Business Wire | Jul 31, 2020 06:49AM EDT

Lazard Ltd Reports Second-quarter and First-half 2020 Results

Jul. 31, 2020

NEW YORK--(BUSINESS WIRE)--Jul. 31, 2020--Lazard Ltd (NYSE: LAZ) today reported operating revenue1 of $543 million for the quarter ended June 30, 2020. Net income, as adjusted2, was $75 million, or $0.67 per share (diluted) for the quarter. On a U.S. GAAP basis, second-quarter 2020 net income was $73 million, or $0.66 per share (diluted).

First-half 2020 net income, as adjusted, was $142 million, or $1.25 per share (diluted). On a U.S. GAAP basis, first-half 2020 net income was $137 million, or $1.22 per share (diluted).

"Lazard continues to perform well in a period of unprecedented uncertainty, reflecting the strength and resilience of our business model and the dedication of our people," said Kenneth M. Jacobs, Chairman and Chief Executive Officer of Lazard. "Our broad array of Financial Advisory services, including our preeminent Restructuring franchise, mitigates the impact of a slowdown in global M&A markets. In Asset Management, the diversification of our investment platforms and global client base continue to be a solid foundation for long-term growth."

($ in millions, except Quarter Ended Six Months Endedper share data and AUM) June 30, June 30,

2020 2019 %'20-'19 2020 2019 %'20-'19

Net Income

U.S. GAAP $73 $66 12% $137 $163 (16)%

Per share, diluted $0.66 $0.55 20% $1.22 $1.36 (10)%

Adjusted^2 $75 $86 (12)% $142 $191 (26)%

Per share, diluted $0.67 $0.73 (8)% $1.25 $1.61 (22)%

Operating Revenue^1

Total operating revenue $543 $630 (14)% $1,106 $1,250 (12)%

Financial Advisory $293 $329 (11)% $588 $659 (11)%

Asset Management $245 $291 (16)% $514 $575 (11)%

AUM ($ in billions)

Period End $215 $237 (10)%

Average $208 $237 (12)% $215 $233 (8)%

Note: Endnotes are on page 6 of this release. A reconciliation of adjusted GAAP to U.S. GAAP begins on page 13.

COVID-19 ENVIRONMENT UPDATE

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

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

We continue to expect a challenging environment in the near-term due to elevated uncertainty, capital markets volatility and a downturn in global M&A activity. We believe that our strong financial position, the diversity of our business, and our consistent focus on cost discipline will enable us to weather the economic downturn.

OPERATING REVENUE

Operating revenue1 was $543 million for the second quarter of 2020, and $1,106 million for the first half of 2020, down 14% and 12% for both periods from the respective 2019 periods.

Financial Advisory

Our Financial Advisory results include M&A Advisory, Capital Advisory, Capital Raising, Restructuring, Shareholder Advisory, Sovereign Advisory, and other strategic advisory work for clients.

For the second quarter of 2020, Financial Advisory operating revenue was $293 million, 11% lower than the second quarter of 2019. The decrease reflected lower M&A completions offset by higher Restructuring advisory fees.

For the first half of 2020, Financial Advisory operating revenue was $588 million, 11% lower than the first half of 2019.

During and since the second quarter of 2020, Lazard has been engaged in significant and complex M&A transactions and other advisory assignments globally, including the following (clients are in italics): Alfried Krupp von Bohlen und Halbach-Foundation in thyssenkrupp's (euro)17.2 billion sale of its Elevator Technology business to a consortium led by Advent, Cinven and RAG foundation; Anheuser-Busch InBev's AUD 16.0 billion sale of Carlton & United Breweries to Asahi Group Holdings; Apergy in its combination with ChampionX, valuing the combined entity at $7.4 billion; Sempra Energy on its $3.6 billion sale of its equity interests in its Peruvian businesses to China Yangtze Power, and its $2.2 billion sale of its equity interests in its Chilean businesses to State Grid International Development; Visa's $5.3 billion acquisition of Plaid; Arqiva's 2.0 billion sale of its Telecoms division to Cellnex; and Teladoc Health's $600 million acquisition of InTouch Health.

Lazard has one of the world's preeminent restructuring practices, with a long track record of successfully advising businesses and governments. During and since the second quarter of 2020, we have been engaged in a broad range of highly visible and complex restructuring and debt advisory assignments for debtors or creditors, including roles involving: 24 Hour Fitness; CSM Bakery Solutions; Diamond Offshore Drilling; Foresight Energy; Gavilan Resources; Global Cloud Xchange; Hi-Crush; J.C. Penney; J.Crew; Libbey; Macy's; Neiman Marcus; PG&E; Pioneer Energy Services; Premier Oil; Pyxus International; Technicolor; Trevi Finanziaria Industriale; and Valaris. Lazard was the global leader in announced restructurings by volume for the first half of 2020 (Source: Refinitiv).

Our Capital and Shareholder Advisory practices remain active globally, advising on a broad range of public and private assignments. Our Sovereign Advisory practice continues to be active advising governments, sovereign and sub-sovereign entities across developed and emerging markets.

For a list of publicly announced Financial Advisory transactions on which Lazard advised in the second quarter of 2020, or continued to advise or completed since June 30, 2020, please visit our website at www.lazard.com/businesses/transactions.

Asset Management

In the text portion of this press release, we present our Asset Management results as 1) Management fees and other revenue, and 2) Incentive fees.

For the second quarter of 2020, Asset Management operating revenue was $245 million, 16% lower than the second quarter of 2019. For the first half of 2020, Asset Management operating revenue was $514 million, 11% lower than the first half of 2019.

For the second quarter of 2020, management fees and other revenue was $245 million, 14% lower than the second quarter of 2019, and 9% lower than the first quarter of 2020. For the first half of 2020, management fees and other revenue was $512 million, 10% lower than the first half of 2019.

Average assets under management (AUM) for the second quarter of 2020 was $208 billion, 12% lower than the second quarter of 2019, and 6% lower than the first quarter of 2020. Average AUM for the first half of 2020 was $215 billion, 8% lower than the first half of 2019.

AUM as of June 30, 2020, was $215 billion, down 10% from June 30, 2019, and up 11% from March 31, 2020. The sequential increase was primarily driven by market appreciation of $25 billion and foreign exchange appreciation of $2.4 billion, partially offset by $6 billion in net outflows.

For the second quarter of 2020, incentive fees were $1 million, compared to $5 million for the second quarter of 2019. For the first half of 2020, incentive fees were $2 million, compared to $6 million for the first half of 2019.

OPERATING EXPENSES

Compensation and Benefits

In managing compensation and benefits expense, we focus on annual awarded compensation (cash compensation and benefits plus deferred incentive compensation with respect to the applicable year, net of estimated future forfeitures and excluding charges), a non-GAAP measure. We believe annual awarded compensation is an appropriate measure to assess actual annual compensation cost when also presented with the GAAP measure of compensation cost, which includes applicable-year cash compensation and the amortization of deferred incentive compensation principally attributable to previous years' deferred compensation. We believe that by managing our business using awarded compensation with a consistent deferral policy, we can better manage our compensation costs, increase our flexibility in the future and build shareholder value over time.

For the second quarter of 2020, we accrued compensation and benefits expense1 at an adjusted compensation1 ratio of 60%. This resulted in $326 million of adjusted compensation and benefits expense, compared to $362 million for the second quarter of 2019.

For the first half of 2020, adjusted compensation and benefits expense1 was $663 million, compared to $719 million for the first half of 2019.

We manage our compensation and benefits expense based on awarded compensation with a consistent deferral policy. We take a disciplined approach to compensation, and our goal is to maintain a compensation-to-operating revenue ratio over the cycle in the mid- to high-50s percentage range on both an awarded and adjusted basis, with consistent deferral policies.

Non-Compensation Expense

Adjusted non-compensation expense1 for the second quarter of 2020 was $100 million, 22% lower than the second quarter of 2019. The decrease primarily reflects lower marketing and business development expenses, including travel. The ratio of adjusted non-compensation expense to operating revenue for the second quarter of 2020 was 18.3%, compared to 20.3% for the second quarter of 2019.

Adjusted non-compensation expense1 for the first half of 2020 was $212 million, 13% lower than the first half of 2019. The ratio of adjusted non-compensation expense to operating revenue for the first half of 2020 was 19.2%, compared to 19.5% for the first half of 2019.

Our goal remains to achieve an adjusted non-compensation expense-to-operating revenue ratio over the cycle of 16% to 20%.

TAXES

The provision for taxes, on an adjusted basis1, was $24 million for the second quarter of 2020 and $50 million for the first half of 2020. The effective tax rate on the same basis was 23.9% for the second quarter and 26.3% for the first half of 2020, compared to 28.8% and 23.9% for the respective 2019 periods.

CAPITAL MANAGEMENT AND BALANCE SHEET

Our primary capital management goals include managing debt and returning capital to shareholders through dividends and share repurchases.

For the second quarter of 2020, Lazard returned $53 million to shareholders, which included: $49 million in dividends and $4 million in satisfaction of employee tax obligations in lieu of share issuances upon vesting of equity grants.

For the first half of 2020, Lazard returned $264 million to shareholders, which included: $98 million in dividends; $95 million in share repurchases of our Class A common stock; and $71 million in satisfaction of employee tax obligations in lieu of share issuances upon vesting of equity grants.

During the first half of 2020, we repurchased 2.9 million shares at an average price of $32.70 per share. As of June 30, 2020, our remaining share repurchase authorization was $306 million.

On July 29, 2020, Lazard declared a quarterly dividend of $0.47 per share on its outstanding common stock. The dividend is payable on August 21, 2020, to stockholders of record on August 10, 2020.

Lazard's financial position remains strong. As of June 30, 2020, our cash and cash equivalents were $897 million, and stockholders' equity related to Lazard's interests was $601 million.

CONFERENCE CALL

Lazard will host a conference call at 8:00 a.m. EDT on July 31, 2020, to discuss the company's financial results for the second quarter and first half of 2020. The conference call can be accessed via a live audio webcast available through Lazard's Investor Relations website at www.lazard.com, or by dialing 1 (800) 458-4148 (U.S. and Canada) or +1 (323) 794-2093 (outside of the U.S. and Canada), 15 minutes prior to the start of the call.

A replay of the conference call will be available by 10:00 a.m. EDT on July 31, 2020, via the Lazard Investor Relations website, or by dialing 1 (888) 203-1112 (U.S. and Canada) or +1 (719) 457-0820 (outside of the U.S. and Canada). The replay access code is 1611226.

ABOUT LAZARD

Lazard, one of the world's preeminent financial advisory and asset management firms, operates from more than 40 cities across 25 countries in North America, Europe, Asia, Australia, Central and South America. With origins dating to 1848, the firm provides advice on mergers and acquisitions, strategic matters, restructuring and capital structure, capital raising and corporate finance, as well as asset management services to corporations, partnerships, institutions, governments and individuals. For more information on Lazard, please visit www.lazard.com. Follow Lazard at @Lazard.

Cautionary Note Regarding Forward-Looking Statements:

This press release contains 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 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 these forward-looking statements.

These factors include, but are not limited to, those discussed in our Annual Report on Form 10-K under Item 1A "Risk Factors," and also discussed from time to time in our reports on Forms 10-Q and 8-K, 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.

Although we believe the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, level of activity, performance or achievements. 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 release to conform our prior statements to actual results or revised expectations and we do not intend to do so.

Lazard Ltd is committed to providing timely and accurate information to the investing public, consistent with our legal and regulatory obligations. To that end, Lazard and its operating companies use their websites to convey information about their businesses, including the anticipated release of quarterly financial results, quarterly financial, statistical and business-related information, and the posting of updates of assets under management in various mutual funds, hedge funds and other investment products managed by Lazard Asset Management LLC and Lazard Frres Gestion SAS. Investors can link to Lazard and its operating company websites through www.lazard.com.

ENDNOTES

1 A non-U.S. GAAP measure. See attached financial schedules and related notes for a detailed explanation of adjustments to corresponding U.S. GAAP results. We believe that presenting our results on an adjusted basis in addition to the U.S. GAAP results is a meaningful and useful basis to compare our operating results across periods.

2 Second-quarter and first-half 2020 adjusted results1 exclude pre-tax charges of $2.5 million and $6.2 million, respectively, of costs relating to an office space reorganization. On a U.S. GAAP basis, these resulted in a net charge of $1.7 million, or $0.02 (diluted) per share, for the second quarter, and a net charge of $4.2 million, or $0.04 (diluted) per share, for the first half of 2020.

LAZ-EPE

LAZARD LTDUNAUDITED CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS(U.S. GAAP) Three Months Ended % Change From

June 30, March 31, June 30, March June 31, 30,

($ in thousands, 2020 2020 2019 2020 2019except per sharedata) Total revenue $592,264 $558,157 $650,801 6 % (9 %)

Interest expense (19,972 ) (20,143 ) (20,111 )

Net revenue 572,292 538,014 630,690 6 % (9 %)

Operating expenses:Compensation and 351,568 319,755 372,470 10 % (6 %)benefits Occupancy and 30,574 32,198 30,953 equipmentMarketing and 6,517 20,186 28,784 businessdevelopmentTechnology and 32,629 31,358 38,825 informationservicesProfessional 16,728 14,545 19,144 servicesFund administration 24,053 26,390 28,493 and outsourcedservicesAmortization andother 455 446 5,042 acquisition-relatedcostsOther 13,903 9,039 5,294

Subtotal 124,859 134,162 156,535 (7 %) (20 %)

Operating expenses 476,427 453,917 529,005 5 % (10 %)

Operating income 95,865 84,097 101,685 14 % (6 %)

Provision for 22,789 25,766 28,172 (12 %) (19 %)income taxesNet income 73,076 58,331 73,513 25 % (1 %)

Net income (loss)attributable to (382 ) (5,691 ) 7,736 noncontrollinginterestsNet income $73,458 $64,022 $65,777 15 % 12 %attributable toLazard Ltd Attributable toLazard Ltd CommonStockholders:Weighted averageshares outstanding:Basic 106,662,064 106,303,962 111,981,204 0 % (5 %)

Diluted 111,487,749 114,120,179 116,175,349 (2 %) (4 %)

Net income pershare:Basic $0.68 $0.59 $0.57 15 % 19 %

Diluted $0.66 $0.56 $0.55 18 % 20 %

LAZARD LTDUNAUDITED CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS(U.S. GAAP) Six Months Ended

June 30, June 30,

($ in thousands, except per share 2020 2019 %data) Change

Total revenue $1,150,421 $1,312,479 (12%)

Interest expense (40,115 ) (38,115 )

Net revenue 1,110,306 1,274,364 (13%)

Operating expenses:

Compensation and benefits 671,323 744,724 (10%)



Occupancy and equipment 62,772 59,248

Marketing and business development 26,703 56,768

Technology and information services 63,987 70,880

Professional services 31,273 33,361

Fund administration and outsourced 50,443 57,423 servicesAmortization and other 901 8,512 acquisition-related costsOther 22,942 22,100

Subtotal 259,021 308,292 (16%)

Operating expenses 930,344 1,053,016 (12%)



Operating income 179,962 221,348 (19%)



Provision for income taxes 48,555 51,359 (5%)

Net income 131,407 169,989 (23%)

Net income (loss) attributable to (6,073 ) 7,170 noncontrolling interestsNet income attributable to Lazard Ltd $137,480 $162,819 (16%)



Attributable to Lazard Ltd Common Stockholders:Weighted average shares outstanding:

Basic 106,483,013 111,962,729 (5%)

Diluted 112,803,964 118,497,717 (5%)



Net income per share:

Basic $1.27 $1.44 (12%)

Diluted $1.22 $1.36 (10%)

LAZARD LTDUNAUDITED CONDENSED CONSOLIDATEDSTATEMENT OF FINANCIAL CONDITION(U.S. GAAP) June 30, December 31,

($ in thousands) 2020 2019

ASSETS Cash and cash equivalents $896,843 $1,231,593

Deposits with banks and short-term investments 1,155,539 1,180,686

Cash deposited with clearing organizations and 40,283 43,280 other segregated cashReceivables 652,112 663,138

Investments 523,366 531,995

Goodwill and other intangible assets 369,159 373,594

Operating lease right-of-use assets 525,193 551,504

Deferred tax assets 563,243 586,750

Other assets 586,380 477,041

Total Assets $5,312,118 $5,639,581

LIABILITIES & STOCKHOLDERS' EQUITY LiabilitiesDeposits and other customer payables $1,230,920 $1,246,200

Accrued compensation and benefits 365,989 602,777

Operating lease liabilities 618,362 644,345

Tax receivable agreement obligation 221,890 247,344

Senior debt 1,680,845 1,679,562

Other liabilities 510,144 537,779

Total liabilities 4,628,150 4,958,007

Commitments and contingencies Stockholders' equityPreferred stock, par value $.01 per share - -

Common stock, par value $.01 per share 1,128 1,128

Additional paid-in capital 52,274 41,020

Retained earnings 1,140,015 1,193,570

Accumulated other comprehensive loss, net of tax (308,921 ) (293,648 )

Subtotal 884,496 942,070

Class A common stock held by subsidiaries, at cost (283,899 ) (332,079 )

Total Lazard Ltd stockholders' equity 600,597 609,991

Noncontrolling interests 83,371 71,583

Total stockholders' equity 683,968 681,574

Total liabilities and stockholders' equity $5,312,118 $5,639,581

LAZARD LTDSELECTED SUMMARY FINANCIAL INFORMATION (a)(Non-GAAP - unaudited) Three Months Ended % Change From

June 30, March 31, June 30, March June 31, 30,

($ in thousands, 2020 2020 2019 2020 2019except per sharedata) Revenues: Financial Advisory $292,906 $294,773 $328,814 (1%) (11%)

Asset Management 245,346 268,953 291,269 (9%) (16%)

Corporate 4,662 (915) 9,617 NM (52%)



Operating revenue $542,914 $562,811 $629,700 (4%) (14%)(b)

Expenses:



Adjusted $325,749 $337,686 $362,078 (4%) (10%)compensation andbenefits expense (c)Ratio of adjusted 60.0% 60.0% 57.5% compensation tooperating revenue

Non-compensation $99,617 $112,632 $128,014 (12%) (22%)expense (d)Ratio of 18.3% 20.0% 20.3% non-compensation tooperating revenue

Earnings:



Earnings from $117,548 $112,493 $139,608 4% (16%)operations (e)Operating margin (f) 21.7% 20.0% 22.2%



Adjusted net income $75,151 $66,552 $85,746 13% (12%)(g)

Diluted adjusted net $0.67 $0.58 $0.73 16% (8%)income per share

Diluted weighted 111,845,101 114,160,044 117,422,884 (2%) (5%)average shares (h) Effective tax rate 23.9% 28.8% 28.8%(i)

This presentation includes non-U.S. GAAP ("non-GAAP") measures. Our non-GAAPmeasures are not meant to be considered in isolation or as a substitute forthe corresponding U.S. GAAP measures, and should be read only in conjunctionwith our consolidated financial statements prepared in accordance with U.S.GAAP. For a detailed explanation of the adjustments made to thecorresponding U.S. GAAP measures, see Reconciliation of U.S. GAAP toSelected Summary Financial Information and Notes to Financial Schedules.

LAZARD LTDSELECTED SUMMARY FINANCIAL INFORMATION (a)(Non-GAAP - unaudited) Six Months Ended

June 30, June 30,

2020 2019 %($ in thousands, except per share data) Change

Revenues: Financial Advisory $587,679 $658,808 (11%)

Asset Management 514,299 575,003 (11%)

Corporate 3,747 15,879 (76%)



Operating revenue (b) $1,105,725 $1,249,690 (12%)



Expenses:



Adjusted compensation and benefits $663,435 $718,572 (8%)expense (c)Ratio of adjusted compensation to 60.0% 57.5% operating revenue

Non-compensation expense (d) $212,249 $243,751 (13%)

Ratio of non-compensation to operating 19.2% 19.5% revenue

Earnings:



Earnings from operations (e) $230,041 $287,367 (20%)

Operating margin (f) 20.8% 23.0%



Adjusted net income (g) $141,703 $191,283 (26%)



Diluted adjusted net income per share $1.25 $1.61 (22%)



Diluted weighted average shares (h) 113,002,572 119,178,774 (5%)

Effective tax rate (i) 26.3% 23.9%

This presentation includes non-GAAP measures. Our non-GAAP measures are notmeant to be considered in isolation or as a substitute for the correspondingU.S. GAAP measures, and should be read only in conjunction with ourconsolidated financial statements prepared in accordance with U.S. GAAP. For adetailed explanation of the adjustments made to the corresponding U.S. GAAPmeasures, see Reconciliation of U.S. GAAP to Selected Summary FinancialInformation and Notes to Financial Schedules.

LAZARD LTDASSETS UNDER MANAGEMENT ("AUM")(unaudited)($ in millions) As of Variance

June 30, March 31, December 31,

2020 2020 2019 Qtr to YTD Qtr

Equity:Emerging Markets $28,937 $27,716 $40,612 4.4% (28.7%)

Global 45,178 39,094 49,759 15.6% (9.2%)

Local 43,477 37,496 48,985 16.0% (11.2%)

Multi-Regional 55,923 50,335 66,185 11.1% (15.5%)

Total Equity 173,515 154,641 205,541 12.2% (15.6%)

Fixed Income:

Emerging Markets 12,412 11,424 14,387 8.6% (13.7%)

Global 9,883 9,100 9,233 8.6% 7.0%

Local 5,436 5,421 5,450 0.3% (0.3%)

Multi-Regional 9,153 8,376 9,193 9.3% (0.4%)

Total Fixed Income 36,884 34,321 38,263 7.5% (3.6%)

Alternative 2,028 1,902 2,149 6.6% (5.6%)InvestmentsPrivate Equity 1,412 1,406 1,385 0.4% 1.9%

Cash Management 865 778 901 11.2% (4.0%)

Total AUM $214,704 $193,048 $248,239 11.2% (13.5%)

Three Months Ended June Six Months Ended 30, June 30,

2020 2019 2020 2019

AUM - Beginning of $193,048 $234,979 $248,239 $214,734Period Net Flows (5,968 ) (5,246 ) (10,881) (5,208)

Market and foreignexchange 27,624 7,733 (22,654) 27,940appreciation(depreciation) AUM - End of Period $214,704 $237,466 $214,704 $237,466

Average AUM $208,454 $236,978 $215,008 $232,740

% Change in average (12.0 %) (7.6%)AUM Note: Average AUM generally represents the average of the monthly ending AUMbalances for the period.

LAZARD LTDRECONCILIATION OF U.S. GAAP TO SELECTED SUMMARY FINANCIAL INFORMATION (a)(unaudited) Three Months Ended Six Months Ended

June 30, March 31, June 30, June 30, June 30,

($ in thousands, 2020 2020 2019 2020 2019except per sharedata) Operating RevenueNet revenue - U.S. $572,292 $538,014 $630,690 $1,110,306 $1,274,364 GAAP Basis Adjustments:(Revenue) lossrelated to (2,173 ) 2,772 (11,819 ) 599 (14,090 )noncontrollinginterests (j)(Gains) lossesrelated to LazardFund Interests (23,803 ) 19,637 (6,484 ) (4,166 ) (20,354 )("LFI") and othersimilararrangementsDistribution fees,reimbursable deal (21,936 ) (16,384 ) (13,357 ) (38,320 ) (37,689 )costs and bad debtexpense (k)Private Equity - - 11,948 - 11,948 investmentadjustment (l)Interest expense 18,534 18,772 18,722 37,306 35,511

Operating revenue, $542,914 $562,811 $629,700 $1,105,725 $1,249,690 as adjusted (b) Compensation and Benefits ExpenseCompensation and $351,568 $319,755 $372,470 $671,323 $744,724 benefits expense -U.S. GAAP Basis Adjustments:(Charges) creditspertaining to LFI (23,803 ) 19,637 (6,484 ) (4,166 ) (20,354 )and other similararrangementsCompensationrelated to (2,016 ) (1,706 ) (3,908 ) (3,722 ) (5,798 )noncontrollinginterests (j) Compensation and $325,749 $337,686 $362,078 $663,435 $718,572 benefits expense,as adjusted (c) Non-Compensation ExpenseNon-compensation $124,859 $134,162 $156,535 $259,021 $308,292 expense - Subtotal- U.S. GAAP Basis Adjustments:Expenses associated - - (7,626 ) - (10,831 )with ERP systemimplementation (m)Expenses related to (2,487 ) (3,664 ) - (6,151 ) - office spacereorganization (n)Distribution fees,reimbursable deal (21,936 ) (16,384 ) (13,357 ) (38,320 ) (37,689 )costs and bad debtexpense (k)Amortization andother (455 ) (446 ) (5,042 ) (901 ) (8,512 )acquisition-relatedcosts (o)Charges pertaining - - (2,262 ) - (6,505 )to Senior Debtrefinancing (p)Non-compensationexpense related to (364 ) (1,036 ) (234 ) (1,400 ) (1,004 )noncontrollinginterests (j) Non-compensation $99,617 $112,632 $128,014 $212,249 $243,751 expense, asadjusted (d) Pre-Tax Income and Earnings From OperationsOperating Income - $95,865 $84,097 $101,685 $179,962 $221,348 U.S. GAAP Basis Adjustments:Expenses associated - - 7,626 - 10,831 with ERP systemimplementation (m)Expenses related to 2,487 3,664 - 6,151 - office spacereorganization (n)Acquisition-related - - 4,612 - 7,651 costs (o)Private Equity - - 11,948 - 11,948 investmentadjustment (l)Charges pertaining - - 2,348 - 6,805 to Senior Debtrefinancing (p)Net (income) lossrelated to 382 5,691 (7,736 ) 6,073 (7,170 )noncontrollinginterests (j)Pre-tax income, as 98,734 93,452 120,483 192,186 251,413 adjustedInterest expense 18,534 18,772 18,636 37,306 35,211

Amortization (LAZ 280 269 489 549 743 only)Earnings from $117,548 $112,493 $139,608 $230,041 $287,367 operations, asadjusted (e) Net Income attributable to Lazard LtdNet incomeattributable to $73,458 $64,022 $65,777 $137,480 $162,819 Lazard Ltd - U.S.GAAP BasisAdjustments:Expenses associated - - 7,626 - 10,831 with ERP systemimplementation (m)Expenses related to 2,487 3,664 - 6,151 - office spacereorganization (n)Acquisition-related - - 4,612 - 7,651 costs (o)Private Equity - - 11,948 - 11,948 investmentadjustment (l)Charges pertaining - - 2,348 - 6,805 to Senior Debtrefinancing (p)Tax benefit (794 ) (1,134 ) (6,565 ) (1,928 ) (8,771 )allocated toadjustments Net income, as $75,151 $66,552 $85,746 $141,703 $191,283 adjusted (g) Diluted Weighted Average Shares OutstandingDiluted WeightedAverage Shares 111,487,749 114,120,179 116,175,349 112,803,964 118,497,717 Outstanding - U.S.GAAP BasisAdjustment:participatingsecurities 357,352 39,865 1,247,535 198,609 681,057 including profitsinterestparticipationrights Diluted WeightedAverage Shares 111,845,101 114,160,044 117,422,884 113,002,572 119,178,774 Outstanding, asadjusted (h) Diluted net incomeper share:U.S. GAAP Basis $0.66 $0.56 $0.55 $1.22 $1.36

Non-GAAP Basis, as $0.67 $0.58 $0.73 $1.25 $1.61 adjusted

This presentation includes non-GAAP measures. Our non-GAAP measures are notmeant to be considered in isolation or as a substitute for comparable U.S.GAAP measures, and should be read only in conjunction with our consolidatedfinancial statements prepared in accordance with U.S. GAAP. For a detailedexplanation of the adjustments made to comparable U.S. GAAP measures, seeNotes to Financial Schedules. See Notes to Financial Schedules

LAZARD LTDRECONCILIATION OF NON-COMPENSATION U.S. GAAP TO ADJUSTED (a)(unaudited) Three Months Ended Six Months Ended

June 30, March 31, June 30, June 30, June 30,

($ in thousands) 2020 2020 2019 2020 2019

Non-compensationexpense - U.S. GAAP Basis:Occupancy and $30,574 $32,198 $30,953 $62,772 $59,248 equipmentMarketing and 6,517 20,186 28,784 26,703 56,768 business developmentTechnology and 32,629 31,358 38,825 63,987 70,880 information servicesProfessional 16,728 14,545 19,144 31,273 33,361 servicesFund administration 24,053 26,390 28,493 50,443 57,423 and outsourced servicesAmortization andother 455 446 5,042 901 8,512 acquisition-relatedcostsOther 13,903 9,039 5,294 22,942 22,100

Non-compensation $124,859 $134,162 $156,535 $259,021 $308,292 expense - Subtotal - U.S. GAAP Basis Non-compensationexpense - Adjustments:Occupancy and ($2,448 ) ($3,733 ) ($25 ) ($6,181 ) ($58 )equipment (j) (n)Marketing andbusiness (755 ) (2,691 ) (6,493 ) (3,446 ) (9,897 )development (j) (k)(m)Technology andinformation (167 ) (435 ) (7,427 ) (602 ) (10,703 )services (j) (k)(m)Professional (1,658 ) (1,778 ) (2,091 ) (3,436 ) (3,455 )services (j) (k) (m) (n)Fund administration (10,129 ) (12,120 ) (12,549 ) (22,249 ) (28,458 )and outsourced services (j) (k)Amortization andother (455 ) (446 ) (5,042 ) (901 ) (8,512 )acquisition-relatedcosts (o)Other (j) (k) (m) (9,630 ) (327 ) 5,106 (9,957 ) (3,458 )(p)Subtotal ($25,242 ) ($21,530 ) ($28,521 ) ($46,772 ) ($64,541 )Non-compensation adjustments Non-compensationexpense, as adjusted:Occupancy and $28,126 $28,465 $30,928 $56,591 $59,190 equipmentMarketing and 5,762 17,495 22,291 23,257 46,871 business developmentTechnology and 32,462 30,923 31,398 63,385 60,177 information servicesProfessional 15,070 12,767 17,053 27,837 29,906 servicesFund administration 13,924 14,270 15,944 28,194 28,965 and outsourced servicesAmortization andother - - - - - acquisition-relatedcostsOther 4,273 8,712 10,400 12,985 18,642

Non-compensation $99,617 $112,632 $128,014 $212,249 $243,751 expense, as adjusted (d)

This presentation includes non-GAAP measures. Our non-GAAP measures are notmeant to be considered in isolation or as a substitute for comparable U.S.GAAP measures, and should be read only in conjunction with our consolidatedfinancial statements prepared in accordance with U.S. GAAP. For a detailedexplanation of the adjustments made to comparable U.S. GAAP measures, seeNotes to Financial Schedules. See Notes to Financial Schedules

LAZARD LTD Notes to Financial Schedules Selected Summary Financial Information are non-GAAP measures. Lazard(a) believes that presenting results and measures on an adjusted basis in conjunction with U.S. GAAP measures provides a meaningful and useful basis for comparison of its operating results across periods.



A non-GAAP measure which excludes (i) (revenue)/loss related to noncontrolling interests (see (j) below), (ii) (gains)/losses related to the changes in the fair value of investments held in connection with Lazard Fund Interests and other similar deferred compensation arrangements for which a corresponding equal amount is excluded from compensation & benefits expense, (iii) revenue related to distribution(b) fees and reimbursable deal costs in accordance with the revenue recognition guidance and bad debt expense (see (k) below), (iv) for the three and six month periods ended June 30, 2019, private equity investment adjustment (see (l) below), (v) interest expense primarily related to corporate financing activities, and (vi) for the three and six month periods ended June 30, 2019, excess interest expense pertaining to Senior Debt refinancing (see (p) below).



A non-GAAP measure which excludes (i) (charges)/credits related to the changes in the fair value of the compensation liability recorded in(c) connection with Lazard Fund Interests and other similar deferred compensation arrangements, and (ii) compensation and benefits related to noncontrolling interests (see (j) below).



A non-GAAP measure which excludes (i) for the three and six month periods ended June 30, 2019, expenses associated with ERP system implementation (see (m) below), (ii) for the three and six month periods ended June 30, 2020 and for the three month period ended March 31, 2020, expenses related to office space reorganization (see (n)(d) below), (iii) expenses related to distribution fees and reimbursable deal costs in accordance with the revenue recognition guidance and bad debt expense (see (k) below), (iv) amortization and other acquisition-related costs (see (o) below), (v) for the three and six month periods ended June 30, 2019, charges pertaining to Senior Debt refinancing (see (p) below), and (vi) expenses related to noncontrolling interests (see (j) below).



A non-GAAP measure which excludes (i) for the three and six month periods ended June 30, 2019, expenses associated with ERP system implementation (see (m) below), (ii) for the three and six month periods ended June 30, 2020 and for the three month period ended March 31, 2020, expenses related to office space reorganization (see (n) below), (iii) amortization and for the three and six month periods(e) ended June 30, 2019, other acquisition-related costs (see (o) below), (iv) for the three and six month periods ended June 30, 2019, private equity investment adjustment (see (l) below), (v) for the three and six month periods ended June 30, 2019, charges pertaining to Senior Debt refinancing (see (p) below), (vi) net revenue and expenses related to noncontrolling interests (see (j) below), and (vii) interest expense primarily related to corporate financing activities.



(f) Represents earnings from operations as a percentage of operating revenue, and is a non-GAAP measure.



A non-GAAP measure which excludes (i) for the three and six month periods ended June 30, 2019, expenses associated with ERP system implementation (see (m) below), (ii) for the three and six month periods ended June 30, 2020 and for the three month period ended March 31, 2020, expenses related to office space reorganization (see (n)(g) below), (iii) for the three and six month periods ended June 30, 2019, acquisition-related costs (see (o) below), (iv) for the three and six month periods ended June 30, 2019, private equity investment adjustment, (see (l) below), and (v) for the three and six month periods ended June 30, 2019, charges pertaining to Senior Debt refinancing (see (p) below), net of tax benefits.



A non-GAAP measure which includes units of the long-term incentive compensation program consisting of profits interest participation rights, which are equity incentive awards that, subject to certain(h) conditions, may be exchanged for shares of our common stock. Certain profits interest participation rights and other participating securities may be excluded from the computation of outstanding stock equivalents for U.S. GAAP net income per share.



Effective tax rate is a non-GAAP measure based upon the U.S. GAAP rate with adjustments for the tax applicable to the non-GAAP adjustments to operating income, generally based upon the effective marginal tax rate in the applicable jurisdiction of the adjustments. The computation is based on a quotient, the numerator of which is the provision for income(i) taxes of $23,583, $26,900, and $34,737 for the three month periods ended June 30, 2020, March 31, 2020, and June 30, 2019, respectively, $50,483 and $60,130 for the six month periods ended June 30, 2020 and 2019 and the denominator of which is pre-tax income of $98,734, $93,452, and $120,483 for the three month periods ended June 30, 2020, March 31, 2020, and June 30, 2019, respectively, $192,186 and $251,413 for the six month periods ended June 30, 2020 and 2019.



(j) Noncontrolling interests include revenue and expenses related to Edgewater and ESC funds.



Represents certain distribution fees and reimbursable deal costs paid to third parties for which an equal amount is excluded from both(k) non-GAAP operating revenue and non-compensation expense, respectively, and excludes bad debt expense, which represents fees that are deemed uncollectible.



(l) Represents write-down of private equity investment to potential transaction value.



(m) Represents expenses associated with Enterprise Resource Planning (ERP) system implementation.



(n) Represents incremental rent expense related to office space reorganization.



(o) Primarily represents the change in fair value of the contingent consideration associated with certain business acquisitions.



The company incurred charges related to the extinguishment of the remaining 4.25% Senior Notes maturing in November 2020. $168 million of the 2020 Notes were redeemed in March 2019 and the remaining $82(p) million have been redeemed in April 2019. The charges include a pre-tax loss on the extinguishment of $6.5 million and excess interest expense of $0.3 million (due to the period of time between the issuance of the 2029 notes and the settlement of the 2020 notes).



NM Not meaningful

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CONTACT: Media Contact: Judi Frost Mackey +1 212 632 1428 judi.mackey@lazard.com Investor Contact: Alexandra Deignan +1 212 632 6886 alexandra.deignan@lazard.com