership.

The warrants exercisable for LGAC Class A ordinary shares that were issued in connection with the LGAC IPO (the “LGAC Warrants”) meet the definition of a liability under FASB ASC Topic 815 and are classified as derivative liabilities which are remeasured at fair value at each balance sheet date until exercised, with changes in fair value reported to earnings. See Note 6.

1012

LAZARD LTD

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS-(Continued)

(UNAUDITED)

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

2.	REVENUE RECOGNITION

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				Three Months Ended				Six Months Ended
	March 31,				June 30,				June 30,
	2022		2021		2022		2021		2022		2021
Net Revenue:
Financial Advisory (a)	$	390,215	$	318,412	$	407,885	$	451,940	$	798,100	$	770,352

Asset Management:
Management Fees and Other (b)	$	313,336	$	314,513	$	281,813	$	330,969	$	595,149	$	645,482
Incentive Fees (c)		25,165		32,977		7,338		34,286		32,503		67,263
Total Asset Management	$	338,501	$	347,490	$	289,151	$	365,255	$	627,652	$	712,745

(a)

Financial Advisory is comprised of a wide array of financial advisory services regarding M&A advisory, restructuring, capital advisory, shareholder advisory, capital raising, sovereign advisory 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.

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.

1113

LAZARD LTD

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS-(Continued)

(UNAUDITED)

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

3.	RECEIVABLES AND ALLOWANCE FOR DOUBTFUL ACCOUNTS

The Company’s receivables represent fee receivables, amounts due from customers and other receivables. Where applicable, receivables are stated net of an estimated allowance for doubtful accounts determined in accordance with the current expected credit losses (“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.

Activity in the allowance for doubtful accounts for the three month and six month periods ended ~~March 31,~~June 30, 2022 and 2021 was as follows:

	Three Months Ended						Three Months Ended						Six Months Ended
	March 31,						June 30,						June 30,
	2022			2021			2022			2021			2022			2021
Beginning Balance	$	33,957		$	36,649		$	33,813		$	35,002		$	33,957		$	36,649
Bad debt expense, net of reversals		519			375
Bad debt expense (credit), net of reversals								(1,061	)		2,169			(542	)		2,544
Charge-offs, foreign currency translation and other adjustments		(663	)		(2,022	)		(2,481	)		(927	)		(3,144	)		(2,949	)
Ending Balance *	$	33,813		$	35,002		$	30,271		$	36,244		$	30,271		$	36,244

*The allowance for doubtful accounts balances are substantially all related to M&A and Restructuring fee receivables that include reimbursable 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 ~~March 31,~~June 30, 2022 and December 31, 2021, ~~$110,321~~$120,334 and $123,189, respectively, represented 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 ~~March 31,~~June 30, 2022 and December 31, 2021, customers and other receivables included ~~$123,988~~$121,321 and $122,229, 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 ~~March 31,~~June 30, 2022 and December 31, 2021.

The aggregate carrying amount of all other receivables of ~~$582,331~~$498,047 and $560,391 at ~~March 31,~~June 30, 2022 and December 31, 2021, respectively, approximates fair value.

1214

LAZARD LTD

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS-(Continued)

(UNAUDITED)

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

4.	INVESTMENTS

The Company’s investments and securities sold, not yet purchased, consist of the following at ~~March 31,~~June 30, 2022 and December 31, 2021:

	March 31,		December 31,		June 30,		December 31,
	2022		2021		2022		2021
Debt	$	99,845	$	299,990	$	99,988	$	299,990
Equities		53,497		54,040		45,704		54,040
Funds:
Alternative investments (a)		55,390		49,757		54,003		49,757
Debt (a)		195,767		164,952		181,322		164,952
Equity (a)		400,586		375,761		352,544		375,761
Private equity		48,592		46,589		37,663		46,589
		700,335		637,059		625,532		637,059
Equity method		16,167		16,250		15,915		16,250
Total investments		869,844		1,007,339		787,139		1,007,339
Less:
Equity method		16,167		16,250		15,915		16,250
Investments, at fair value	$	853,677	$	991,089	$	771,224	$	991,089
Securities sold, not yet purchased, at fair value (included in “other liabilities”)	$	5,726	$	6,828	$	4,948	$	6,828

(a)

Interests in alternative investment funds, debt funds and equity funds include investments with fair values of ~~$24,201, $164,500~~$23,799, $150,882 and ~~$333,535,~~$277,940, respectively, at ~~March 31,~~June 30, 2022 and $18,326, $132,875 and $306,618, respectively, at December 31, 2021, held in order to satisfy the Company’s liability upon vesting of previously granted Lazard Fund Interests (“LFI”) and other similar 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 6 and 12).

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”).

Equity method investments represent partnership interests accounted for under the equity method of accounting.

1315

LAZARD LTD

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS-(Continued)

(UNAUDITED)

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

During the three month and six month periods ended ~~March 31,~~June 30, 2022 and 2021, 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

March 31,

2022

2021

Net unrealized investment gains (losses)

$
(40,867
)

$
1,054

	Three Months Ended					Six Months Ended
	June 30,					June 30,
	2022			2021		2022			2021
Net unrealized investment gains (losses)	$	(62,131	)	$	18,637	$	(102,998	)	$	19,691

5.	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.

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 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.

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 Company and classified as Level 1 is based on the listed market price of such instruments. The fair value of derivatives entered into by the Company and classified as Level 2 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 6.

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

1416

LAZARD LTD

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS-(Continued)

(UNAUDITED)

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

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 ~~March 31,~~June 30, 2022 and December 31, 2021, 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:

	March 31, 2022										June 30, 2022
	Level 1		Level 2		Level 3		NAV		Total		Level 1		Level 2		Level 3		NAV		Total
Assets:
Investments:
Debt	$	99,845	$	-	$	-	$	-	$	99,845	$	99,988	$	-	$	-	$	-	$	99,988
Equities		52,922		-		575		-		53,497		45,162		-		542		-		45,704
Funds:
Alternative investments		25,731		-		-		29,659		55,390		26,064		-		-		27,939		54,003
Debt		195,762		-		-		5		195,767		181,317		-		-		5		181,322
Equity		400,541		-		-		45		400,586		352,502		-		-		42		352,544
Private equity		-		-		274		48,318		48,592		-		-		256		37,407		37,663
Derivatives		-		1,451		-		-		1,451		-		19,098		-		-		19,098
Total	$	774,801	$	1,451	$	849	$	78,027	$	855,128	$	705,033	$	19,098	$	798	$	65,393	$	790,322
Liabilities:
Securities sold, not yet purchased	$	5,726	$	-	$	-	$	-	$	5,726	$	4,948	$	-	$	-	$	-	$	4,948
Derivatives		6,095		399,121		-		-		405,216		2,875		346,336		-		-		349,211
Total	$	11,821	$	399,121	$	-	$	-	$	410,942	$	7,823	$	346,336	$	-	$	-	$	354,159

	December 31, 2021
	Level 1		Level 2		Level 3		NAV		Total
Assets:
Investments:
Debt	$	299,990	$	-	$	-	$	-	$	299,990
Equities		53,462		-		578		-		54,040
Funds:
Alternative investments		24,972		-		-		24,785		49,757
Debt		164,947		-		-		5		164,952
Equity		375,712		-		-		49		375,761
Private equity		-		-		293		46,296		46,589
Derivatives		-		922		-		-		922
Total	$	919,083	$	922	$	871	$	71,135	$	992,011
Liabilities:
Securities sold, not yet purchased	$	6,828	$	-	$	-	$	-	$	6,828
Derivatives		10,005		362,240		-		-		372,245
Total	$	16,833	$	362,240	$	-	$	-	$	379,073

1517

LAZARD LTD

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS-(Continued)

(UNAUDITED)

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

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 ~~March 31,~~June 30, 2022 and 2021:

	Three Months Ended March 31, 2022														Three Months Ended June 30, 2022
	Beginning Balance		Net Unrealized/ Realized Gains/Losses Included In Earnings (a)		Purchases/ Acquisitions/ Issuances		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		Foreign Currency Translation Adjustments			Ending Balance
Assets:
Investments:
Equities	$	578	$	7	$	0	$	0		$	(10	)	$	575	$	575	$	0	$	0	$	0	$	(33	)	$	542
Private equity funds		293		0		0		(13	)		(6	)		274		274		0		0		0		(18	)		256
Total Level 3 assets	$	871	$	7	$	0	$	(13	)	$	(16	)	$	849	$	849	$	0	$	0	$	0	$	(51	)	$	798

	Six Months Ended June 30, 2022
	Beginning Balance		Net Unrealized/ Realized Gains/Losses Included In Earnings (a)		Purchases/ Acquisitions/ Issuances		Sales/ Dispositions/ Settlements			Foreign Currency Translation Adjustments			Ending Balance
Assets:
Investments:
Equities	$	578	$	7	$	0	$	0		$	(43	)	$	542
Private equity funds		293		0		0		(13	)		(24	)		256
Total Level 3 assets	$	871	$	7	$	0	$	(13	)	$	(67	)	$	798

Three Months Ended March 31, 2021

Beginning
Balance

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

Purchases/
Acquisitions/
Issuances

Sales/
Dispositions/
Settlements

Foreign
Currency
Translation
Adjustments

Ending
Balance

Assets:

Investments:

Equities

$
1,671

$
1

$
0

$
0

$
(31
)

$
1,641

Private equity funds

1,486

0

0

0

(14
)

1,472

Total Level 3 assets

$
3,157

$
1

$
0

$
0

$
(45
)

$
3,113

Liabilities:

Derivatives

$
0

$
0

$
11,500

$
0

$
0

$
11,500

Total Level 3 liabilities

$
0

$
0

$
11,500

$
0

$
0

$
11,500

~~(a)~~

~~Earnings recorded in “other revenue” for investments in Level 3 assets for the three month periods ended March 31, 2022 and 2021 include net unrealized gains of $7 and $1, respectively.~~

~~There were 0 transfers into or out of Level 3 within the fair value hierarchy during the three month periods ended March 31, 2022 and 2021.~~

~~The following tables present, at March 31, 2022 and December 31, 2021, certain investments that are valued using NAV or its equivalent as a practical expedient in determining fair value:~~

March 31, 2022

Investments Redeemable

Fair Value

Unfunded
Commitments

% of
Fair Value
Not
Redeemable

Redemption
Frequency

Redemption
Notice Period
Alternative investment funds:

Hedge funds

$
29,035

$
-

NA

(a)

30-60 days
Other

624

-

NA

(b)

<30-30 days
Debt funds

5

-

NA

(c)

<30 days
Equity funds

45

-

NA

(d)

<30-60 days
Private equity funds:

Equity growth

48,318

5,560

(e)

100%
(f)

NA

NA
Total

$
78,027

$
5,560

	Three Months Ended June 30, 2021
	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	$	1,641	$	0	$	0	$	0		$	5	$	1,646
Private equity funds		1,472		1,152		0		-			4		2,628
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

1618

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, 2021
	Beginning Balance		Net Unrealized/ Realized Gains/Losses Included In Earnings (a)		Purchases/ Acquisitions		Sales/ Dispositions/ Settlements/ Transfers (b)			Foreign Currency Translation Adjustments			Ending Balance
Assets:
Investments:
Equities	$	1,671	$	1	$	0	$	0		$	(26	)	$	1,646
Private equity funds		1,486		1,152		0		0			(10	)		2,628
Total Level 3 assets	$	3,157	$	1,153	$	0	$	0		$	(36	)	$	4,274

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

(a)	Earnings recorded in “other revenue” for investments in Level 3 assets for the three month and six month periods ended June 30, 2022 and 2021 include net unrealized gains of $0, $7, $1,152 and $1,153 respectively.

(b)	Transfers out of Level 3 derivatives during the three month period ended June 30, 2021 reflected transfers of derivative liabilities for LGAC Warrants to Level 1 principally due to a change in the inputs used to value these 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, 2022 and 2021.

The following tables present, at June 30, 2022 and December 31, 2021, certain investments that are valued using NAV or its equivalent as a practical expedient in determining fair value:

June 30, 2022

Investments Redeemable

Fair Value

Unfunded

Commitments

% of

Fair Value

Not

Redeemable

Redemption

Frequency

Redemption

Notice Period

Alternative investment funds:

Hedge funds

27,331

(a)

30-60 days

Other

608

(b)

<30-30 days

Debt funds

(c)

<30 days

Equity funds

(d)

<30-60 days

Private equity funds:

Equity growth

37,407

5,560

(e)

100%

(f)

Total

65,393

5,560

(a)	monthly ~~(65%~~(66%) and quarterly ~~(35%~~(34%)

(b)	daily (7%) and monthly (93%)

(c)	daily (100%)

(d)	monthly ~~(34%~~(33%) and annually ~~(66%~~(67%)

(e)	Unfunded commitments to private equity investments consolidated but not owned by Lazard of $8,596 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, 2021

Investments Redeemable

Fair Value

Unfunded

Commitments

% of

Fair Value

Not

Redeemable

Redemption

Frequency

Redemption

Notice Period

Alternative investment funds:

Hedge funds

24,162

(a)

30-60 days

Other

623

(b)

<30-30 days

Debt funds

(c)

<30 days

Equity funds

(d)

<30-60 days

Private equity funds:

Equity growth

46,296

5,597

(e)

100

(f)

Total

71,135

5,597

(a)	monthly (79%) and quarterly (21%)

(b)	daily (8%) and monthly (92%)

(c)	daily (100%)

(d)	monthly (36%) and annually (64%)

(e)	Unfunded commitments to private equity investments consolidated but not owned by Lazard of $9,128 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 ~~March 31,~~June 30, 2022, the Company’s maximum unfunded commitments for capital contributions to investment funds primarily arose from commitments to EGCP III, which amounted to $5,158. 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.

6.DERIVATIVES

The tables below present 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 12) on the accompanying condensed consolidated statements of financial condition as of ~~March 31,~~June 30, 2022 and December 31, 2021. Notional amounts provide an indication of the volume of the Company's derivative activity.

Derivative assets and liabilities, as well as the related cash collateral from the same counterparty, have been netted on the condensed consolidated statements of financial condition where the Company has obtained an appropriate legal opinion with respect to the master netting agreement. Where such a legal opinion has not been either sought or obtained, amounts are not eligible for netting on the condensed consolidated statements of financial condition, and those derivative assets and liabilities are shown separately in the table below.

1720

LAZARD LTD

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS-(Continued)

(UNAUDITED)

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

In addition to the cash collateral received and transferred that is presented on a net basis with derivative assets and liabilities, the Company receives and transfers additional securities and cash collateral. These amounts mitigate counterparty credit risk associated with the Company’s derivative instruments, but are not eligible for net presentation on the condensed consolidated statements of financial condition.

	March 31, 2022										June 30, 2022
	Derivative Assets					Derivative Liabilities					Derivative Assets					Derivative Liabilities
	Fair Value			Notional		Fair Value			Notional		Fair Value			Notional		Fair Value			Notional
Forward foreign currency exchange rate contracts	$	1,178		$	175,775	$	1,508		$	179,364	$	2,337		$	200,572	$	690		$	172,454
Total return swaps and other		1,255			50,398		1,951			77,115		18,512			147,287		229			3,372
LGAC Warrants		-			-		6,095			11,500		-			-		2,875			11,500
LFI and other similar deferred compensation arrangements		-			-		397,761			386,783		-			-		345,667			366,737
Total gross derivatives		2,433		$	226,173		407,315		$	654,762		20,849		$	347,859		349,461		$	554,063
Counterparty and cash collateral netting:
Forward foreign currency exchange rate contracts		(147	)				(148	)				(21	)				(21	)
Total return swaps and other		(835	)				(1,951	)				(1,730	)				(229	)
Total in "other assets" and "other liabilities"		1,451					405,216					19,098					349,211
Amounts not netted (a):
Cash collateral		-					(588	)				-					-
Securities collateral		-					-					-					-
	$	1,451				$	404,628				$	19,098				$	349,211

	December 31, 2021
	Derivative Assets					Derivative Liabilities
	Fair Value			Notional		Fair Value			Notional
Forward foreign currency exchange rate contracts	$	1,005		$	253,059	$	761		$	174,550
Total return swaps and other		1,052			20,888		13,709			83,706
LGAC Warrants		-			-		10,005			11,500
LFI and other similar deferred compensation arrangements		-			-		358,877			301,478
Total gross derivatives		2,057		$	273,947		383,352		$	571,234
Counterparty and cash collateral netting:
Forward foreign currency exchange rate contracts		(83	)				(83	)
Total return swaps and other		(1,052	)				(11,024	)
Total in "other assets" and "other liabilities"		922					372,245
Amounts not netted (a):
Cash collateral		-					(2,476	)
Securities collateral		-					(391	)
	$	922				$	369,378

~~LAZARD LTD~~

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

~~(UNAUDITED)~~

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

(a)

Amounts are subject to master netting arrangements but do not meet the criteria for netting on the condensed consolidated statements of financial condition under U.S. GAAP. For some counterparties, the collateral amounts of securities and cash collateral pledged may exceed the derivative assets and derivative liabilities balances. Where this is the case, the total amount reported is limited to the net derivative assets and net derivative liabilities balances with that counterparty.

LAZARD LTD

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS-(Continued)

(UNAUDITED)

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

Net gains (losses) with respect to derivative instruments (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 ~~March 31,~~June 30, 2022 and 2021, were as follows:

	Three Months Ended					Three Months Ended					Six Months Ended
	March 31,					June 30,					June 30,
	2022		2021			2022		2021			2022		2021
Forward foreign currency exchange rate contracts	$	1,906	$	6,818		$	3,704	$	(1,719	)	$	5,610	$	5,099
LFI and other similar deferred compensation arrangements		14,323		(7,487	)		35,098		(16,491	)		49,421		(23,978	)
LGAC Warrants		3,910		-			3,220		(1,725	)		7,130		(1,725	)
Total return swaps and other		6,188		(4,279	)		19,311		(6,695	)		25,499		(10,974	)
Total	$	26,327	$	(4,948	)	$	61,333	$	(26,630	)	$	87,660	$	(31,578	)

PROPERTY

At ~~March 31,~~June 30, 2022 and December 31, 2021, property consisted of the following:

	Estimated Depreciable		March 31,		December 31,		Estimated Depreciable		June 30,		December 31,
	Life in Years		2022		2021		Life in Years		2022		2021
Buildings		33	$	140,614	$	143,464		33	$	131,570	$	143,464
Leasehold improvements	3-20			208,193		209,469	3-20			203,822		209,469
Furniture and equipment	3-10			223,545		218,527	3-10			224,389		218,527
Construction in progress				50,420		46,052				43,266		46,052
Total				622,772		617,512				603,047		617,512
Less - Accumulated depreciation and amortization				373,366		367,507				371,545		367,507
Property			$	249,406	$	250,005			$	231,502	$	250,005

8.	GOODWILL AND OTHER INTANGIBLE ASSETS

The components of goodwill and other intangible assets at ~~March 31,~~June 30, 2022 and December 31, 2021 are presented below:

	March 31,		December 31,		June 30,		December 31,
	2022		2021		2022		2021
Goodwill	$	379,480	$	379,421	$	377,884	$	379,421
Other intangible assets (net of accumulated amortization)		135		150		120		150
	$	379,615	$	379,571	$	378,004	$	379,571

At ~~March 31,~~June 30, 2022 and December 31, 2021, goodwill of ~~$314,939~~$313,343 and $314,880, 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, 2022 and 2021 are as follows:

	Six Months Ended
	June 30,
	2022			2021
Balance, January 1	$	379,421		$	383,861
Foreign currency translation adjustments		(1,537	)		(3,174	)
Balance, June 30	$	377,884		$	380,687

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 three month periods ended March 31, 2022 and 2021 are as follows:~~

Three Months Ended

March 31,

2022

2021

Balance, January 1

$
379,421

$
383,861

Foreign currency translation adjustments

59

(2,109
)
Balance, March 31

$
379,480

$
381,752

All changes in the carrying amount of goodwill for the ~~three~~six month periods ended ~~March 31,~~June 30, 2022 and 2021 are attributable to the Company’s Financial Advisory segment.

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 periods ended March 31, 2022 and 2021 was $15 and $15, respectively.

9.	SENIOR DEBT

Senior debt is comprised of the following as of ~~March 31,~~June 30, 2022 and December 31, 2021:

							Outstanding as of																		Outstanding as of
	Initial			Annual			March 31, 2022						December 31, 2021						Initial			Annual			June 30, 2022						December 31, 2021
	Principal Amount		Maturity Date	Interest Rate(a)			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	$	1,357	$	398,643	$	400,000	$	1,476	$	398,524	$	400,000	2/13/25		3.75	%	$	400,000	$	1,239	$	398,761	$	400,000	$	1,476	$	398,524
Lazard Group 2027 Senior Notes		300,000	3/1/27		3.625	%		300,000		1,918		298,082		300,000		2,015		297,985		300,000	3/1/27		3.625	%		300,000		1,820		298,180		300,000		2,015		297,985
Lazard Group 2028 Senior Notes		500,000	9/19/28		4.50	%		500,000		5,503		494,497		500,000		5,716		494,284		500,000	9/19/28		4.50	%		500,000		5,290		494,710		500,000		5,716		494,284
Lazard Group 2029 Senior Notes		500,000	3/11/29		4.375	%		500,000		5,373		494,627		500,000		5,566		494,434		500,000	3/11/29		4.375	%		500,000		5,180		494,820		500,000		5,566		494,434
Total							$	1,700,000	$	14,151	$	1,685,849	$	1,700,000	$	14,773	$	1,685,227							$	1,700,000	$	13,529	$	1,686,471	$	1,700,000	$	14,773	$	1,685,227

(a)

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 Lazard Group’s 4.375% senior notes due March 11, 2029 (the “2029 Notes”) are 3.87%, 3.76%, 4.67% and 4.53%, respectively.

The Company’s senior debt at ~~March 31,~~June 30, 2022 and December 31, 2021 is carried at their principal balances outstanding, net of unamortized debt costs. At those dates, the fair value of such senior debt was approximately ~~$1,732,000~~$1,633,000 and $1,885,000, 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 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 amended and 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 Restated Credit Agreement contains certain covenants, events of default and other customary provisions, including customary LIBOR-replacement mechanics. At ~~March 31,~~June 30, 2022 and December 31, 2021, 0 amounts were outstanding under the Amended and Restated Credit Agreement.

~~LAZARD LTD~~

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

~~(UNAUDITED)~~

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

As of ~~March 31,~~June 30, 2022, the Company had approximately ~~$206,700~~$208,800 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 ~~$6,000.~~$7,800.

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 ~~March 31,~~June 30, 2022, the Company was in compliance with such provisions. All of the Company’s senior debt obligations are unsecured.

LAZARD LTD

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS-(Continued)

(UNAUDITED)

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

10.	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 ~~March 31,~~June 30, 2022, LFB and LFNY had 0 such underwriting commitments.

See Notes 5 and 13 for information regarding commitments relating to investment capital funding commitments and obligations to fund our pension plans, respectively.

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 may experience 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 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.

11.	STOCKHOLDERS’ EQUITY

Share Repurchase Program— ~~Since~~During 2021 and through the ~~three~~six month period ended ~~March 31,~~June 30, 2022, 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, as set forth in the table below:

Date

Repurchase

Authorization

Expiration

April 2021

300,000

December 31, 2022

February 2022

300,000

December 31, 2024

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:

Three Months Ended March 31:	Number of Shares Purchased		Average Price Per Share
Six Months Ended June 30:					Number of Shares Purchased		Average Price Per Share
2021		2,899,541	$	42.30		5,329,541	$	43.86
2022		4,717,821	$	37.26		10,598,882	$	35.40

~~LAZARD LTD~~

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

~~(UNAUDITED)~~

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

During the ~~three~~six month periods ended ~~March 31,~~June 30, 2022 and 2021, 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 ~~three~~six month ~~period~~periods ended ~~March 31,~~June 30, 2022 and 2021, the Company purchased shares of common stock from certain of our executive officers. ~~There were 0 such purchases (other than for taxes) during the three month period ended March 31, 2022.~~ The aggregate value of all such purchases during the ~~three~~six month periods ended ~~March 31,~~June 30, 2022 and 2021 was approximately ~~$11,500~~$13,400 and $18,600, respectively. Such shares of common stock are reported at cost.

LAZARD LTD

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS-(Continued)

(UNAUDITED)

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

As of ~~March 31,~~June 30, 2022, a total of ~~$318,054~~$118,666 of share repurchase authorization remained available under Lazard Ltd’s share repurchase program, ~~$18,054 of~~ which ~~will expire on December 31, 2022 and $300,000 of which~~authorization will expire on December 31, 2024.

In addition, on July 27, 2022, the Board of Directors of Lazard authorized the repurchase of up to $500,000 of additional shares of common stock, which authorization will expire on December 31, 2024, bringing the total available share repurchase authorization as of July 27, 2022 to approximately $559,000.

During the ~~three~~six month period ended ~~March 31,~~June 30, 2022, Lazard Ltd 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 ~~March 31,~~June 30, 2022 and December 31, 2021, 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 ~~March 31,~~June 30, 2022 and 2021 and activity during the three month and six month periods then ended:

	Three Months Ended March 31, 2022															Three Months Ended June 30, 2022
	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, January 1, 2022	$	(92,178	)	$	(131,669	)	$	(223,847	)	$	-		$	(223,847	)
Balance, April 1, 2022																$	(110,246	)	$	(127,381	)	$	(237,627	)	$	(1	)	$	(237,626	)
Activity:
Other comprehensive income (loss) before reclassifications		(18,068	)		3,439			(14,629	)		(1	)		(14,628	)		(61,700	)		8,287			(53,413	)		-			(53,413	)
Adjustments for items reclassified to earnings, net of tax		0			849			849			-			849			205			805			1,010			-			1,010
Net other comprehensive income (loss)		(18,068	)		4,288			(13,780	)		(1	)		(13,779	)		(61,495	)		9,092			(52,403	)		-			(52,403	)
Balance, March 31, 2022	$	(110,246	)	$	(127,381	)	$	(237,627	)	$	(1	)	$	(237,626	)
Balance, June 30, 2022																$	(171,741	)	$	(118,289	)	$	(290,030	)	$	(1	)	$	(290,029	)

	Six Months Ended June 30, 2022
	Currency Translation Adjustments			Employee Benefit Plans			Total AOCI			Amount Attributable to Noncontrolling Interests			Total Lazard Ltd AOCI
Balance, January 1, 2022	$	(92,178	)	$	(131,669	)	$	(223,847	)	$	-		$	(223,847	)
Activity:
Other comprehensive income (loss) before reclassifications		(79,690	)		11,726			(67,964	)		(1	)		(67,963	)
Adjustments for items reclassified to earnings, net of tax		127			1,654			1,781			-			1,781
Net other comprehensive income (loss)		(79,563	)		13,380			(66,183	)		(1	)		(66,182	)
Balance, June 30, 2022	$	(171,741	)	$	(118,289	)	$	(290,030	)	$	(1	)	$	(290,029	)

Three Months Ended March 31, 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 income (loss) before
reclassifications

(19,743
)

1,065

(18,678
)

1

(18,679
)
Adjustments for items reclassified to earnings,
net of tax

0

1,336

1,336

-

1,336

Net other comprehensive income (loss)

(19,743
)

2,401

(17,342
)

1

(17,343
)
Balance, March 31, 2021

$
(87,467
)

$
(168,243
)

$
(255,710
)

$
1

$
(255,711
)

2225

LAZARD LTD

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS-(Continued)

(UNAUDITED)

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

	Three Months Ended June 30, 2021
	Currency Translation Adjustments			Employee Benefit Plans			Total AOCI			Amount Attributable to Noncontrolling Interests			Total Lazard Ltd AOCI
Balance, April 1, 2021	$	(87,467	)	$	(168,243	)	$	(255,710	)	$	1		$	(255,711	)
Activity:
Other comprehensive income (loss) before reclassifications		5,502			(1,477	)		4,025			(1	)		4,026
Adjustments for items reclassified to earnings, net of tax		23,579			1,458			25,037			-			25,037
Net other comprehensive income (loss)		29,081			(19	)		29,062			(1	)		29,063
Balance, June 30, 2021	$	(58,386	)	$	(168,262	)	$	(226,648	)	$	-		$	(226,648	)

	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	)

The table below reflects adjustments for items reclassified from AOCI, by component, for the three month and six month periods ended ~~March 31,~~June 30, 2022 and 2021:

	Three Months Ended				Three Months Ended				Six Months Ended
	March 31,				June 30,				June 30,
	2022		2021		2022		2021		2022		2021
Currency translation losses (a)					$	205	$	23,579	$	127	$	23,579
Employee benefit plans:
Amortization relating to employee benefit plans (a)	$	1,116	$	1,717
Amortization relating to employee benefit plans (b)						1,053		1,941		2,169		3,658
Less - related income taxes		267		381		248		483		515		864
						805		1,458		1,654		2,794
Total reclassifications, net of tax	$	849	$	1,336	$	1,010	$	25,037	$	1,781	$	26,373

(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 13). 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 12), (iii) LGAC interests (see Note 1) and (iv) consolidated VIE interests held by employees (see Note 19).

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 ~~March 31,~~June 30, 2022 and 2021 and noncontrolling interests as of ~~March 31,~~June 30, 2022 and December 31, 2021 in the Company’s condensed consolidated financial statements:

	Net Income (Loss) Attributable to Noncontrolling Interests						Net Income (Loss) Attributable to Noncontrolling Interests
	Three Months Ended						Three Months Ended						Six Months Ended
	March 31,						June 30,						June 30,
	2022			2021			2022			2021			2022			2021
Edgewater	$	6,988		$	1,456		$	3,518		$	1,874		$	10,506		$	3,330
LFI Consolidated Funds		(2,751	)		2,268			(10,405	)		2,420			(13,156	)		4,688
LGAC		2,860			(200	)		3,058			(2,558	)		5,918			(2,758	)
Other		2			2			-			2			2			4
Total	$	7,099		$	3,526		$	(3,829	)	$	1,738		$	3,270		$	5,264

	Noncontrolling Interests as of						Noncontrolling Interests as of
	March 31,			December 31,			June 30,			December 31,
	2022			2021			2022			2021
Edgewater	$	47,485		$	44,826		$	46,015		$	44,826
Profits interest participation rights		5,650			4,049			9,293			4,049
LFI Consolidated Funds		79,100			67,299			67,551			67,299
LGAC		(12,447	)		(13,445	)		(11,576	)		(13,445	)
Other		14			15			12			15
Total	$	119,802		$	102,744		$	111,295		$	102,744

Dividends Declared, ~~April~~July 27, 2022—On ~~April~~July 27, 2022, the Board of Directors of Lazard declared a quarterly dividend of ~~$0.47~~$0.50 per share on our common stock. The dividend is payable on ~~May 20,~~August 19, 2022, to stockholders of record on ~~May 9,~~August 8, 2022.

12.	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 ~~March 31,~~June 30, 2022 and 2021 is presented below.

~~LAZARD LTD~~

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

~~(UNAUDITED)~~

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

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 by 20,000,000 shares. The 2018 Plan replaced the 2008 Plan, which was terminated on April 24, 2018. The 2018 Plan 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. 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.

LAZARD LTD

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS-(Continued)

(UNAUDITED)

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

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.

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 ~~March 31,~~June 30, 2022 and 2021:

	Three Months Ended				Three Months Ended				Six Months Ended
	March 31,				June 30,				June 30,
	2022		2021		2022		2021		2022		2021
Share-based incentive awards:
RSUs	$	26,659	$	34,805	$	34,292	$	36,102	$	60,951	$	70,907
PRSUs		245		5,559		644		155		889		5,714
Restricted Stock		4,936		6,067		7,841		5,699		12,777		11,766
Profits interest participation rights		21,448		21,573		28,244		32,109		49,692		53,682
DSUs		149		187		1,728		1,631		1,877		1,818
Total	$	53,437	$	68,191	$	72,749	$	75,696	$	126,186	$	143,887

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.

~~LAZARD LTD~~

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

~~(UNAUDITED)~~

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

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 ~~three~~six month period ended ~~March 31,~~June 30, 2022, dividend participation rights required the issuance of ~~106,885~~221,575 RSUs and the associated charge to “retained earnings”, net of estimated forfeitures (with corresponding credits to “additional paid-in-capital”) was ~~$3,690.~~$7,056.

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.~~DSUs, which resulted in 44,772 DSUs being granted during the six month period ended June 30, 2022. 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.

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 ~~three~~six month period ended ~~March 31,~~June 30, 2022, ~~3,929~~8,563 DSUs had been granted pursuant to such Plan.

LAZARD LTD

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS-(Continued)

(UNAUDITED)

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

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

The following is a summary of activity relating to RSUs and DSUs during the ~~three~~six month period ended ~~March 31,~~June 30, 2022:

	RSUs					DSUs				RSUs					DSUs
	Units			Weighted Average Grant Date Fair Value		Units		Weighted Average Grant Date Fair Value		Units			Weighted Average Grant Date Fair Value		Units		Weighted Average Grant Date Fair Value
Balance, January 1, 2022		8,150,782		$	41.16		338,408	$	38.01		8,150,782		$	41.16		338,408	$	38.01
Granted (including 106,885 RSUs relating to dividend participation)		3,692,028		$	33.09		3,929	$	37.95
Granted (including 221,575 RSUs relating to dividend participation)											4,500,490		$	33.49		53,335	$	35.19
Forfeited		(16,550	)	$	42.41		-		-		(271,135	)	$	39.46		-		-
Settled		(3,767,006	)	$	39.14		-	$	-		(3,773,601	)	$	39.14		-		-
Balance, March 31, 2022		8,059,254		$	38.40		342,337	$	38.01
Balance, June 30, 2022											8,606,536		$	38.09		391,743	$	37.62

The weighted-average grant date fair value of RSUs granted during the ~~three~~six month periods ended ~~March 31,~~June 30, 2022 and 2021, was ~~$33.09~~$33.49 and ~~$43.13,~~$43.11, respectively. The weighted-average grant date fair value of DSUs granted during the ~~three~~six month periods ended ~~March 31,~~June 30, 2022 and ~~2021was $37.95~~2021 was $35.19 and ~~$41.92,~~$46.51, respectively.

In connection with RSUs that settled during the ~~three~~six month period ended ~~March 31,~~June 30, 2022, the Company satisfied its minimum statutory tax withholding requirements in lieu of delivering ~~1,490,239~~1,493,598 shares of common stock during such ~~three~~six month period. Accordingly, ~~2,276,767~~2,280,003 shares of common stock held by the Company were delivered during the ~~three~~six month period ended ~~March 31,~~June 30, 2022.

As of ~~March 31,~~June 30, 2022, estimated unrecognized RSU compensation expense was ~~$181,224,~~$161,587, with such expense expected to be recognized over a weighted average period of approximately 1.0 ~~years~~year subsequent to ~~March 31,~~June 30, 2022.

~~LAZARD LTD~~

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

~~(UNAUDITED)~~

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

Restricted Stock

The following is a summary of activity related to shares of restricted common stock associated with compensation arrangements during the ~~three~~six month period ended ~~March 31,~~June 30, 2022:

	Restricted Shares			Weighted Average Grant Date Fair Value		Restricted Shares			Weighted Average Grant Date Fair Value
Balance, January 1, 2022		871,227		$	41.24		871,227		$	41.24
Granted (including 8,948 relating to dividend participation)		1,005,983		$	33.17
Granted (including 30,290 relating to dividend participation)							1,027,325		$	33.21
Forfeited		(710	)	$	34.65		(59,856	)	$	36.78
Settled		(344,359	)	$	38.10		(372,377	)	$	38.08
Balance, March 31, 2022		1,532,141		$	36.65
Balance, June 30, 2022							1,466,319		$	36.60

The weighted-average grant date fair value of restricted stock granted during the ~~three~~six month periods ended ~~March 31,~~June 30, 2022 and ~~2021was $33.17~~2021 was $33.21 and ~~$43.23,~~$43.27, respectively.

In connection with shares of restricted common stock that settled during the ~~three~~six month period ended ~~March 31,~~June 30, 2022, the Company satisfied its minimum statutory tax withholding requirements in lieu of delivering ~~131,069~~142,512 shares of common stock during such ~~three~~six month period. Accordingly, ~~213,290~~229,865 shares of common stock held by the Company were delivered during the ~~three~~six month period ended ~~March 31,~~June 30, 2022.

Restricted stock awards granted in 2022 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

LAZARD LTD

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS-(Continued)

(UNAUDITED)

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

on common stock during such period. During the ~~three~~six month period ended ~~March 31,~~June 30, 2022, dividend participation rights required the issuance of ~~8,948~~30,290 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 ~~$313.~~$1,033.

At ~~March 31,~~June 30, 2022, estimated unrecognized restricted stock expense was ~~$41,775,~~$31,822, with such expense to be recognized over a weighted average period of approximately 1.0 ~~years~~year subsequent to ~~March 31,~~June 30, 2022.

PRSUs

PRSUs are RSUs that are subject to performance-based and service-based vesting 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-based and, beginning with awards granted in February 2021, market-based metrics that relate to 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 beginning 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. PRSUs granted prior to February 2021 include dividend participation rights that provide that during vesting periods, the target number of PRSUs 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 beginning 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.

~~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 PRSUs during the ~~three~~six month period ended ~~March 31,~~June 30, 2022:

	PRSUs		Weighted Average Grant Date Fair Value		PRSUs		Weighted Average Grant Date Fair Value
Balance, January 1, 2022		32,394	$	46.63		32,394	$	46.63
Granted		62,296	$	35.44		62,296	$	35.44
Balance, March 31, 2022		94,690	$	39.27
Balance, June 30, 2022						94,690	$	39.27

The weighted-average grant date fair value of PRSUs granted during the ~~three~~six month periods ended ~~March 31,~~June 30, 2022 and ~~2021was~~2021 was $35.44 and $46.63, respectively.

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 ~~March 31,~~June 30, 2022, the total estimated unrecognized compensation expense was ~~$4,510,~~$4,418, and the Company expects to amortize such expense over a weighted-average period of approximately ~~1.3~~1.2 years subsequent to ~~March 31,~~June 30, 2022.

Profits Interest Participation Rights

Profits interest participation rights are equity incentive awards that, subject to certain conditions, may be exchanged for shares of common stock pursuant to the 2018 Plan. The Company granted profits interest 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 certain of 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. Profits interest participation rights generally provide for vesting approximately three years following the grant date, so long as applicable conditions have been satisfied.

LAZARD LTD

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS-(Continued)

(UNAUDITED)

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

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-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 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 years ended December 31, 2020 and December 31, 2021, respectively. On March 1, 2022, the profits interest participation rights granted in February 2019, for which the Minimum Value Condition and other vesting conditions were satisfied, were exchanged on a one-for-one basis for shares of common stock.

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.

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 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 the PRPU awards granted in February 2019 and February 2020 will range from zero to two times the target number. For the PRPU awards granted beginning 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 conditions are satisfied during the three year performance period, and the Minimum Value Condition is satisfied within five years following the grant date, all

~~LAZARD LTD~~

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

~~(UNAUDITED)~~

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

PRPUs will be forfeited, and the recipients will not be entitled to any such awards.

In addition, the performance metrics applicable to 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 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 ~~three~~six month period ended ~~March 31,~~June 30, 2022:

	Profits Interest Participation Rights			Weighted Average Grant Date Fair Value		Profits Interest Participation Rights			Weighted Average Grant Date Fair Value
Balance, January 1, 2022		4,122,993		$	41.50		4,122,993		$	41.50
Granted		1,521,103		$	34.53		1,521,103		$	34.53
Forfeited							(96,323	)	$	38.92
Settled		(1,902,756	)	$	38.76		(1,902,756	)	$	38.76
Balance, March 31, 2022 (a)		3,741,340		$	40.06
Balance, June 30, 2022 (a)							3,645,017		$	40.09

(a)

Table includes 1,960,613 PRPUs, which represents the target number of PRPUs granted as of ~~March 31,~~June 30, 2022, including 963,660 PRPUs granted during the ~~three~~six month period ended ~~March 31,~~June 30, 2022. The weighted average grant date fair values for PRPUs and other profits interest participation rights outstanding as of January 1, 2022 were $41.82 and $41.20, respectively. The weighted average grant date fair values for PRPUs and other profits interest participation rights granted during the ~~three~~six month period ended ~~March 31,~~June 30, 2022 were $35.44 and $32.95, respectively. The weighted average grant date fair values for other profits interest participation rights forfeited during the six month period ended June 30, 2022 were $38.92. The weighted average grant date fair values for PRPUs and other profits interest participation rights settled during the ~~three~~six month period ended ~~March 31,~~June 30, 2022 were $38.86 and $38.65, respectively. The weighted average grant date fair values for PRPUs and other profits interest participation rights outstanding as of ~~March 31,~~June 30, 2022 were $40.20 and ~~$39.90,~~$39.96, respectively.

LAZARD LTD

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS-(Continued)

(UNAUDITED)

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

The weighted average grant date fair value of profits interest participation rights granted during the ~~three~~six month periods ended ~~March 31,~~June 30, 2022 and 2021 was $34.53 and $44.73, respectively. 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 ~~March 31,~~June 30, 2022, the total estimated unrecognized compensation expense was ~~$74,580.~~$51,125. The Company expects to amortize such expense over a weighted-average period of approximately 0.7 years subsequent to ~~March 31,~~June 30, 2022.

LFI and Other Similar Deferred Compensation Arrangements

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, 2022:

	Prepaid Compensation Asset			Compensation Liability
Balance, January 1, 2022	$	108,049		$	358,877
Granted		166,096			166,096
Settled		-			(119,526	)
Forfeited		(10,683	)		(11,394	)
Amortization		(79,748	)		-
Change in fair value related to:
Change in fair value of underlying investments		-			(49,421	)
Adjustment for estimated forfeitures		-			4,217
Other		(33	)		(3,182	)
Balance, June 30, 2022	$	183,681		$	345,667

The amortization of the prepaid compensation asset will generally be recognized over a weighted average period of approximately 0.9 years subsequent to June 30, 2022.

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 LFI and other similar deferred compensation arrangements during the three month period ended March 31, 2022:~~

Prepaid
Compensation
Asset

Compensation
Liability

Balance, January 1, 2022

$
108,049

$
358,877

Granted

166,096

166,096

Settled

-

(115,744
)
Forfeited

61

(171
)
Amortization

(32,528
)

-

Change in fair value related to:

Change in fair value of underlying
investments

-

(14,323
)
Adjustment for estimated forfeitures

-

3,329

Other

129

(303
)
Balance, March 31, 2022

$
241,807

$
397,761

~~The amortization of the prepaid compensation asset will generally be recognized over a weighted average period of approximately 1.0 years subsequent to March 31, 2022.~~

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 ~~March 31,~~June 30, 2022 and 2021:

	Three Months Ended					Three Months Ended					Six Months Ended
	March 31,					June 30,					June 30,
	2022			2021		2022			2021		2022			2021
Amortization, net of forfeitures	$	35,625		$	30,023	$	47,629		$	51,770	$	83,254		$	81,793
Change in the fair value of underlying investments		(14,323	)		7,487		(35,098	)		16,491		(49,421	)		23,978
Total	$	21,302		$	37,510	$	12,531		$	68,261	$	33,833		$	105,771

13.	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.

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, 2022 and 2021:

	Pension Plans
	Three Months Ended June 30,
	2022			2021
Components of Net Periodic Benefit Cost (Credit):
Service cost	$	59		$	231
Interest cost		2,817			2,141
Expected return on plan assets		(6,195	)		(6,597	)
Amortization of:
Prior service cost		26			30
Net actuarial loss (gain)		1,027			1,911
Settlement loss		407			384
Net periodic benefit cost (credit)	$	(1,859	)	$	(1,900	)

	Pension Plans
	Six Months Ended June 30,
	2022			2021
Components of Net Periodic Benefit Cost (Credit):
Service cost	$	270		$	457
Interest cost		5,817			4,256
Expected return on plan assets		(12,819	)		(13,131	)
Amortization of:
Prior service cost		55			60
Net actuarial loss (gain)		2,114			3,598
Settlement loss		843			764
Net periodic benefit cost (credit)	$	(3,720	)	$	(3,996	)

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 periods ended March 31, 2022 and 2021:~~

Pension Plans

Three Months Ended March 31,

2022

2021

Components of Net Periodic Benefit Cost (Credit):

Service cost

$
211

$
226

Interest cost

3,000

2,115

Expected return on plan assets

(6,624
)

(6,534
)
Amortization of:

Prior service cost

29

30

Net actuarial loss (gain)

1,087

1,687

Settlement loss

436

380

Net periodic benefit cost (credit)

$
(1,861
)

$
(2,096
)

14.	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 ~~$38,753~~$34,187 and ~~$43,464~~$72,940 for the three month and six month periods ended ~~March 31,~~June 30, 2022, respectively, and $41,345 and $84,809 for the three month and six month periods ended June 30, 2021, respectively, representing effective tax rates of ~~24.3%~~27.2%, 25.5%, 24.9% and ~~32.4%~~28.2%, 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)~~

15.	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 ~~March 31,~~June 30, 2022 and 2021 are presented below:

	Three Months Ended						Three Months Ended						Six Months Ended
	March 31,						June 30,						June 30,
	2022			2021			2022			2021			2022			2021
Net income attributable to Lazard Ltd	$	113,876		$	87,300		$	95,480		$	123,178		$	209,356		$	210,478
Add - adjustment for earnings attributable to participating securities		(1,733	)		(1,292	)		(1,090	)		(1,549	)		(2,823	)		(2,841	)
Net income attributable to Lazard Ltd - basic		112,143			86,008			94,390			121,629			206,533			207,637
Add - adjustment for earnings attributable to participating securities		1,129			1,292			554			1,549			1,683			2,841
Net income attributable to Lazard Ltd - diluted	$	113,272		$	87,300		$	94,944		$	123,178		$	208,216		$	210,478
Weighted average number of shares of common stock outstanding		100,634,720			105,545,273			97,380,282			105,104,377			99,007,501			105,324,825
Add - adjustment for shares of common stock issuable on a non-contingent basis		1,912,557			1,746,287			1,279,891			1,642,277			1,596,223			1,694,282
Weighted average number of shares of common stock outstanding - basic		102,547,277			107,291,560			98,660,173			106,746,654			100,603,724			107,019,107
Add - dilutive effect, as applicable, of:
Weighted average number of incremental shares of common stock issuable from share-based incentive compensation		5,639,365			8,530,734			4,093,163			6,856,824			4,866,264			7,693,778
Weighted average number of shares of common stock outstanding - diluted		108,186,642			115,822,294			102,753,336			113,603,478			105,469,988			114,712,885
Net income attributable to Lazard Ltd per share of common stock:
Basic	$	1.09		$	0.80		$	0.96		$	1.14		$	2.05		$	1.94
Diluted	$	1.05		$	0.75		$	0.92		$	1.08		$	1.97		$	1.83

LAZARD LTD

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS-(Continued)

(UNAUDITED)

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

16.	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 ~~$164,371~~$134,342 and ~~$173,678~~$298,713 for the three month and six month periods ended ~~March 31,~~June 30, 2022, respectively, and $186,446 and $360,124 for the three month and six month periods ended June 30, 2021, respectively, and are included in “asset management fees” on the condensed consolidated statements of operations. Of such amounts, ~~$92,151~~$110,061 and $96,740 remained as receivables at ~~March 31,~~June 30, 2022 and December 31, 2021, 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 “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 the increases in the tax basis of certain assets and of certain other tax benefits related to the TRA, and (ii) an amount that we currently expect will equal 85% of the cash tax savings that may arise from tax basis increases attributable to payments under the TRA. Our subsidiaries expect to benefit from the balance of cash savings, if any, in income tax that our subsidiaries realize from such

~~LAZARD LTD~~

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

~~(UNAUDITED)~~

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

tax basis increases. 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.

For purposes of the 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 assets of Lazard Group and had our subsidiaries not entered into the TRA. The term of the TRA will continue until approximately 2033 or, if earlier, until all relevant tax benefits have been utilized or expired.

The amount of the TRA liability is an undiscounted amount based upon current tax laws and the 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, we could be required to accelerate payments under the TRA. As such, the actual amount and timing of payments under the 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 TRA as of ~~March 31,~~June 30, 2022 and December 31, 2021 was ~~$192,489~~$192,473 and $213,434, respectively, and is recorded in “tax receivable agreement obligation” on the condensed consolidated statements of financial condition. The balance at ~~March 31,~~June 30, 2022 reflects a payment made under the TRA in the ~~three~~six months ended ~~March 31,~~June 30, 2022 of ~~$20,945.~~$20,961.

Other

See Note 11 for information regarding related party transactions pertaining to shares repurchased from certain of our executive officers.

17.	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 ~~March 31,~~June 30, 2022, LFNY’s regulatory net capital was ~~$46,066,~~$63,059, which exceeded the minimum requirement by ~~$43,337.~~$58,868. LFNY’s aggregate indebtedness to net capital ratio was ~~0.89:~~1.00:1 as of ~~March 31,~~June 30, 2022.

LAZARD LTD

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS-(Continued)

(UNAUDITED)

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

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 ~~March 31,~~June 30, 2022, the aggregate regulatory net capital of the U.K. Subsidiaries was ~~$169,363,~~$143,683, which exceeded the minimum requirement by ~~$107,228.~~$86,005.

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 ~~December~~March 31, ~~2021,~~2022, the consolidated regulatory net capital of CFLF was ~~$143,046~~$131,148 which exceeded the minimum requirement set for regulatory capital levels by ~~$72,846.~~$62,075. 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 ~~December~~March 31, ~~2021,~~2022, the regulatory net capital of the combined European regulated group was ~~$162,804,~~$149,268, which exceeded the minimum requirement set for regulatory capital levels by ~~$80,912.~~$69,552. Additionally, the combined European regulated group, together with our European Financial Advisory entities, is required to perform an annual risk

~~LAZARD LTD~~

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

~~(UNAUDITED)~~

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

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 ~~March 31,~~June 30, 2022, for those subsidiaries with regulatory capital requirements, their aggregate net capital was ~~$186,506,~~$190,739, which exceeded the minimum required capital by ~~$157,703.~~$163,830.

At ~~March 31,~~June 30, 2022, 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.

18.	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 ~~March 31,~~June 30, 2022 and 2021 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.

LAZARD LTD

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS-(Continued)

(UNAUDITED)

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

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							Three Months Ended						Six Months Ended
		March 31,							June 30,						June 30,
		2022			2021				2022			2021			2022			2021
Financial Advisory	Net Revenue	$	390,215		$	318,412		Net Revenue	$	407,885		$	451,940		$	798,100		$	770,352
	Operating Expenses		298,258			258,047		Operating Expenses		316,574			369,083			614,832			627,130
	Operating Income	$	91,957		$	60,365		Operating Income	$	91,311		$	82,857		$	183,268		$	143,222
Asset Management	Net Revenue	$	338,501		$	347,490		Net Revenue	$	289,151		$	365,255		$	627,652		$	712,745
	Operating Expenses		241,516			232,103		Operating Expenses		232,546			269,314			474,062			501,417
	Operating Income	$	96,985		$	115,387		Operating Income	$	56,605		$	95,941		$	153,590		$	211,328
Corporate	Net Revenue (Expense)	$	(33,824	)	$	(5,795	)	Net Revenue (Loss)	$	(57,490	)	$	5,942		$	(91,314	)	$	147
	Operating Expenses (Credit)		(4,610	)		35,667		Operating Expenses (Credit)		(35,412	)		18,479			(40,022	)		54,146
	Operating Loss	$	(29,214	)	$	(41,462	)	Operating Loss	$	(22,078	)	$	(12,537	)	$	(51,292	)	$	(53,999	)
Total	Net Revenue	$	694,892		$	660,107		Net Revenue	$	639,546		$	823,137		$	1,334,438		$	1,483,244
	Operating Expenses		535,164			525,817		Operating Expenses		513,708			656,876			1,048,872			1,182,693
	Operating Income	$	159,728		$	134,290		Operating Income	$	125,838		$	166,261		$	285,566		$	300,551

	As Of				As Of
	March 31, 2022		December 31, 2021		June 30, 2022		December 31, 2021
Total Assets
Financial Advisory	$	1,334,389	$	1,239,964	$	1,199,214	$	1,239,964
Asset Management		951,464		1,128,549		910,142		1,128,549
Corporate		4,562,493		4,778,668		4,602,440		4,778,668
Total	$	6,848,346	$	7,147,181	$	6,711,796	$	7,147,181

LAZARD LTD

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS-(Continued)

(UNAUDITED)

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

19.	CONSOLIDATED VIEs

The Company’s consolidated VIEs as of ~~March 31,~~June 30, 2022 and December 31, 2021 include LGAC (see Note 1) and certain funds (“LFI Consolidated 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 assets of LFI Consolidated Funds, except as it relates to ~~$158,783~~$138,741 and $140,371 of LFI held by Lazard Group as of ~~March 31,~~June 30, 2022 and December 31, 2021, respectively, can only be used to settle the obligations of LFI Consolidated Funds. The Company’s consolidated VIE assets and liabilities for LFI Consolidated Funds as reflected in the condensed consolidated statements of financial condition consist of the following at ~~March 31,~~June 30, 2022 and December 31, 2021.

	March 31, 2022		December 31, 2021		June 30, 2022		December 31, 2021
ASSETS
Cash and cash equivalents	$	3,702	$	3,936	$	4,769	$	3,936
Customers and other receivables		1,558		305		168		305
Investments		233,520		204,062		202,495		204,062
Other assets		462		328		880		328
Total Assets	$	239,242	$	208,631	$	208,312	$	208,631

LIABILITIES
Deposits and other customer payables	$	781	$	50	$	1,568	$	50
Other liabilities		580		910		452		910
Total Liabilities	$	1,361	$	960	$	2,020	$	960

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, 2021 (the “Form 10-K”). All references to “2022,” “2021,” “second quarter,” “first ~~quarter”~~half” or “the period” refer to, as the context requires, the three month and six month periods ended ~~March 31,~~June 30, 2022 and 2021.

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 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, one~~

Net Revenue

407,885

451,940

798,100

770,352

Operating Expenses

316,574

369,083

614,832

627,130

Operating Income

91,311

82,857

183,268

143,222

Asset Management

Net Revenue

289,151

365,255

627,652

712,745

Operating Expenses

232,546

269,314

474,062

501,417

Operating Income

56,605

95,941

153,590

211,328

Corporate

Net Revenue (Loss)

(57,490

)

5,942

(91,314

)

147

Operating Expenses (Credit)

(35,412

)

18,479

(40,022

)

54,146

Operating Loss

(22,078

)

(12,537

)

(51,292

)

(53,999

)

Total

Net Revenue

639,546

823,137

1,334,438

1,483,244

Operating Expenses

513,708

656,876

1,048,872

1,182,693

Operating Income

125,838

166,261

285,566

300,551

	As Of
	June 30, 2022		December 31, 2021
Total Assets
Financial Advisory	$	1,199,214	$	1,239,964
Asset Management		910,142		1,128,549
Corporate		4,602,440		4,778,668
Total	$	6,711,796	$	7,147,181

LAZARD LTD

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS-(Continued)

(UNAUDITED)

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

19.	CONSOLIDATED VIEs

The Company’s consolidated VIEs as of June 30, 2022 and December 31, 2021 include LGAC (see Note 1) and certain funds (“LFI Consolidated 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 assets of LFI Consolidated Funds, except as it relates to $138,741 and $140,371 of LFI held by Lazard Group as of June 30, 2022 and December 31, 2021, respectively, can only be used to settle the obligations of LFI Consolidated Funds. The Company’s consolidated VIE assets and liabilities for LFI Consolidated Funds as reflected in the condensed consolidated statements of financial condition consist of the following at June 30, 2022 and December 31, 2021.

	June 30, 2022		December 31, 2021
ASSETS
Cash and cash equivalents	$	4,769	$	3,936
Customers and other receivables		168		305
Investments		202,495		204,062
Other assets		880		328
Total Assets	$	208,312	$	208,631

LIABILITIES
Deposits and other customer payables	$	1,568	$	50
Other liabilities		452		910
Total Liabilities	$	2,020	$	960

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, 2021 (the “Form 10-K”). All references to “2022,” “2021,” “second quarter,” “first half” or “the period” refer to, as the context requires, the three month and six month periods ended June 30, 2022 and 2021.

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 ~~world’s preeminent~~M&A market or our assets under management (“AUM”);

•

losses caused by financial advisory and asset management firms, operates from 40 cities across 25 countries in North and South America, Europe, Asia and Australia. 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.or other problems experienced by third parties;

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.

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~~•

losses due to unidentified or unanticipated risks;

•

a lack of ~~revenue are derived from activities~~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 ~~following business segments:~~availability of short-term borrowing;

•

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, capital raising, sovereign advisory and other strategic advisory matters,

•

competitive position;

•

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

•

potential growth opportunities available to our businesses;

•

~~Asset Management, which offers a broad range~~

•

potential impact of ~~global investment solutions and investment and wealth 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,~~technology infrastructure and data science capabilities;

•

recruitment and retention of our managing directors and employees;

•

potential levels of compensation expense, including ~~management~~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 ~~cash, investments, deferred~~success and impact of litigation;

•

expected tax ~~assets, outstanding indebtedness,~~rates, including effective tax rates;

•

changes in interest and tax rates;

•

availability of certain ~~contingent obligations and~~tax benefits, including certain ~~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~~potential deductions;

•

potential impact of ~~the Company, Lazard Growth Acquisition Corp. I (“LGAC”).~~

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

Three Months Ended

March 31,

2022

2021

Financial Advisory

56
%

48
%
Asset Management

49

53

Corporate

(5
)

(1
)
Total

100
%

100
%

~~We also invest our own capital from time to time, generally alongside capital of qualified institutional and individual investors in alternative investments~~certain events or ~~private equity investments, and make investments to seed our Asset Management strategies.~~

~~Business Environment and Outlook~~

~~Economic and global financial market conditions can materially affect~~circumstances on our financial ~~performance. As described above, our principal sources of revenue are derived from activities~~statements and operations, including the ongoing COVID-19 pandemic;

•

changes in our Financial Advisory and Asset Management business segments. 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.foreign currency exchange rates;

The global macroeconomic environment remains unsettled due to a number of factors, including geopolitical instability, especially Russia’s invasion of Ukraine, heightened inflation, the coronavirus (“COVID-19”) pandemic-related lockdowns in China, a rising interest rate environment and supply chain challenges.

~~Our outlook~~•

•

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

•

~~Financial Advisory~~—Despite the global macroeconomic environment, our engagement with clients remains robust. The global scale and breadth of our Financial Advisory business enables 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 in an effort to enhance our capabilities and sector expertise in M&A, capital structure and public and private capital markets.

•

~~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, uncertainty due to the ongoing health crisis, emergent concerns about inflation, and geopolitical instability may 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 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, a new long/short credit strategy and a new Technology, Media and Telecom long/short equity 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~~new or future legislation and regulation, including tax laws and regulations, 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.business.

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

Net Revenue

407,885

451,940

798,100

770,352

Operating Expenses

316,574

369,083

614,832

627,130

Operating Income

91,311

82,857

183,268

143,222

Asset Management

Net Revenue

289,151

365,255

627,652

712,745

Operating Expenses

232,546

269,314

474,062

501,417

Operating Income

56,605

95,941

153,590

211,328

Corporate

Net Revenue (Loss)

(57,490

)

5,942

(91,314

)

147

Operating Expenses (Credit)

(35,412

)

18,479

(40,022

)

54,146

Operating Loss

(22,078

)

(12,537

)

(51,292

)

(53,999

)

Total

Net Revenue

639,546

823,137

1,334,438

1,483,244

Operating Expenses

513,708

656,876

1,048,872

1,182,693

Operating Income

125,838

166,261

285,566

300,551

	As Of
	June 30, 2022		December 31, 2021
Total Assets
Financial Advisory	$	1,199,214	$	1,239,964
Asset Management		910,142		1,128,549
Corporate		4,602,440		4,778,668
Total	$	6,711,796	$	7,147,181

LAZARD LTD

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS-(Continued)

(UNAUDITED)

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

19.	CONSOLIDATED VIEs

	June 30, 2022		December 31, 2021
ASSETS
Cash and cash equivalents	$	4,769	$	3,936
Customers and other receivables		168		305
Investments		202,495		204,062
Other assets		880		328
Total Assets	$	208,312	$	208,631

LIABILITIES
Deposits and other customer payables	$	1,568	$	50
Other liabilities		452		910
Total Liabilities	$	2,020	$	960

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, 2021 (the “Form 10-K”). All references to “2022,” “2021,” “second quarter,” “first half” or “the period” refer to, as the context requires, the three month and six month periods ended June 30, 2022 and 2021.

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

•

a decline in general economic conditions or the ~~following table, which sets forth~~ 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 ~~industry statistics,~~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 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 ~~value~~availability of short-term borrowing;

•

competitive position;

•

future acquisitions, including the consideration to be paid and ~~number~~the timing of ~~all completed transactions decreased~~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 ~~first quarter of 2022 as compared~~ongoing COVID-19 pandemic;

•

changes in foreign currency exchange rates;

•

expectations with respect to the ~~first quarter~~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 ~~2021, while completed transactions involving values greater than $500 million increased as compared to the first quarter~~competition on our business; and

•

impact of ~~2021. With respect to announced M&A transactions, the value~~new or future legislation and ~~number of all transactions,~~regulation, including ~~the subset of announced transactions involving values greater than $500 million, decreased in the first quarter of 2022 as compared to the first quarter of 2021.~~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, Central and South America, Europe, Asia and Australia. 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:

Three Months Ended

March 31,

2022

2021

%
Incr / (Decr)

($ in billions)

Completed M&A Transactions:

All deals:

Value

$
1,105

$
1,119

(1
)%
Number

6,354

9,165

(31
)%
Deals Greater than $500 million:

Value

$
878

$
858

2
%
Number

361

334

8
%
Announced M&A Transactions:

All deals:

Value

$
1,030

$
1,472

(30
)%
Number

6,914

9,438

(27
)%
Deals Greater than $500 million:

Value

$
775

$
1,177

(34
)%
Number

343

478

(28
)%

•

~~Source: Dealogic as of April 5, 2021.~~

Global restructuring activity during the first quarter of 2022, as measured by the number of corporate defaults, decreased as compared to 2021. The number of defaulting issuers was 23 in the first quarter of 2022 according to Moody’s Investors Service, Inc., as compared to 13 in 2021.

~~Net revenue trends in~~ Financial Advisory, ~~are generally correlated~~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, capital raising, sovereign advisory 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,
	2022			2021			2022			2021
Financial Advisory		64	%		55	%		60	%		52	%
Asset Management		45			44			47			48
Corporate		(9	)		1			(7	)		-
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 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. 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.

The global macroeconomic environment remains uncertain, characterized by global inflation at multi-decade highs, rising interest rates, and turbulent capital markets.

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

•

Financial Advisory—Despite the ~~level~~global macroeconomic environment, our engagement with clients remains robust. The global scale and breadth of ~~completed industry-wide M&A transactions~~our Financial Advisory business enables us to advise on a wide range of strategic and restructuring transactions ~~occurring subsequent~~across a variety of industries. In addition, we continue to ~~corporate debt defaults, respectively.~~invest in our Financial Advisory business by selectively hiring talented senior professionals in an effort to enhance our capabilities and sector expertise in M&A, capital structure and public and private capital markets.

•

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, ~~deviations~~uncertainty due to the ongoing health crisis, continued concerns about inflation, and geopolitical instability may 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 ~~this relationship can occur~~the developing economies around the globe, as their retirement systems evolve and individual wealth is increasingly deployed in ~~any given year~~the financial markets. Given our diversified investment platform and our ability to provide investment solutions for a ~~number~~global mix 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 whereclients, we believe we are ~~involved in non-public~~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 ~~sovereign advisory assignments.~~other inorganic growth opportunities. Among other efforts, we have been particularly focused on continuing to incorporate environmental, social and governance (“ESG”) considerations, as

~~Asset Management~~appropriate, into our investment research and launching strategies that use ESG and sustainability factors to drive long-term investment returns. In addition, recent examples of growth initiatives include the following: various Quantitative Equity strategies, convertible bond strategies, thematically oriented strategies, a long/short credit strategy and a new inflation oriented equity strategy.

~~The percentage change in major equity market indices at March 31, 2022, as compared to such indices at December 31, 2021 and at March 31, 2021, is shown in the table below.~~

Percentage Changes
March 31, 2022 vs.

December 31, 2021

March 31, 2021

MSCI World Index

(5
)%

10
%
Euro Stoxx

(9
)%

2
%
MSCI Emerging Market

(7
)%

(11
)%
S&P 500

(5
)%

16
%

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.

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 and number of all completed transactions, including the subset of completed transactions involving values greater than $500 million, decreased in the first half of 2022 as compared to the first half of 2021. 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 2022 as compared to the first half of 2021.

	Three Months Ended							Six Months Ended
	June 30,							June 30,
	2022		2021		% Incr / (Decr)			2022		2021		% Incr / (Decr)
	($ in billions)
Completed M&A Transactions:
All deals:
Value	$	913	$	1,165		(22	)%	$	2,095	$	2,297		(9	)%
Number		6,407		9,514		(33	)%		14,634		19,253		(24	)%
Deals Greater than $500 million:
Value	$	723	$	861		(16	)%	$	1,638	$	1,726		(5	)%
Number		268		382		(30	)%		667		719		(7	)%
Announced M&A Transactions:
All deals:
Value	$	1,160	$	1,456		(20	)%	$	2,249	$	2,928		(23	)%
Number		7,356		9,653		(24	)%		16,017		19,631		(18	)%
Deals Greater than $500 million:
Value	$	917	$	1,141		(20	)%	$	1,728	$	2,314		(25	)%
Number		330		447		(26	)%		687		922		(25	)%

Source: Dealogic as of July 5, 2021.

Global restructuring activity during the first half of 2022, as measured by the number of corporate defaults, increased as compared to 2021. The number of defaulting issuers was 43 in the first half of 2022 according to Moody’s Investors Service, Inc., as compared to 29 in 2021.

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.

Asset Management

The percentage change in major equity market indices at June 30, 2022, as compared to such indices at March 31, 2022, December 31, 2021 and at June 30, 2021, is shown in the table below.

	Percentage Changes June 30, 2022 vs.
	March 31, 2022			December 31, 2021			June 30, 2021
MSCI World Index		(16	)%		(21	)%		(14	)%
Euro Stoxx		(9	)%		(17	)%		(12	)%
MSCI Emerging Market		(11	)%		(18	)%		(25	)%
S&P 500		(16	)%		(20	)%		(11	)%

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, shareholder advisory, capital raising, 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, to a lesser extent, fixed income markets as well as Lazard’s investment performance, which impacts its ability to successfully attract 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.

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 ~~67%~~69% of Lazard’s consolidated total assets as of ~~March 31,~~June 30, 2022, 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, investments accounted for under the equity method of accounting, 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 12 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 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 2022 related to the 2021 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. Increased competition for 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; however, in future periods we may benefit from pressure on compensation costs within the financial services industry.

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”.

We do not believe inflation will have a significant affect on our compensation costs as they are substantially variable in nature. However, the rate of inflation may affect certain of our other expenses, such as information technology and occupancy costs. To the extent inflation results in rising interest rates and has other effects upon the securities markets or general macroeconomic conditions, it may adversely affect our financial position and results of operations by impacting overall levels of M&A activity, reducing our AUM or net revenue, or otherwise.

Provision for Income Taxes

See “Critical Accounting Policies and Estimates—Income Taxes” below and Notes 14 and 16 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 11 and 19 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.

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						Three Months Ended						Six Months Ended
	March 31,						June 30,						June 30,
	2022			2021			2022			2021			2022			2021
	($ in thousands)						($ in thousands)
Net Revenue	$	694,892		$	660,107		$	639,546		$	823,137		$	1,334,438		$	1,483,244
Operating Expenses:
Compensation and benefits		396,841			401,546			363,830			514,918			760,671			916,464
Non-compensation		138,308			124,256			149,863			141,943			288,171			266,199
Amortization of intangible assets related to acquisitions		15			15			15			15			30			30
Total operating expenses		535,164			525,817			513,708			656,876			1,048,872			1,182,693
Operating Income		159,728			134,290			125,838			166,261			285,566			300,551
Provision for income taxes		38,753			43,464			34,187			41,345			72,940			84,809
Net Income		120,975			90,826			91,651			124,916			212,626			215,742
Less - Net Income Attributable to Noncontrolling Interests		7,099			3,526
Less - Net Income (Loss) Attributable to Noncontrolling Interests								(3,829	)		1,738			3,270			5,264
Net Income Attributable to Lazard Ltd	$	113,876		$	87,300		$	95,480		$	123,178		$	209,356		$	210,478
Operating Income, as a % of net revenue		23.0	%		20.3	%		19.7	%		20.2	%		21.4	%		20.3	%

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						Three Months Ended						Six Months Ended
	March 31,						June 30,						June 30,
	2022			2021			2022			2021			2022			2021
	($ in thousands)						($ in thousands)
Operating Revenue:
Net revenue	$	694,892		$	660,107		$	639,546		$	823,137		$	1,334,438		$	1,483,244
Adjustments:
Interest expense (a)		19,037			18,313			19,010			18,600			38,047			36,913
Distribution fees, reimbursable deal costs, bad debt expense and other (b)		(18,822	)		(16,710	)		(17,083	)		(21,625	)		(35,905	)		(38,335	)
Revenue related to noncontrolling interests (c)		(10,795	)		(6,361	)		(660	)		(5,754	)		(11,455	)		(12,115	)
(Gains) losses on investments pertaining to LFI (d)		14,323			(7,487	)		35,098			(16,491	)		49,421			(23,978	)
Losses associated with restructuring and closing of certain offices (e)								-			23,579			-			23,579
Operating revenue	$	698,635		$	647,862		$	675,911		$	821,446		$	1,374,546		$	1,469,308

(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, 2021.

	Three Months Ended						Three Months Ended						Six Months Ended
	March 31,						June 30,						June 30,
	2022			2021			2022			2021			2022			2021
	($ in thousands)						($ in thousands)
Adjusted Compensation and Benefits Expense:
Total compensation and benefits expense	$	396,841		$	401,546		$	363,830		$	514,918		$	760,671		$	916,464
Adjustments:
Noncontrolling interests (a)		(2,462	)		(1,958	)		(3,521	)		(2,380	)		(5,983	)		(4,338	)
(Charges) credits pertaining to LFI (b)		14,323			(7,487	)		35,098			(16,491	)		49,421			(23,978	)
Expenses associated with restructuring and closing of certain offices		-			(6,623	)		-			(7,287	)		-			(13,910	)
Adjusted compensation and benefits expense	$	408,702		$	385,478		$	395,407		$	488,760		$	804,109		$	874,238
Adjusted compensation and benefits expense, as a % of operating revenue		58.5	%		59.5	%		58.5	%		59.5	%		58.5	%		59.5	%

(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						Three Months Ended						Six Months Ended
	March 31,						June 30,						June 30,
	2022			2021			2022			2021			2022			2021
	($ in thousands)						($ in thousands)
Adjusted Non-Compensation Expense:
Total non-compensation expense	$	138,308		$	124,256		$	149,863		$	141,943		$	288,171		$	266,199
Adjustments:
Expenses relating to office space reorganization (a)		(1,124	)		(1,416	)		(871	)		(1,237	)		(1,995	)		(2,653	)
Distribution fees, reimbursable deal costs, bad debt expense and other (b)		(18,822	)		(16,710	)		(17,083	)		(21,625	)		(35,905	)		(38,335	)
Noncontrolling interests (c)		(1,236	)		(679	)		(968	)		(1,837	)		(2,204	)		(2,516	)
Expenses associated with restructuring and closing of certain offices		-			(2,971	)
Credits (expenses) associated with restructuring and closing of certain offices								-			1,586			-			(1,385	)
Adjusted non-compensation expense	$	117,126		$	102,480		$	130,941		$	118,830		$	248,067		$	221,310
Adjusted non-compensation expense, as a % of operating revenue		16.8	%		15.8	%		19.4	%		14.5	%		18.0	%		15.1	%

(a)	Represents building depreciation and other costs 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

March 31,

2022

2021

($ in thousands)

Earnings From Operations:

Operating revenue

$
698,635

$
647,862

Deduct:

Adjusted compensation and benefits expense

(408,702
)

(385,478
)
Adjusted non-compensation expense

(117,126
)

(102,480
)
Earnings from operations

$
172,807

$
159,904

Earnings from operations, as a % of operating revenue

24.7
%

24.7
%

	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2022			2021			2022			2021
	($ in thousands)
Earnings From Operations:
Operating revenue	$	675,911		$	821,446		$	1,374,546		$	1,469,308
Deduct:
Adjusted compensation and benefits expense		(395,407	)		(488,760	)		(804,109	)		(874,238	)
Adjusted non-compensation expense		(130,941	)		(118,830	)		(248,067	)		(221,310	)
Earnings from operations	$	149,563		$	213,856		$	322,370		$	373,760
Earnings from operations, as a % of operating revenue		22.1	%		26.0	%		23.5	%		25.4	%

Headcount information is set forth below:

	As of						As of
	March 31, 2022		December 31, 2021		March 31, 2021		June 30, 2022		December 31, 2021		June 30, 2021
Headcount:
Managing Directors:
Financial Advisory (a)		215		179		184		212		179		180
Asset Management		119		110		110		119		110		108
Corporate		24		22		23		24		22		22
Total Managing Directors		358		311		317		355		311		310
Other Business Segment Professionals and Support Staff:
Financial Advisory (a)		1,336		1,349		1,347		1,357		1,349		1,336
Asset Management		1,107		1,088		1,012		1,109		1,088		1,033
Corporate		435		431		413		448		431		421
Total		3,236		3,179		3,089		3,269		3,179		3,100

(a)

~~In 2022,~~Financial Advisory headcount reflects that, in addition to customary year-end changes, ~~Financial Advisory headcount reflects a reclass~~20 employees were reclassified in the first quarter of ~~20 employees~~2022 from professionals to managing directors due to a consolidation of the Lazard Middle Market LLC broker-dealer license.

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 ~~March 31,~~June 30, 2022 versus ~~March 31,~~June 30, 2021

The Company reported net income attributable to Lazard Ltd of ~~$114~~$95 million, as compared to net income attributable to Lazard Ltd of ~~$87~~$123 million in the 2021 period.

Net revenue ~~increased $35~~decreased $184 million, or 5%22%, with operating revenue ~~increasing $51~~decreasing $146 million, or 8%18%, as compared to the 2021 period. Fee revenue from investment banking and other advisory activities ~~increased $72~~decreased $70 million, or ~~23%~~15%, as compared to the 2021 period. Asset management fees, including incentive fees, decreased ~~$12~~$77 million, or 4%22%, as compared to the 2021 period. In the aggregate, interest income, other revenue and interest expense decreased ~~$25~~$36 million, as compared to the 2021 period.

Compensation and benefits expense decreased $5$151 million, or 1%29%, as compared to the 2021 period.

Adjusted compensation and benefits expense (which excludes certain items and which we believe allows for improved comparability between periods, as described above) was ~~$409~~$395 million, ~~an increase~~a decrease of ~~$23~~$93 million, or 19%, as compared to $489 million in the 2021 period. The ratio of adjusted compensation and benefits expense to operating revenue was 58.5% for the 2022 period, as compared to 59.5% for the 2021 period.

Non-compensation expense increased $8 million, or 6%, as compared to ~~$385~~the 2021 period, primarily due to increased marketing and business development expenses from higher travel, and investments in technology. Adjusted non-compensation expense increased $12 million, or 10%, as compared to the 2021 period. The ratio of adjusted non-compensation expense to operating revenue was 19.4% for the 2022 period, as compared to 14.5% for the 2021 period.

Operating income decreased $40 million, or 24%, as compared to the 2021 period.

Earnings from operations decreased $64 million, or 30%, as compared to the 2021 period, and, as a percentage of operating revenue, was 22.1% for the 2022 period, as compared to 26.0% in the 2021 period.

The provision for income taxes reflects an effective tax rate of 27.2%, as compared to 24.9% for the 2021 period. The increase in the effective tax rate principally relates to changes in the geographic mix of earnings and a decrease in discrete benefits.

Net income attributable to noncontrolling interests reflected a loss of $4 million in the 2022 period as compared to income of $2 million in the 2021 period.

Six Months Ended June 30, 2022 versus June 30, 2021

The Company reported net income attributable to Lazard Ltd of $209 million, as compared to net income attributable to Lazard Ltd of $210 million in the 2021 period.

Net revenue decreased $149 million, or 10%, with operating revenue decreasing $95 million, or 6%, as compared to the 2021 period. Fee revenue from investment banking and other advisory activities increased $2 million as compared to the 2021 period. Asset management fees, including incentive fees, decreased $89 million, or 13%, as compared to the 2021 period. In the aggregate, interest income, other revenue and interest expense decreased $61 million, as compared to the 2021 period.

Compensation and benefits expense decreased $156 million, or 17%, as compared to the 2021 period.

Adjusted compensation and benefits expense (which excludes certain items and which we believe allows for improved comparability between periods, as described above) was $804 million, a decrease of $70 million, or 8%, as compared to $874 million in the 2021 period. The ratio of adjusted compensation and benefits expense to operating revenue was 58.5% for the 2022 period, as compared to 59.5% for the 2021 period.

Non-compensation expense increased ~~$14~~$22 million, or ~~11%~~8%, as compared to the 2021 period, primarily due to increased marketing and business development expenses from higher travel, and ~~continued~~ investments in technology. Adjusted non-compensation expense increased ~~$15~~$27 million, or ~~14%~~12%, as compared to the 2021 period. The ratio of adjusted non-compensation expense to operating revenue was ~~16.8%~~18.0% for the 2022 period, as compared to ~~15.8%~~15.1% for the 2021 period.

Operating income ~~increased $25~~decreased $15 million, or ~~19%~~5%, as compared to the 2021 period.

Earnings from operations ~~increased $13~~decreased $51 million, or 8%14%, as compared to the 2021 period, and, as a percentage of operating revenue, was ~~24.7% in both~~23.5% for the 2022 ~~and~~period, as compared to 25.4% in the 2021 ~~periods.~~period.

The provision for income taxes reflects an effective tax rate of ~~24.3%~~25.5%, as compared to ~~32.4%~~28.2% for the 2021 period. The decrease in the effective tax rate principally relates to changes in the geographic mix of earnings and an increase in discrete benefits.

Net income attributable to noncontrolling interests ~~increased $4~~decreased $2 million as compared to the 2021 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

289,151

365,255

627,652

712,745

Operating Expenses

232,546

269,314

474,062

501,417

Operating Income

56,605

95,941

153,590

211,328

Corporate

Net Revenue (Loss)

(57,490

)

5,942

(91,314

)

147

Operating Expenses (Credit)

(35,412

)

18,479

(40,022

)

54,146

Operating Loss

(22,078

)

(12,537

)

(51,292

)

(53,999

)

Total

Net Revenue

639,546

823,137

1,334,438

1,483,244

Operating Expenses

513,708

656,876

1,048,872

1,182,693

Operating Income

125,838

166,261

285,566

300,551

	As Of
	June 30, 2022		December 31, 2021
Total Assets
Financial Advisory	$	1,199,214	$	1,239,964
Asset Management		910,142		1,128,549
Corporate		4,602,440		4,778,668
Total	$	6,711,796	$	7,147,181

LAZARD LTD

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS-(Continued)

(UNAUDITED)

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

19.	CONSOLIDATED VIEs

	June 30, 2022		December 31, 2021
ASSETS
Cash and cash equivalents	$	4,769	$	3,936
Customers and other receivables		168		305
Investments		202,495		204,062
Other assets		880		328
Total Assets	$	208,312	$	208,631

LIABILITIES
Deposits and other customer payables	$	1,568	$	50
Other liabilities		452		910
Total Liabilities	$	2,020	$	960

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, 2021 (the “Form 10-K”). All references to “2022,” “2021,” “second quarter,” “first half” or “the period” refer to, as the context requires, the three month and six month periods ended June 30, 2022 and 2021.

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~~

~~The following table summarizes~~financial advisory activity, the ~~reported operating results attributable~~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, ~~segment:~~

Three Months Ended

March 31,

2022

2021

($ in thousands)

Net Revenue

$
390,215

$
318,412

Operating Expenses

298,258

258,047

Operating Income

$
91,957

$
60,365

Operating Income, as a % of net revenue

23.6
%

19.0
%

~~Certain Lazard fee~~which offers corporate, partnership, institutional, government, sovereign and ~~transaction statistics for~~individual clients across the ~~Financial Advisory segment are set forth below:~~

Three Months Ended

March 31,

2022

2021

Lazard Statistics:

Number of clients with fees greater than $1 million:

Financial Advisory

66

75

Percentage of total Financial Advisory net revenue from top 10
clients

44
%

32
%
Number of M&A transactions completed with values greater than
$500 million (a)

19

26

~~(a)~~

~~Source: Dealogic as of April 5, 2022.~~

~~The geographical distribution~~globe a wide array 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

March 31,

2022

2021

Americas

50
%

56
%
EMEA

48

42

Asia Pacific

2

2

Total

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~~financial advisory services regarding M&A, ~~restructuring~~restructurings, capital advisory, shareholder advisory, capital raising, sovereign advisory and other strategic advisory matters, ~~depending~~and

•

Our consolidated net revenue was derived from the following segments:

	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2022			2021			2022			2021
Financial Advisory		64	%		55	%		60	%		52	%
Asset Management		45			44			47			48
Corporate		(9	)		1			(7	)		-
Total		100	%		100	%		100	%		100	%

Business Environment and Outlook

The global macroeconomic environment remains uncertain, characterized by global inflation at multi-decade highs, rising interest rates, and turbulent capital markets.

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

•

Financial Advisory—Despite the global macroeconomic environment, our engagement with clients remains robust. The global scale and breadth of our Financial Advisory business enables us to advise on ~~clients’ needs. This flexibility allows Lazard~~a wide range of strategic and restructuring transactions across a variety of industries. In addition, we continue to ~~better match its~~invest in our Financial Advisory business by selectively hiring talented senior professionals ~~with the counter-cyclical business cycles of mergers~~in an effort to enhance our capabilities and ~~acquisitions and restructurings. While Lazard measures revenue by practice area, Lazard does not separately measure the costs or profitability of~~sector expertise in M&A, ~~services~~capital structure and public and private capital markets.

•

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, uncertainty due to the ongoing health crisis, continued concerns about inflation, and geopolitical instability may 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 ~~compared~~their retirement systems evolve and individual wealth is increasingly deployed in the financial markets. Given our diversified investment platform and our ability to ~~restructuring~~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 ~~services. Accordingly, Lazard measures performance in its Financial Advisory segment based~~inorganic growth opportunities. Among other efforts, we have been particularly focused on ~~overall segment operating revenue~~continuing to incorporate environmental, social and ~~operating income margins.~~governance (“ESG”) considerations, as

~~Financial Advisory Results~~

appropriate, into our investment research and launching strategies that use ESG and sustainability factors to drive long-term investment returns. In addition, recent examples of ~~Operations~~

~~Financial Advisory’s quarterly revenue~~growth initiatives include the following: various Quantitative Equity strategies, convertible bond strategies, thematically oriented strategies, a long/short credit strategy 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.a new inflation oriented equity strategy.

~~Three Months Ended March 31, 2022 versus March 31, 2021~~

~~Financial Advisory net revenue increased $72 million, or 23%~~

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.

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,
	2022		2021		% Incr / (Decr)			2022		2021		% Incr / (Decr)
	($ in billions)
Completed M&A Transactions:
All deals:
Value	$	913	$	1,165		(22	)%	$	2,095	$	2,297		(9	)%
Number		6,407		9,514		(33	)%		14,634		19,253		(24	)%
Deals Greater than $500 million:
Value	$	723	$	861		(16	)%	$	1,638	$	1,726		(5	)%
Number		268		382		(30	)%		667		719		(7	)%
Announced M&A Transactions:
All deals:
Value	$	1,160	$	1,456		(20	)%	$	2,249	$	2,928		(23	)%
Number		7,356		9,653		(24	)%		16,017		19,631		(18	)%
Deals Greater than $500 million:
Value	$	917	$	1,141		(20	)%	$	1,728	$	2,314		(25	)%
Number		330		447		(26	)%		687		922		(25	)%

Source: Dealogic as of July 5, 2021.

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.

Asset Management

The percentage change in major equity market indices at June 30, 2022, as compared to such indices at March 31, 2022, December 31, 2021 and at June 30, 2021, is shown in the table below.

	Percentage Changes June 30, 2022 vs.
	March 31, 2022			December 31, 2021			June 30, 2021
MSCI World Index		(16	)%		(21	)%		(14	)%
Euro Stoxx		(9	)%		(17	)%		(12	)%
MSCI Emerging Market		(11	)%		(18	)%		(25	)%
S&P 500		(16	)%		(20	)%		(11	)%

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.

Corporate segment total assets represented 69% of Lazard’s consolidated total assets as of June 30, 2022, 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, investments accounted for under the equity method of accounting, deferred tax assets and certain other assets associated with LFB and LGAC.

Operating Expenses

•

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 2022 related to the 2021 ~~period. The increase~~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)

(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.

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

Provision for Income Taxes

Noncontrolling Interests

Consolidated Results of Operations

	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2022			2021			2022			2021
	($ in thousands)
Net Revenue	$	639,546		$	823,137		$	1,334,438		$	1,483,244
Operating Expenses:
Compensation and benefits		363,830			514,918			760,671			916,464
Non-compensation		149,863			141,943			288,171			266,199
Amortization of intangible assets related to acquisitions		15			15			30			30
Total operating expenses		513,708			656,876			1,048,872			1,182,693
Operating Income		125,838			166,261			285,566			300,551
Provision for income taxes		34,187			41,345			72,940			84,809
Net Income		91,651			124,916			212,626			215,742
Less - Net Income (Loss) Attributable to Noncontrolling Interests		(3,829	)		1,738			3,270			5,264
Net Income Attributable to Lazard Ltd	$	95,480		$	123,178		$	209,356		$	210,478
Operating Income, as a % of net revenue		19.7	%		20.2	%		21.4	%		20.3	%

	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2022			2021			2022			2021
	($ in thousands)
Operating Revenue:
Net revenue	$	639,546		$	823,137		$	1,334,438		$	1,483,244
Adjustments:
Interest expense (a)		19,010			18,600			38,047			36,913
Distribution fees, reimbursable deal costs, bad debt expense and other (b)		(17,083	)		(21,625	)		(35,905	)		(38,335	)
Revenue related to noncontrolling interests (c)		(660	)		(5,754	)		(11,455	)		(12,115	)
(Gains) losses on investments pertaining to LFI (d)		35,098			(16,491	)		49,421			(23,978	)
Losses associated with restructuring and closing of certain offices (e)		-			23,579			-			23,579
Operating revenue	$	675,911		$	821,446		$	1,374,546		$	1,469,308

(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, 2021.

	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2022			2021			2022			2021
	($ in thousands)
Adjusted Compensation and Benefits Expense:
Total compensation and benefits expense	$	363,830		$	514,918		$	760,671		$	916,464
Adjustments:
Noncontrolling interests (a)		(3,521	)		(2,380	)		(5,983	)		(4,338	)
(Charges) credits pertaining to LFI (b)		35,098			(16,491	)		49,421			(23,978	)
Expenses associated with restructuring and closing of certain offices		-			(7,287	)		-			(13,910	)
Adjusted compensation and benefits expense	$	395,407		$	488,760		$	804,109		$	874,238
Adjusted compensation and benefits expense, as a % of operating revenue		58.5	%		59.5	%		58.5	%		59.5	%

(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,
	2022			2021			2022			2021
	($ in thousands)
Adjusted Non-Compensation Expense:
Total non-compensation expense	$	149,863		$	141,943		$	288,171		$	266,199
Adjustments:
Expenses relating to office space reorganization (a)		(871	)		(1,237	)		(1,995	)		(2,653	)
Distribution fees, reimbursable deal costs, bad debt expense and other (b)		(17,083	)		(21,625	)		(35,905	)		(38,335	)
Noncontrolling interests (c)		(968	)		(1,837	)		(2,204	)		(2,516	)
Credits (expenses) associated with restructuring and closing of certain offices		-			1,586			-			(1,385	)
Adjusted non-compensation expense	$	130,941		$	118,830		$	248,067		$	221,310
Adjusted non-compensation expense, as a % of operating revenue		19.4	%		14.5	%		18.0	%		15.1	%

(a)	Represents building depreciation and other costs 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,
	2022			2021			2022			2021
	($ in thousands)
Earnings From Operations:
Operating revenue	$	675,911		$	821,446		$	1,374,546		$	1,469,308
Deduct:
Adjusted compensation and benefits expense		(395,407	)		(488,760	)		(804,109	)		(874,238	)
Adjusted non-compensation expense		(130,941	)		(118,830	)		(248,067	)		(221,310	)
Earnings from operations	$	149,563		$	213,856		$	322,370		$	373,760
Earnings from operations, as a % of operating revenue		22.1	%		26.0	%		23.5	%		25.4	%

Headcount information is set forth below:

	As of
	June 30, 2022		December 31, 2021		June 30, 2021
Headcount:
Managing Directors:
Financial Advisory (a)		212		179		180
Asset Management		119		110		108
Corporate		24		22		22
Total Managing Directors		355		311		310
Other Business Segment Professionals and Support Staff:
Financial Advisory (a)		1,357		1,349		1,336
Asset Management		1,109		1,088		1,033
Corporate		448		431		421
Total		3,269		3,179		3,100

(a)

Financial Advisory ~~net revenue was primarily a result of an increase~~headcount reflects that, in addition to customary year-end changes, 20 employees were reclassified in the ~~number~~first quarter of ~~fees greater than $10~~2022 from professionals to managing directors due to a consolidation of the Lazard Middle Market LLC broker-dealer license.

Operating Results

Three Months Ended June 30, 2022 versus June 30, 2021

The Company reported net income attributable to Lazard Ltd of $95 million, as compared to net income attributable to Lazard Ltd of $123 million in the 2021 period.

Net revenue decreased $184 million, or 22%, with operating revenue decreasing $146 million, or 18%, as compared to the 2021 period. Fee revenue from investment banking and other advisory activities decreased $70 million, or 15%, as compared to the 2021 period. Asset management fees, including incentive fees, decreased $77 million, or 22%, as compared to the 2021 period. In the aggregate, interest income, other revenue and interest expense decreased $36 million, as compared to the 2021 period.

Compensation and benefits expense decreased $151 million, or 29%, as compared to the 2021 period.

Adjusted compensation and benefits expense (which excludes certain items and which we believe allows for improved comparability between periods, as described above) was $395 million, a decrease of $93 million, or 19%, as compared to $489 million in the 2021 period. The ratio of adjusted compensation and benefits expense to operating revenue was 58.5% for the 2022 period, as compared to 59.5% for the 2021 period.

Non-compensation expense increased $8 million, or 6%, as compared to the 2021 period, primarily due to increased marketing and business development expenses from higher travel, and investments in technology. Adjusted non-compensation expense increased $12 million, or 10%, as compared to the 2021 period. The ratio of adjusted non-compensation expense to operating revenue was 19.4% for the 2022 period, as compared to 14.5% for the 2021 period.

Operating income decreased $40 million, or 24%, as compared to the 2021 period.

Net income attributable to noncontrolling interests reflected a loss of $4 million in the 2022 period as compared to income of $2 million in the 2021 period.

Six Months Ended June 30, 2022 versus June 30, 2021

The Company reported net income attributable to Lazard Ltd of $209 million, as compared to net income attributable to Lazard Ltd of $210 million in the 2021 period.

Compensation and benefits expense decreased $156 million, or 17%, as compared to the 2021 period.

Non-compensation expense increased $22 million, or 8%, as compared to the 2021 period, primarily due to increased marketing and business development expenses from higher travel, and investments in technology. Adjusted non-compensation expense increased $27 million, or 12%, as compared to the 2021 period. The ratio of adjusted non-compensation expense to operating revenue was 18.0% for the 2022 period, as compared to 15.1% for the 2021 period.

Operating income decreased $15 million, or 5%, as compared to the 2021 period.

Earnings from operations decreased $51 million, or 14%, as compared to the 2021 period, and, as a percentage of operating revenue, was 23.5% for the 2022 period, as compared to 25.4% in the 2021 period.

The provision for income taxes reflects an effective tax rate of 25.5%, as compared to 28.2% for the 2021 period. The decrease in the effective tax rate principally relates to changes in the geographic mix of earnings and an increase in discrete benefits.

Net income attributable to noncontrolling interests decreased $2 million as compared to the 2021 period.

~~Operating expenses increased $40 million, or 16%, as compared to the 2021 period, primarily due to increases in compensation and benefits expense associated with increased operating revenue.~~

Financial Advisory operating income was $92 million, an increase of $32 million, or 52%, as compared to operating income of $60 million in the 2021 period and, as a percentage of net revenue, was 23.6%, as compared to 19.0% in the 2021 period.

Asset Management

~~Assets Under Management~~

~~AUM primarily consists~~Net Revenue

289,151

365,255

627,652

712,745

Operating Expenses

232,546

269,314

474,062

501,417

Operating Income

56,605

95,941

153,590

211,328

Corporate

Net Revenue (Loss)

(57,490

)

5,942

(91,314

)

147

Operating Expenses (Credit)

(35,412

)

18,479

(40,022

)

54,146

Operating Loss

(22,078

)

(12,537

)

(51,292

)

(53,999

)

Total

Net Revenue

639,546

823,137

1,334,438

1,483,244

Operating Expenses

513,708

656,876

1,048,872

1,182,693

Operating Income

125,838

166,261

285,566

300,551

	As Of
	June 30, 2022		December 31, 2021
Total Assets
Financial Advisory	$	1,199,214	$	1,239,964
Asset Management		910,142		1,128,549
Corporate		4,602,440		4,778,668
Total	$	6,711,796	$	7,147,181

LAZARD LTD

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS-(Continued)

(UNAUDITED)

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

19.	CONSOLIDATED VIEs

	June 30, 2022		December 31, 2021
ASSETS
Cash and cash equivalents	$	4,769	$	3,936
Customers and other receivables		168		305
Investments		202,495		204,062
Other assets		880		328
Total Assets	$	208,312	$	208,631

LIABILITIES
Deposits and other customer payables	$	1,568	$	50
Other liabilities		452		910
Total Liabilities	$	2,020	$	960

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, 2021 (the “Form 10-K”). All references to “2022,” “2021,” “second quarter,” “first half” or “the period” refer to, as the context requires, the three month and six month periods ended June 30, 2022 and 2021.

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 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 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, capital raising, sovereign advisory and other strategic advisory matters, and

•

Asset Management, which offers a broad range of global investment solutions and investment and wealth management services in equity ~~instruments, which have a value that is readily available based on either prices quoted~~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,
	2022			2021			2022			2021
Financial Advisory		64	%		55	%		60	%		52	%
Asset Management		45			44			47			48
Corporate		(9	)		1			(7	)		-
Total		100	%		100	%		100	%		100	%

Business Environment and Outlook

The global macroeconomic environment remains uncertain, characterized by global inflation at multi-decade highs, rising interest rates, and turbulent capital markets.

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

•

~~Prices~~wide range of ~~equity~~strategic 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 evaluated bids or other similarly sourced price.

~~Either directly, or through our third-party vendors, we perform~~restructuring transactions across a variety of ~~regular~~industries. In addition, we continue to invest in our Financial Advisory business by selectively hiring talented senior professionals in an effort to enhance our capabilities and sector expertise in M&A, capital structure and public and private capital markets.

•

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, uncertainty due ~~diligence procedures~~to the ongoing health crisis, continued concerns about inflation, and geopolitical instability may 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 governance (“ESG”) considerations, as

appropriate, into our ~~pricing service providers.~~investment research and launching strategies that use ESG and sustainability factors to drive long-term investment returns. In addition, recent examples of growth initiatives include the following: various Quantitative Equity strategies, convertible bond strategies, thematically oriented strategies, a long/short credit strategy and a new inflation oriented equity 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.

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,
	2022		2021		% Incr / (Decr)			2022		2021		% Incr / (Decr)
	($ in billions)
Completed M&A Transactions:
All deals:
Value	$	913	$	1,165		(22	)%	$	2,095	$	2,297		(9	)%
Number		6,407		9,514		(33	)%		14,634		19,253		(24	)%
Deals Greater than $500 million:
Value	$	723	$	861		(16	)%	$	1,638	$	1,726		(5	)%
Number		268		382		(30	)%		667		719		(7	)%
Announced M&A Transactions:
All deals:
Value	$	1,160	$	1,456		(20	)%	$	2,249	$	2,928		(23	)%
Number		7,356		9,653		(24	)%		16,017		19,631		(18	)%
Deals Greater than $500 million:
Value	$	917	$	1,141		(20	)%	$	1,728	$	2,314		(25	)%
Number		330		447		(26	)%		687		922		(25	)%

Source: Dealogic as of July 5, 2021.

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.

Asset Management

The percentage change in major equity market indices at June 30, 2022, as compared to such indices at March 31, 2022, December 31, 2021 and at June 30, 2021, is shown in the table below.

	Percentage Changes June 30, 2022 vs.
	March 31, 2022			December 31, 2021			June 30, 2021
MSCI World Index		(16	)%		(21	)%		(14	)%
Euro Stoxx		(9	)%		(17	)%		(12	)%
MSCI Emerging Market		(11	)%		(18	)%		(25	)%
S&P 500		(16	)%		(20	)%		(11	)%

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.

Operating Expenses

•

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.

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

Provision for Income Taxes

Noncontrolling Interests

Consolidated Results of Operations

	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2022			2021			2022			2021
	($ in thousands)
Net Revenue	$	639,546		$	823,137		$	1,334,438		$	1,483,244
Operating Expenses:
Compensation and benefits		363,830			514,918			760,671			916,464
Non-compensation		149,863			141,943			288,171			266,199
Amortization of intangible assets related to acquisitions		15			15			30			30
Total operating expenses		513,708			656,876			1,048,872			1,182,693
Operating Income		125,838			166,261			285,566			300,551
Provision for income taxes		34,187			41,345			72,940			84,809
Net Income		91,651			124,916			212,626			215,742
Less - Net Income (Loss) Attributable to Noncontrolling Interests		(3,829	)		1,738			3,270			5,264
Net Income Attributable to Lazard Ltd	$	95,480		$	123,178		$	209,356		$	210,478
Operating Income, as a % of net revenue		19.7	%		20.2	%		21.4	%		20.3	%

	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2022			2021			2022			2021
	($ in thousands)
Operating Revenue:
Net revenue	$	639,546		$	823,137		$	1,334,438		$	1,483,244
Adjustments:
Interest expense (a)		19,010			18,600			38,047			36,913
Distribution fees, reimbursable deal costs, bad debt expense and other (b)		(17,083	)		(21,625	)		(35,905	)		(38,335	)
Revenue related to noncontrolling interests (c)		(660	)		(5,754	)		(11,455	)		(12,115	)
(Gains) losses on investments pertaining to LFI (d)		35,098			(16,491	)		49,421			(23,978	)
Losses associated with restructuring and closing of certain offices (e)		-			23,579			-			23,579
Operating revenue	$	675,911		$	821,446		$	1,374,546		$	1,469,308

(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, 2021.

	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2022			2021			2022			2021
	($ in thousands)
Adjusted Compensation and Benefits Expense:
Total compensation and benefits expense	$	363,830		$	514,918		$	760,671		$	916,464
Adjustments:
Noncontrolling interests (a)		(3,521	)		(2,380	)		(5,983	)		(4,338	)
(Charges) credits pertaining to LFI (b)		35,098			(16,491	)		49,421			(23,978	)
Expenses associated with restructuring and closing of certain offices		-			(7,287	)		-			(13,910	)
Adjusted compensation and benefits expense	$	395,407		$	488,760		$	804,109		$	874,238
Adjusted compensation and benefits expense, as a % of operating revenue		58.5	%		59.5	%		58.5	%		59.5	%

(a)	~~The following table shows~~Expenses related to the ~~composition~~consolidation of ~~AUM~~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 ~~the Asset Management segment:~~which a corresponding equal amount is excluded from operating revenue.

	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2022			2021			2022			2021
	($ in thousands)
Adjusted Non-Compensation Expense:
Total non-compensation expense	$	149,863		$	141,943		$	288,171		$	266,199
Adjustments:
Expenses relating to office space reorganization (a)		(871	)		(1,237	)		(1,995	)		(2,653	)
Distribution fees, reimbursable deal costs, bad debt expense and other (b)		(17,083	)		(21,625	)		(35,905	)		(38,335	)
Noncontrolling interests (c)		(968	)		(1,837	)		(2,204	)		(2,516	)
Credits (expenses) associated with restructuring and closing of certain offices		-			1,586			-			(1,385	)
Adjusted non-compensation expense	$	130,941		$	118,830		$	248,067		$	221,310
Adjusted non-compensation expense, as a % of operating revenue		19.4	%		14.5	%		18.0	%		15.1	%

As of

March 31,
2022

December 31,
2021

($ in millions)

AUM by Asset Class:

Equity:

Emerging Markets

$
26,575

$
31,227

Global

55,810

59,516

Local

53,832

56,310

Multi-Regional

64,810

73,953

Total Equity

201,027

221,006

Fixed Income:

Emerging Markets

11,997

12,231

Global

13,881

14,410

Local

5,652

6,022

Multi-Regional

13,454

13,623

Total Fixed Income

44,984

46,286

Alternative Investments

4,483

4,203

Private Equity

1,256

1,290

Cash Management

925

954

Total AUM

$
252,675

$
273,739

(a)	~~Total AUM at March 31, 2022 was $253 billion, a decrease of $21 billion, or 8%, as compared to total AUM of $274 billion at December 31, 2021 due to market and foreign exchange~~Represents building depreciation and ~~net outflows. Average AUM~~other costs 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,
	2022			2021			2022			2021
	($ in thousands)
Earnings From Operations:
Operating revenue	$	675,911		$	821,446		$	1,374,546		$	1,469,308
Deduct:
Adjusted compensation and benefits expense		(395,407	)		(488,760	)		(804,109	)		(874,238	)
Adjusted non-compensation expense		(130,941	)		(118,830	)		(248,067	)		(221,310	)
Earnings from operations	$	149,563		$	213,856		$	322,370		$	373,760
Earnings from operations, as a % of operating revenue		22.1	%		26.0	%		23.5	%		25.4	%

Headcount information is set forth below:

	As of
	June 30, 2022		December 31, 2021		June 30, 2021
Headcount:
Managing Directors:
Financial Advisory (a)		212		179		180
Asset Management		119		110		108
Corporate		24		22		22
Total Managing Directors		355		311		310
Other Business Segment Professionals and Support Staff:
Financial Advisory (a)		1,357		1,349		1,336
Asset Management		1,109		1,088		1,033
Corporate		448		431		421
Total		3,269		3,179		3,100

(a)

Financial Advisory headcount reflects that, in addition to customary year-end changes, 20 employees were reclassified in the first quarter of 2022 ~~decreased 2% as compared~~from professionals to managing directors due to a consolidation of the ~~first quarter of 2021 and 6% as compared to the fourth quarter of 2021.~~Lazard Middle Market LLC broker-dealer license.

Operating Results

Three Months Ended June 30, 2022 versus June 30, 2021

The Company reported net income attributable to Lazard Ltd of $95 million, as compared to net income attributable to Lazard Ltd of $123 million in the 2021 period.

Compensation and benefits expense decreased $151 million, or 29%, as compared to the 2021 period.

Operating income decreased $40 million, or 24%, as compared to the 2021 period.

Net income attributable to noncontrolling interests reflected a loss of $4 million in the 2022 period as compared to income of $2 million in the 2021 period.

Six Months Ended June 30, 2022 versus June 30, 2021

The Company reported net income attributable to Lazard Ltd of $209 million, as compared to net income attributable to Lazard Ltd of $210 million in the 2021 period.

Compensation and benefits expense decreased $156 million, or 17%, as compared to the 2021 period.

Operating income decreased $15 million, or 5%, as compared to the 2021 period.

Net income attributable to noncontrolling interests decreased $2 million as compared to the 2021 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,
	2022			2021			2022			2021
	($ in thousands)
Net Revenue	$	407,885		$	451,940		$	798,100		$	770,352
Operating Expenses		316,574			369,083			614,832			627,130
Operating Income	$	91,311		$	82,857		$	183,268		$	143,222
Operating Income, as a % of net revenue		22.4	%		18.3	%		23.0	%		18.6	%

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,
	2022			2021			2022			2021
Lazard Statistics:
Number of clients with fees greater than $1 million:
Financial Advisory		85			96			147			169
Percentage of total Financial Advisory net revenue from top 10 clients		40	%		35	%		31	%		24	%
Number of M&A transactions completed with values greater than $500 million (a)		21			17			42			43

As of March 31, 2022, approximately 86% 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, compared to approximately 87%(a)

Source: Dealogic as of December 31, 2021. As of March 31, 2022, approximately 14% of our AUM was managed on behalf of individual client relationships, which are principally with family offices and individuals, compared to approximately 13% as of December 31, 2021.July 5, 2022.

As of both March 31, 2022 and December 31, 2021, AUM with foreign currency exposure represented approximately 65% of our total AUM. 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 periods ended March 31, 2022 and 2021:~~

Three Months Ended March 31, 2022

AUM
Beginning
Balance

Inflows (a)

Outflows (a)

Net
Flows

Market Value
Appreciation/
(Depreciation)

Foreign
Exchange
Appreciation/
(Depreciation)

AUM
Ending
Balance

($ in millions)

Equity

$
221,006

$
6,116

$
(12,814
)

$
(6,698
)

$
(11,639
)

$
(1,642
)

$
201,027

Fixed Income

46,286

2,555

(2,706
)

(151
)

(742
)

(409
)

44,984

Other

6,447

771

(447
)

324

(64
)

(43
)

6,664

Total

$
273,739

$
9,442

$
(15,967
)

$
(6,525
)

$
(12,445
)

$
(2,094
)

$
252,675

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,
	2022			2021			2022			2021
Americas		63	%		67	%		57	%		62	%
EMEA		37			33			42			37
Asia Pacific		-			-			1			1
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, 2022 versus June 30, 2021

Financial Advisory net revenue decreased $44 million, or 10%, as compared to the 2021 period. The decrease in Financial Advisory net revenue was primarily a result of a decrease in the number of fees greater than $10 million as compared to the 2021 period.

Operating expenses decreased $53 million, or 14%, as compared to the 2021 period, primarily due to decreases in compensation and benefits expense associated with decreased operating revenue.

Financial Advisory operating income was $91 million, an increase of $8 million, or 10%, as compared to operating income of $83 million in the 2021 period and, as a percentage of net revenue, was 22.4%, as compared to 18.3% in the 2021 period.

Six Months Ended June 30, 2022 versus June 30, 2021

Financial Advisory net revenue increased $28 million, or 4%, as compared to the 2021 period.

Operating expenses decreased $12 million, or 2%, as compared to the 2021 period.

Financial Advisory operating income was $183 million, an increase of $40 million, or 28%, as compared to operating income of $143 million in the 2021 period and, as a percentage of net revenue, was 23.0%, as compared to 18.6% in the 2021 period.

Asset Management

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 evaluated bids 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.

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

	As of
	June 30, 2022		December 31, 2021
	($ in millions)
AUM by Asset Class:
Equity:
Emerging Markets	$	22,656	$	31,227
Global		48,742		59,516
Local		46,617		56,310
Multi-Regional		52,259		73,953
Total Equity		170,274		221,006
Fixed Income:
Emerging Markets		9,948		12,231
Global		12,380		14,410
Local		5,302		6,022
Multi-Regional		12,299		13,623
Total Fixed Income		39,929		46,286
Alternative Investments		4,145		4,203
Private Equity		1,268		1,290
Cash Management		1,010		954
Total AUM	$	216,626	$	273,739

Total AUM at June 30, 2022 was $217 billion, a decrease of $57 billion, or 21%, as compared to total AUM of $274 billion at December 31, 2021 due to market and foreign exchange depreciation and net outflows. Average AUM for the three month and six month periods ended June 30, 2022 decreased 17% and 9%, respectively, as compared to the three month and six month periods ended June 30, 2021.

As of June 30, 2022, approximately 86% 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, compared to approximately 87% as of December 31, 2021. As of June 30, 2022, approximately 14% of our AUM was managed on behalf of individual client relationships, which are principally with family offices and individuals, compared to approximately 13% as of December 31, 2021.

As of June 30, 2022 and December 31, 2021, AUM with foreign currency exposure represented approximately 64% and 65%, respectively, of our total AUM. 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, 2022 and 2021:

	Three Months Ended June 30, 2022
	AUM Beginning Balance		Inflows (a)		Outflows (a)			Net Flows			Market Value Appreciation/ (Depreciation)			Foreign Exchange Appreciation/ (Depreciation)			AUM Ending Balance
	($ in millions)
Equity	$	201,027	$	7,089	$	(10,987	)	$	(3,898	)	$	(20,701	)	$	(6,154	)	$	170,274
Fixed Income		44,984		1,940		(2,992	)		(1,052	)		(2,090	)		(1,913	)		39,929
Other		6,664		951		(650	)		301			(406	)		(136	)		6,423
Total	$	252,675	$	9,980	$	(14,629	)	$	(4,649	)	$	(23,197	)	$	(8,203	)	$	216,626

(a)

Inflows in the Equity asset class were primarily attributable to the Global and Multi-Regional 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 Global and Multi-Regional platforms.

Three Months Ended March 31, 2021

AUM
Beginning
Balance

Inflows

Outflows

Net
Flows

Market Value
Appreciation/
(Depreciation)

Foreign
Exchange
Appreciation/
(Depreciation)

AUM
Ending
Balance

($ in millions)

Equity

$
209,732

$
7,561

$
(11,327
)

$
(3,766
)

$
12,779

$
(3,286
)

$
215,459

Fixed Income

43,784

3,794

(1,946
)

1,848

(133
)

(1,250
)

44,249

Other

5,126

700

(461
)

239

(166
)

(55
)

5,144

Total

$
258,642

$
12,055

$
(13,734
)

$
(1,679
)

$
12,480

$
(4,591
)

$
264,852

As of April 22, 2022, AUM was $243.4 billion, a $9.3 billion decrease since March 31, 2022. The decrease in AUM was due to market depreciation of $5.4 billion, foreign exchange depreciation of $3.6 billion and net outflows of $242 million.

Average AUM for the three month periods ended March 31, 2022 and 2021 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

March 31,

2022

2021

($ in millions)

Average AUM by Asset Class:

Equity

$
204,121

$
211,999

Fixed Income

45,811

44,335

Alternative Investments

4,400

2,918

Private Equity

1,266

1,347

Cash Management

832

864

Total Average AUM

$
256,430

$
261,463

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

Three Months Ended

March 31,

2022

2021

($ in thousands)

Net Revenue

$
338,501

$
347,490

Operating Expenses

241,516

232,103

Operating Income

$
96,985

$
115,387

Operating Income, as a % of net revenue

28.7
%

33.2
%

~~The geographical distribution of Asset Management net revenue is set forth below in percentage terms,~~Global and ~~is based on the Lazard offices that manage~~Local 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

March 31,

2022

2021

Americas

47
%

46
%
EMEA

43

44

Asia Pacific

10

10

Total

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 March 31, 2022 versus March 31, 2021~~

~~Asset Management net revenue decreased $9 million, or 3%, as compared to the 2021 period. Management fees and other revenue was $313 million as compared to $315 million~~inflows in the ~~2021 period. Incentive fees~~Fixed Income asset class were ~~$25 million, a decrease of $8 million as compared to $33 million in the 2021 period.~~

~~Operating expenses increased $9 million, or 4%, as compared to the 2021 period.~~

Asset Management operating income was $97 million, a decrease of $18 million, or 16%, as compared to operating income of $115 million in the 2021 period and as a percentage of net revenue, was 28.7%, as compared to 33.2% in the 2021 period.

~~Corporate~~

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

	Six Months Ended June 30, 2022
	AUM Beginning Balance		Inflows (a)		Outflows (a)			Net Flows			Market Value Appreciation/ (Depreciation)			Foreign Exchange Appreciation/ (Depreciation)			AUM Ending Balance
	($ in millions)
Equity	$	221,006	$	13,205	$	(23,801	)	$	(10,596	)	$	(32,340	)	$	(7,796	)	$	170,274
Fixed Income		46,286		4,495		(5,698	)		(1,203	)		(2,832	)		(2,322	)		39,929
Other		6,447		1,722		(1,097	)		625			(470	)		(179	)		6,423
Total	$	273,739	$	19,422	$	(30,596	)	$	(11,174	)	$	(35,642	)	$	(10,297	)	$	216,626

Three Months Ended

March 31,

2022

2021

($ in thousands)

Interest Income

$
1,105

$
466

Interest Expense

(19,304
)

(18,803
)
Net Interest (Expense)

(18,199
)

(18,337
)
Other Revenue (Expense)

(15,625
)

12,542

Net Revenue (Expense)

(33,824
)

(5,795
)
Operating Expenses (Credit)

(4,610
)

35,667

Operating Loss

$
(29,214
)

$
(41,462
)

~~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 March 31, 2022 versus March 31, 2021~~

~~Net interest expense remained substantially the same as compared~~Equity asset class were primarily attributable to the ~~2021 period.~~

~~Other revenue decreased $28 million as compared~~Global and Multi-Regional platforms, and inflows in the Fixed Income asset class were primarily attributable to the ~~2021 period primarily due to losses~~Global and Multi-Regional platforms. Outflows in the ~~2022 period as compared~~Equity asset class were primarily attributable to ~~gains~~the Multi-Regional, Global and Emerging Markets equity platforms, and outflows in the ~~2021 period~~Fixed Income asset class were primarily attributable to ~~investments held in connection with LFI.~~the Global, Multi-Regional and Emerging Markets platforms.

~~Operating expenses decreased $40~~

	Three Months Ended June 30, 2021
	AUM Beginning Balance		Inflows		Outflows			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

	Six Months Ended June 30, 2021
	AUM Beginning Balance		Inflows		Outflows			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

As of July 22, 2022, AUM was $220.2 billion, a $3.6 billion increase since June 30, 2022. The increase in AUM was due to market appreciation of $5.5 billion, partially offset by foreign exchange depreciation of $1.4 billion and net outflows of $0.5 billion.

Average AUM for the three month and six month periods ended June 30, 2022 and 2021 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,
	2022		2021		2022		2021
	($ in millions)
Average AUM by Asset Class:
Equity	$	181,343	$	223,617	$	192,695	$	217,807
Fixed Income		42,171		46,725		43,993		45,530
Alternative Investments		4,374		3,404		4,387		3,161
Private Equity		1,259		1,330		1,263		1,340
Cash Management		1,015		775		925		819
Total Average AUM	$	230,162	$	275,851	$	243,263	$	268,657

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

	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2022			2021			2022			2021
	($ in thousands)
Net Revenue	$	289,151		$	365,255		$	627,652		$	712,745
Operating Expenses		232,546			269,314			474,062			501,417
Operating Income	$	56,605		$	95,941		$	153,590		$	211,328
Operating Income, as a % of net revenue		19.6	%		26.3	%		24.5	%		29.6	%

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,
	2022			2021			2022			2021
Americas		48	%		47	%		47	%		46	%
EMEA		40			43			42			44
Asia Pacific		12			10			11			10
Total		100	%		100	%		100	%		100	%

Asset Management Results of Operations

Three Months Ended June 30, 2022 versus June 30, 2021

Asset Management net revenue decreased $76 million, or 21%, as compared to the 2021 period. Management fees and other revenue was $282 million, a decrease of $49 million, or 15%, as compared to $331 million in the 2021 period primarily due to a decrease in average AUM. Incentive fees were $7 million, a decrease of $27 million as compared to $34 million in the 2021 period.

Operating expenses decreased $37 million, or 14%, as compared to the 2021 period primarily due to decreases in compensation and benefits expense associated with decreased operating revenue.

Asset Management operating income was $57 million, a decrease of $39 million, or 41%, as compared to operating income of $96 million in the 2021 period and, as a percentage of net revenue, was 19.6%, as compared to 26.3% in the 2021 period.

Six Months Ended June 30, 2022 versus June 30, 2021

Asset Management net revenue decreased $85 million, or 12%, as compared to the 2021 period. Management fees and other revenue was $595 million, a decrease of $50 million, or 8%, as compared to $645 million in the 2021 period primarily due to a decrease in average AUM. Incentive fees were $33 million, a decrease of $34 million as compared to $67 million in the 2021 period.

Operating expenses decreased $27 million, or 5%, as compared to the 2021 period primarily due to decreases in compensation and benefits expense associated with decreased operating revenue.

Asset Management operating income was $154 million, a decrease of $58 million, or 27%, as compared to operating income of $211 million in the 2021 period and, as a percentage of net revenue, was 24.5%, as compared to 29.6% in the 2021 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,
	2022			2021			2022			2021
	($ in thousands)
Interest Income	$	1,876		$	685		$	2,981		$	1,151
Interest Expense		(19,235	)		(18,663	)		(38,539	)		(37,466	)
Net Interest Expense		(17,359	)		(17,978	)		(35,558	)		(36,315	)
Other Revenue (Loss)		(40,131	)		23,920			(55,756	)		36,462
Net Revenue (Loss)		(57,490	)		5,942			(91,314	)		147
Operating Expenses (Credit)		(35,412	)		18,479			(40,022	)		54,146
Operating Loss	$	(22,078	)	$	(12,537	)	$	(51,292	)	$	(53,999	)

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, 2022 versus June 30, 2021

Net interest expense remained substantially the same as compared to the 2021 period.

Other revenue decreased $64 million as compared to the 2021 period primarily due to losses in the 2022 period as compared to gains in the 2021 period attributable to investments held in connection with LFI.

Operating expenses decreased $54 million ~~or 113%,~~ as compared to the 2021 period, primarily due to a decrease in compensation and benefits expense which reflected a decrease in charges pertaining to LFI.

Six Months Ended June 30, 2022 versus June 30, 2021

Net interest expense remained substantially the same as compared to the 2021 period.

Other revenue decreased $92 million as compared to the 2021 period primarily due to losses in the 2022 period as compared to gains in the 2021 period attributable to investments held in connection with LFI.

Operating expenses decreased $94 million as compared to the 2021 period, primarily due to a decrease in compensation and benefits expense which reflected a decrease 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.

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.

Summary of Cash Flows:

	Three Months Ended						Six Months Ended
	March 31,						June 30,
	2022			2021			2022			2021
	($ in millions)						($ in millions)
Cash Provided By (Used In):
Operating activities:
Net income	$	121		$	91		$	213		$	216
Adjustments to reconcile net income to net cash provided by operating activities (a)		144			156			309			352
Other operating activities (b)		(479	)		(370	)		(437	)		(553	)
Net cash used in operating activities		(214	)		(123	)
Net cash provided by operating activities								85			15
Investing activities		(13	)		(7	)		(20	)		(17	)
Financing activities (c)		(19	)		244			(62	)		201
Effect of exchange rate changes		(52	)		(79	)		(208	)		(62	)
Net Increase (Decrease) in Cash and Cash Equivalents and Restricted Cash		(298	)		35			(205	)		137
Cash and Cash Equivalents and Restricted Cash (d):
Beginning of Period		3,430			2,569			3,430			2,569
End of Period	$	3,132		$	2,604		$	3,225		$	2,706

(a)	Consists of the following:

	Three Months Ended				Six Months Ended
	March 31,				June 30,
	2022		2021		2022		2021
	($ in millions)				($ in millions)
Depreciation and amortization of property	$	10	$	9	$	21	$	19
Noncash lease expense		17		17		32		36
Currency translation adjustment reclassification						-		23
Amortization of deferred expenses and share-based incentive compensation		91		100		213		230
Deferred tax provision		26		30		43		44
Total	$	144	$	156	$	309	$	352

(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 in 2021, contributions from redeemable noncontrolling interests and payments of underwriting fees and other offering costs associated with the LGAC IPO.

(d)	Cash and cash equivalents and restricted cash consists of cash and cash equivalents, deposits with banks and short-term investments and 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 ~~quarter~~half of 2022, as reflected on the condensed consolidated statements of financial condition, both “deposits with banks and short-term investments” and “deposits and other customer payables” increased as compared to December 31, 2021, 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, lease obligations, 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 ~~March 31,~~June 30, 2022, Lazard had approximately ~~$878~~$907 million of cash, with such amount including approximately ~~$553~~$470 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 ~~March 31,~~June 30, 2022, the Company’s lease obligations were ~~$59~~$38 million for 2022 ~~(April 1through~~(July 1 through December 31), ~~$143~~$144 million from 2023 through 2024, ~~$118~~$119 million from 2025 through 2026 and ~~$324~~$321 million through 2033.

As of ~~March 31,~~June 30, 2022, Lazard had approximately ~~$207~~$209 million in unused lines of credit available to it, including a $200 million, three-year, senior revolving credit facility with a group of lenders that expires in July 2023 (the “Amended and Restated Credit Agreement”) and unused lines of credit available to LFB of approximately $6$8 million.

The 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 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 Amended and Restated Credit Agreement remains outstanding and unpaid or any other amount is due to the lending bank group, the Amended and Restated Credit Agreement includes financial covenants that require that Lazard Group not permit (i) its Consolidated Leverage Ratio (as defined in the 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 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 ~~March 31,~~June 30, 2022, Lazard Group was in compliance with such ratios, with its Consolidated Leverage Ratio being ~~1.31~~1.39 to 1.00 and its Consolidated Interest Coverage Ratio being ~~17.13~~15.82 to 1.00. In any event, no amounts were outstanding under the Amended and Restated Credit Agreement as of ~~March 31,~~June 30, 2022.

In addition, the Amended and Restated Credit Agreement contains certain other covenants (none of which relate to financial condition), events of default and other customary provisions and also contains customary LIBOR-replacement mechanics. At ~~March 31,~~June 30, 2022, 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.

See also Notes 10, 12, 13, 14 and 16 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.

Financing Activities

The table below sets forth our corporate indebtedness as of ~~March 31,~~June 30, 2022 and December 31, 2021. 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
		March 31, 2022						December 31, 2021							June 30, 2022						December 31, 2021
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	$	1.4	$	398.6	$	400.0	$	1.5	$	398.5	2025	$	400.0	$	1.2	$	398.8	$	400.0	$	1.5	$	398.5
Lazard Group 2027 Senior Notes	2027		300.0		1.9		298.1		300.0		2.0		298.0	2027		300.0		1.8		298.2		300.0		2.0		298.0
Lazard Group 2028 Senior Notes	2028		500.0		5.5		494.5		500.0		5.7		494.3	2028		500.0		5.3		494.7		500.0		5.7		494.3
Lazard Group 2029 Senior Notes	2029		500.0		5.4		494.6		500.0		5.6		494.4	2029		500.0		5.2		494.8		500.0		5.6		494.4
		$	1,700.0	$	14.2	$	1,685.8	$	1,700.0	$	14.8	$	1,685.2		$	1,700.0	$	13.5	$	1,686.5	$	1,700.0	$	14.8	$	1,685.2

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 ~~March 31,~~June 30, 2022, 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 9 of Notes to Condensed Consolidated Financial Statements for additional information regarding senior debt.

Stockholders’ Equity

At ~~March 31,~~June 30, 2022, total stockholders’ equity was ~~$970~~$827 million, as compared to $1,078 million at December 31, 2021, including ~~$850~~$716 million and $975 million attributable to Lazard Ltd on the respective dates. The net activity in stockholders’ equity during the ~~three~~six month period ended ~~March 31,~~June 30, 2022 is reflected in the table below (in millions of dollars):

Stockholders’ Equity - January 1, 2022	$	1,078		$	1,078
Increase (decrease) due to:
Net income		118			207
Other comprehensive loss		(14	)		(66	)
Amortization of share-based incentive compensation		53			126
Purchase of common stock		(176	)		(375	)
Settlement of share-based incentive compensation (a)		(52	)		(52	)
Common stock dividends		(47	)		(93	)
Other - net		10			2
Stockholders’ Equity - March 31, 2022	$	970
Stockholders’ Equity - June 30, 2022				$	827

(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:

Three Months Ended March 31:	Number of Shares Purchased		Average Price Per Share
Six Months Ended June 30:					Number of Shares Purchased		Average Price Per Share
2021		2,899,541	$	42.30		5,329,541	$	43.86
2022		4,717,821	$	37.26		10,598,882	$	35.40

As of ~~March 31,~~June 30, 2022, a total of ~~$318~~$119 million of share repurchase authorization remained available under Lazard Ltd’s share repurchase program, of which ~~$18 million will expire on December 31, 2022 and $300 million of which~~authorization will expire on December 31, 2024.

In addition, on July 27, 2022, the Board of Directors of Lazard authorized the repurchase of up to $500 million of additional shares of common stock, which authorization will expire on December 31, 2024, bringing the total available share repurchase authorization as of July 27, 2022 to $559 million.

On ~~April~~July 27, 2022, the Board of Directors of Lazard declared a quarterly dividend of ~~$0.47~~$0.50 per share on our common stock. The dividend is payable on ~~May 20,~~August 19, 2022 to stockholders of record on ~~May 9,~~August 8, 2022.

See Notes 11 and 12 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 17 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.

Critical Accounting Policies and Estimates

The preparation of Lazard’s condensed consolidated financial statements, in conformity with U.S. 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, the allowance for doubtful accounts, income taxes (including the impact on the tax receivable agreement obligation), 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.

The following is a description of Lazard’s critical accounting estimates and judgments used in the preparation of its condensed consolidated financial statements.

Revenue Recognition

Lazard generates substantially all of its revenue from providing Financial Advisory and Asset Management services to clients. Lazard recognizes revenue in accordance with the criteria in Note 2 of Notes to Consolidated Financial statements in our Form 10-K.

Assessment of these criteria requires the application of judgment in determining the timing and amount of revenue recognized, including the probability of collection of fees.

Allowance for Doubtful Accounts

We maintain an allowance for doubtful accounts to provide coverage for estimated losses from our receivables. We determine the adequacy of the allowance under the current expected credit losses (“CECL”) guidance 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.

The allowance for doubtful accounts involves judgment including incorporation of historical loss experience and assessment of risk characteristics of our clients. The bad debt charge-off rate based on historical charge-off experience was an average annual rate estimated using the most recent two years of charge-off data. When assessing risk characteristics of individual clients, we considered the macroeconomic environment in the local market, our collection experience and recent communication with the client, as well as any potential future engagement with the client. We have also considered risks associated with the COVID-19 pandemic that started in early 2020 and have made necessary adjustments to the allowance for risks associated with certain clients that had been adversely impacted.

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, 2021, on a consolidated basis, we recorded gross deferred tax assets of approximately $647 million, with such amount partially offset by a valuation allowance of approximately $89 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. See Note 2 of Notes to Consolidated Financial Statements in our Form 10-K for additional information on sources of taxable income, and the information considered when assessing whether a valuation allowance is required.

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, some of our tax-paying entities have recorded a valuation allowance on substantially all of their deferred tax assets due to the combined effect of operating losses in certain subsidiaries of these entities 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 $89 million of deferred tax assets held by these entities as of December 31, 2021.

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 14 of Notes to Condensed Consolidated Financial Statements for additional information related to income taxes.

Amended and Restated Tax Receivable Agreement

The Second Amended and Restated Tax Receivable Agreement, dated as of October 26, 2015 (the “TRA”), between Lazard and LTBP Trust (the “Trust”) provides for payments by our subsidiaries to the owners of the Trust, who include certain of our executive officers.

The amount of the TRA liability is an undiscounted amount based upon current tax laws and the 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, we could be required to accelerate payments under the TRA. As such, the actual amount and timing of payments under the TRA could differ materially from our estimates. See Note 16 of Notes to Condensed Consolidated Financial Statements for additional information regarding the TRA.

The cumulative liability relating to our obligations under the TRA recorded as of ~~March 31,~~June 30, 2022 and December 31, 2021 was $192 million and $213 million, respectively, and is recorded in “tax receivable agreement obligation” on the condensed consolidated statements of financial condition.

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 goodwill associated with each business combination is allocated to the related reporting units for impairment testing. 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. The qualitative evaluation includes significant judgment on the business outlook assumptions of each reporting unit based on historical data, current economic conditions, stock performance and industry trends. See Note 8 of Notes to Condensed Consolidated Financial Statements for additional information regarding goodwill.

Consolidation

The condensed consolidated financial statements include entities in which Lazard 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, investment management contracts with fund entities in our Asset Management business and LGAC. Lazard is not required to consolidate such entities because, with the exception of certain seed and LFI investments, and LGAC, 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.

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.

Seed investments held in entities in which the Company maintained a controlling interest were ~~$74~~$87 million in ~~eleven~~ten entities as of ~~March 31,~~June 30, 2022, as compared to $74 million in ten entities as of December 31, 2021. LFI investments held in entities in which the Company maintained a controlling interest were ~~$189~~$165 million in nine entities as of ~~March 31,~~June 30, 2022, as compared to $175 million in ten entities as of December 31, 2021.

As of ~~March 31,~~June 30, 2022 and December 31, 2021, the Company did not consolidate any seed investment entities or LFI investment entities, with the exception of the consolidation of certain LFI funds (see Note 19 of Notes to Condensed Consolidated Financial Statements). As such, seed investments and substantially all of LFI investments included in “investments” on the consolidated statements of financial condition represented the Company’s economic interest in the seed and LFI investments.

See Note 1 of Notes to Condensed Consolidated Financial Statements for additional information on the consolidation of LGAC.

Risk Management

Investments

Investments consist primarily of debt and equity securities, and interests in alternative investment, debt, equity and private equity funds. These investments, 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.

Investments also include those investments accounted for under the equity method of accounting. Any increases or decreases in the Company’s share of net income or losses pertaining to its equity method investments are reflected in earnings.

See Note 5 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:

	March 31, 2022		December 31, 2021		June 30, 2022		December 31, 2021
	($ in thousands)				($ in thousands)
Seed investments by asset class:
Equities (a)	$	118,967	$	121,627	$	119,157	$	121,627
Fixed income		9,887		10,343		9,185		10,343
Alternative investments		30,256		30,495		29,297		30,495
Total seed investments		159,110		162,465		157,639		162,465
Other investments owned:
Private equity		29,444		30,127		21,075		30,127
U.S. Treasury securities		99,845		299,990		99,988		299,990
Fixed income and other		23,894		24,226		23,313		24,226
Total other investments owned		153,183		354,343		144,376		354,343
Subtotal		312,293		516,808		302,015		516,808
Add:
Private equity consolidated, not owned		19,148		16,462		16,588		16,462
Equity method		16,167		16,250		15,915		16,250
LFI		522,236		457,819		452,621		457,819
Total investments	$	869,844	$	1,007,339	$	787,139	$	1,007,339

(a)	At ~~March 31,~~June 30, 2022 and December 31, 2021, seed investments in directly owned equity securities were invested as follows:

	March 31, 2022			December 31, 2021			June 30, 2022			December 31, 2021
Percentage invested in:
Financials		15	%		16	%		14	%		16	%
Consumer		31			32			32			32
Industrial		14			14			12			14
Technology		20			26			20			26
Other		20			12			22			12
Total		100	%		100	%		100	%		100	%

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) investments accounted for under the equity method of accounting.

The market risk associated with investments held in connection with LFI and other similar deferred compensation arrangements 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.

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 ~~March 31,~~both June 30, 2022 and December 31, 2021, 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 ~~$128 million and~~ $138 ~~million, respectively.~~million. The Company hedges market exposure arising from a significant portion of our equity investment portfolios by entering into total return swaps. The Company estimates that a hypothetical 10% adverse change in market prices would result in a net ~~(increase)~~ decrease of approximately ~~$(0.6)~~$0.9 million and $0.3 million in the carrying value of such investments as of ~~March 31,~~June 30, 2022 and December 31, 2021, respectively, including the effect of the hedging transactions.

Interest Rate/Credit Spread Risk—At ~~March 31,~~June 30, 2022 and December 31, 2021, 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

~~was $149~~$148 million and $351 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 ~~$0.1~~$0.2 million and $0.6 million in the carrying value of such investments as of ~~March 31,~~June 30, 2022 and December 31, 2021, respectively, including the effect of the hedging transactions.

Foreign Exchange Rate Risk—At ~~March 31,~~June 30, 2022 and December 31, 2021, 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 ~~$63~~$53 million and $68 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 ~~$2.0~~$1.3 million and $2.4 million in the carrying value of such investments as of ~~March 31,~~June 30, 2022 and December 31, 2021, 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 ~~March 31,~~June 30, 2022 and December 31, 2021, the Company’s exposure to changes in fair value of such investments was approximately ~~$29~~$21 million and $30 million, respectively. The Company estimates that a hypothetical 10% adverse change in fair value would result in a decrease of approximately ~~$2.9~~$2.1 million and $3.0 million in the carrying value of such investments as of ~~March 31,~~June 30, 2022 and December 31, 2021.

For additional information regarding risks associated with our investments, see 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.”

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 ~~March 31,~~June 30, 2022, total receivables amounted to ~~$817~~$740 million, net of an allowance for doubtful accounts of ~~$34~~$30 million. As of that date, Financial Advisory and Asset Management fees, and customers and other receivables comprised ~~81%~~79% and ~~19%~~21% of total receivables, respectively. At December 31, 2021, total receivables amounted to $806 million, net of an allowance for doubtful accounts of $34 million. As of that date, Financial Advisory and Asset Management fees, and customers and other receivables comprised 83% and 17% of total receivables, respectively. See also “Critical Accounting Policies and Estimates—Revenue Recognition” above and Note 3 of Notes to Condensed Consolidated Financial Statements for additional information regarding receivables.

LFG and LFB offer wealth management and banking services to high net worth individuals and families. At ~~March 31,~~June 30, 2022 and December 31, 2021, customers and other receivables included ~~$124~~$121 million and $122 million, respectively, of LFB loans. Such loans were fully collateralized and closely monitored for counterparty creditworthiness.

Credit Concentrations

The Company monitors its exposures to individual counterparties and diversifies where appropriate to reduce the exposure to concentrations of credit.

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 $19 million and $1 million at ~~both March 31,~~June 30, 2022 and December 31, 2021, respectively, 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 million and $3 million at ~~March 31,~~June 30, 2022 and December 31, 2021, respectively.

The Company records the LGAC Warrants as derivative liabilities at fair value, which amounted to $6$3 million and $10 million at ~~March 31,~~June 30, 2022 and December 31, 2021, respectively, 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 ~~$398~~$346 million and $359 million at ~~March 31,~~June 30, 2022 and December 31, 2021, 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 ~~March 31,~~June 30, 2022, Lazard estimates that its annual operating income relating to cash and cash equivalents would increase by approximately $9 million in the event interest rates were to increase by 1% and decrease by approximately $9 million if rates were to decrease by 1%.

As of ~~March 31,~~June 30, 2022, the Company’s cash and cash equivalents totaled approximately ~~$878~~$907 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, legal actions due to operating deficiencies, noncompliance or cyber attacks. 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.

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 may experience 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 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

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, 2021.

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 ~~first~~second quarter of 2022. 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
January 1 – January 31, 2022
April 1 – April 30, 2022
Share Repurchase Program (1)		1,435,000	$	43.70		1,435,000	$	131.1	million		2,500,000	$	34.65		2,500,000	$	231.4	million
Employee Transactions (2)		40	$	44.70		-		-			844	$	34.21		-		-
February 1 – February 28, 2022
May 1 – May 31, 2022
Share Repurchase Program (1)		-	$	-		-	$	431.1	million		1,055,000	$	33.79		1,055,000	$	195.8	million
Employee Transactions (2)		575,835	$	37.95		-		-			4,809	$	32.39		-		-
March 1 – March 31, 2022
June 1 – June 30, 2022
Share Repurchase Program (1)		3,282,821	$	34.45		3,282,821	$	318.1	million		2,326,061	$	33.16		2,326,061	$	118.7	million
Employee Transactions (2)		1,045,433	$	34.58		-		-			9,149	$	33.70		-		-
Total
Share Repurchase Program (1)		4,717,821	$	37.26		4,717,821	$	318.1	million		5,881,061	$	33.90		5,881,061	$	118.7	million
Employee Transactions (2)		1,621,308	$	35.78		-		-			14,802	$	33.30		-		-

(1)	~~Since~~During 2021 and through the ~~three~~six months ended ~~March 31,~~June 30, 2022, 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 2021	$	300,000	December 31, 2022
February 2022	$	300,000	December 31, 2024

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 ~~March 31,~~June 30, 2022, the Company satisfied such obligations in lieu of issuing (i) ~~1,490,239~~3,359 shares of common stock upon the vesting or settlement of ~~3,767,006~~6,595 RSUs and (ii) ~~131,069~~11,443 shares of common stock upon the vesting of ~~344,359~~28,018 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 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).

10.8*		Amended and Restated Agreement relating to Retention and Noncompetition and Other Covenants, dated as of March 31, 2022, 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 6, 2022).

10.9*		Amended and Restated Agreement relating to Retention and Noncompetition and Other Covenants, dated as of March 31, 2022, 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. 001-32492) filed on April 6, 2022)

10.10*		Amended and Restated Agreement relating to Retention and Noncompetition and Other Covenants, dated as of March 31, 2022, by and among the Registrant, Lazard Group LLC and Peter R. Orszag (incorporated by reference to Exhibit 10.3 to the Registrant’s Current Report on Form 8-K (File No. 001-32492) filed on April 6, 2022).

10.11*		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 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).

10.12*		Resignation Letter Agreement, dated as of March 31, 2022, by and between the Registrant and Ashish Bhutani (incorporated by reference to Exhibit 10.4 to the Registrant’s Current Report on Form 8-K (File No. 001-32492) filed on April 6, 2022).

10.13*		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).

10.14*		Resignation Letter Agreement, dated as of March 31, 2022, by and between the Registrant 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 6, 2022).

10.15*		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).

10.16*		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) filed on May 11, 2006).

10.17		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 (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).

10.18*		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) filed on April 30, 2019).

10.19*		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).

10.20*		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).

10.21*		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).

10.22*		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: ~~May 2,~~August 1, 2022

	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

6571

	Three Months Ended March 31, 2021
	Beginning Balance		Net Unrealized/ Realized Gains/Losses Included In Earnings (a)		Purchases/ Acquisitions/ Issuances		Sales/ Dispositions/ Settlements		Foreign Currency Translation Adjustments			Ending Balance
Assets:
Investments:
Equities	$	1,671	$	1	$	0	$	0	$	(31	)	$	1,641
Private equity funds		1,486		0		0		0		(14	)		1,472
Total Level 3 assets	$	3,157	$	1	$	0	$	0	$	(45	)	$	3,113

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

	Pension Plans
	Three Months Ended March 31,
	2022			2021
Components of Net Periodic Benefit Cost (Credit):
Service cost	$	211		$	226
Interest cost		3,000			2,115
Expected return on plan assets		(6,624	)		(6,534	)
Amortization of:
Prior service cost		29			30
Net actuarial loss (gain)		1,087			1,687
Settlement loss		436			380
Net periodic benefit cost (credit)	$	(1,861	)	$	(2,096	)