Lazard, Inc. [LAZ] Filings

10-Q 1 laz-20240630.htm 10-Q laz-20240630

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

____________________________________

FORM 10-Q

____________________________________

(Mark One)


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

For the quarterly period ended June 30, 2024


o			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, INC.

(Exact name of registrant as specified in its charter)


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

30 Rockefeller Plaza

New York, NY 10112

(Address of principal executive offices)

Registrant’s telephone number: (212) 632-6000

____________________________________

Securities Registered Pursuant to Section 12(b) of the Act:


Title of each class	Trading Symbol(s)	Name of each exchange on which registered
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 x No o

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 x No o

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	x	Accelerated filer	o
Non-accelerated filer	o	Smaller reporting company	o
		Emerging growth company	o

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. o

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

As of July 19, 2024, there were 112,766,091 shares of the Registrant’s common stock outstanding (including 22,596,555 shares held by subsidiaries).

TABLE OF CONTENTS

On January 1, 2024, we completed our conversion (the “Conversion”) from an exempted company incorporated under the laws of Bermuda named Lazard Ltd to a U.S. C-Corporation named Lazard, Inc., a company incorporated under the laws of the state of Delaware. Pursuant to the Conversion, each share of Lazard Ltd common stock was converted into one share of Lazard, Inc. common stock. This report includes the results of Lazard, Inc. following the Conversion and Lazard Ltd prior to the Conversion.

When we use the terms “Lazard”, “we”, “us”, “our” and “the Company”, we mean (i) Lazard, Inc. and its subsidiaries following the Conversion and (ii) Lazard Ltd and its subsidiaries prior to the Conversion. Lazard’s subsidiaries include Lazard Group LLC, a Delaware limited liability company (“Lazard Group”), that is the current holding company for our businesses. Lazard’s primary operating asset is its indirect ownership as of June 30, 2024 of all of the common membership interests in Lazard Group and its controlling interest in Lazard Group.

All references to common stock, or shares or per share amounts, prior to the Conversion refer to Class A common stock of Lazard Ltd. Unless otherwise noted, all references to common stock, or shares or per share amounts, following the Conversion refer to common stock of Lazard, Inc.


			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			42

Item 3. Quantitative and Qualitative Disclosures About Market Risk			72

Item 4. Controls and Procedures			72

Part II. Other Information

Item 1. Legal Proceedings			73

Item 1A. Risk Factors			73

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds			73

Item 3. Defaults Upon Senior Securities			74

Item 4. Mine Safety Disclosures			74

Item 5. Other Information			74

Item 6. Exhibits			75

Signatures			79

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements (Unaudited)


			Page
Condensed Consolidated Statements of Financial Condition as of June 30, 2024 and December 31, 2023			2

Condensed Consolidated Statements of Operations for the three month and six month periods ended June 30, 2024 and 2023			4

Condensed Consolidated Statements of Comprehensive Income (Loss) for the three month and six month periods ended June 30, 2024 and 2023			5

Condensed Consolidated Statements of Cash Flows for the six month periods ended June 30, 2024 and 2023			6

Condensed Consolidated Statements of Changes in Stockholders’ Equity and Redeemable Noncontrolling Interests for the three month and six month periods ended June 30, 2024 and 2023			8

Notes to Condensed Consolidated Financial Statements			12

LAZARD, INC.

CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION

JUNE 30, 2024 AND DECEMBER 31, 2023

(UNAUDITED)

(dollars in thousands, except for per share data)


	June 30, 2024		December 31, 2023
ASSETS
Cash and cash equivalents	$	847,555	$	971,316
Deposits with banks and short-term investments	203,809		219,576
Restricted cash	33,089		34,091
Receivables (net of allowance for credit losses of $29,686 and $28,503 at June 30, 2024 and December 31, 2023, respectively):
Fees	554,596		560,552
Customers and other	170,892		201,767
	725,488		762,319
Investments	687,507		701,964
Property (net of accumulated amortization and depreciation of $424,128 and $414,547 at June 30, 2024 and December 31, 2023, respectively, including $70,002 and $72,921 of property held for sale at June 30, 2024 and December 31, 2023, respectively)	220,663		232,516
Operating lease right-of-use assets	451,707		407,213
Goodwill and other intangible assets (net of accumulated amortization of $67,711 and $67,681 at June 30, 2024 and December 31, 2023, respectively)	393,967		394,928
Deferred tax assets	507,572		497,340
Other assets	455,837		414,518
Total Assets	$	4,527,194	$	4,635,781

See notes to condensed consolidated financial statements.

LAZARD, INC.

CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION

JUNE 30, 2024 AND DECEMBER 31, 2023

(UNAUDITED)

(dollars in thousands, except for per share data)


	June 30, 2024		December 31, 2023
LIABILITIES, REDEEMABLE NONCONTROLLING INTERESTS AND STOCKHOLDERS’ EQUITY
Liabilities:
Deposits and other customer payables	$	382,115	$	443,262
Accrued compensation and benefits	550,189		781,375
Operating lease liabilities	522,864		485,191
Tax receivable agreement obligation	84,137		115,087
Senior debt	1,852,149		1,690,200
Deferred tax liabilities	3,944		3,857
Other liabilities	536,675		546,947
Total Liabilities	3,932,073		4,065,919
Commitments and contingencies
Redeemable noncontrolling interests	80,931		87,675
STOCKHOLDERS’ EQUITY
Preferred stock, par value $.01 per share; 15,000,000 shares authorized; no shares issued and outstanding at June 30, 2024 and December 31, 2023	–		–
Common stock:
Par value $0.01 per share (500,000,000 shares authorized; 112,766,091 shares issued at June 30, 2024 and December 31, 2023, including shares held by subsidiaries)	1,128		1,128
Additional paid-in-capital	218,455		247,204
Retained earnings	1,382,703		1,402,636
Accumulated other comprehensive loss, net of tax	(306,293)		(289,950)
	1,295,993		1,361,018
Common stock held by subsidiaries, at cost (22,596,555 and 25,340,287 shares at June 30, 2024 and December 31, 2023, respectively)	(837,338)		(937,259)
Total Lazard Stockholders’ Equity	458,655		423,759
Noncontrolling interests	55,535		58,428
Total Stockholders’ Equity	514,190		482,187
Total Liabilities, Redeemable Noncontrolling Interests and Stockholders’ Equity	$	4,527,194	$	4,635,781

See notes to condensed consolidated financial statements.

LAZARD, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

FOR THE THREE MONTH AND SIX MONTH PERIODS ENDED JUNE 30, 2024 AND 2023

(UNAUDITED)

(dollars in thousands, except for per share data)


	Three Months Ended June 30,				Six Months Ended June 30,
	2024		2023		2024		2023
REVENUE
Investment banking and other advisory fees	$	408,773	$	350,104	$	861,800	$	627,512
Asset management fees	267,914		271,637		544,763		533,116
Interest income	12,854		10,946		24,325		23,553
Other	18,450		29,631		62,584		40,048
Total revenue	707,991		662,318		1,493,472		1,224,229
Interest expense	22,642		19,204		43,370		38,679
Net revenue	685,349		643,114		1,450,102		1,185,550
OPERATING EXPENSES
Compensation and benefits	452,560		572,231		1,003,384		1,022,198
Occupancy and equipment	32,031		32,800		64,888		64,573
Marketing and business development	25,493		28,582		49,092		51,344
Technology and information services	46,406		51,370		91,323		95,410
Professional services	23,734		21,402		43,614		45,728
Fund administration and outsourced services	27,114		28,968		53,254		55,544
Amortization and other acquisition-related costs	68		95		136		143
Benefit pursuant to tax receivable agreement	–		–		–		(40,435)
Other	14,303		17,739		26,210		38,042
Total operating expenses	621,709		753,187		1,331,901		1,332,547
OPERATING INCOME (LOSS)	63,640		(110,073)		118,201		(146,997)
Provision (benefit) for income taxes	11,587		10,303		25,924		(11,422)
NET INCOME (LOSS)	52,053		(120,376)		92,277		(135,575)
LESS - NET INCOME ATTRIBUTABLE TO NONCONTROLLING INTERESTS	2,144		3,637		6,613		10,610
NET INCOME (LOSS) ATTRIBUTABLE TO LAZARD	$	49,909	$	(124,013)	$	85,664	$	(146,185)
ATTRIBUTABLE TO LAZARD COMMON STOCKHOLDERS:
WEIGHTED AVERAGE SHARES OF COMMON STOCK OUTSTANDING:
Basic	92,886,364		88,729,654		92,073,414		88,160,753
Diluted	100,627,867		88,729,654		99,989,817		88,160,753
NET INCOME (LOSS) PER SHARE OF COMMON STOCK:
Basic	$	0.53	$	(1.41)	$	0.91	$	(1.68)
Diluted	$	0.49	$	(1.41)	$	0.84	$	(1.68)

See notes to condensed consolidated financial statements.

LAZARD, INC.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

FOR THE THREE MONTH AND SIX MONTH PERIODS ENDED JUNE 30, 2024 AND 2023

(UNAUDITED)

(dollars in thousands)


	Three Months Ended June 30,				Six Months Ended June 30,
	2024		2023		2024		2023
NET INCOME (LOSS)	$	52,053	$	(120,376)	$	92,277	$	(135,575)
OTHER COMPREHENSIVE INCOME (LOSS), NET OF TAX:
Currency translation adjustments	(4,572)		2,478		(20,834)		17,017
Employee benefit plans:
Actuarial gain (loss) (net of tax expense (benefit) of $371 and $(479) for the three months ended June 30, 2024 and 2023, respectively, and $659 and $(1,074) for the six months ended June 30, 2024 and 2023, respectively)	789		(2,585)		1,604		(5,386)
Adjustment for items reclassified to earnings (net of tax expense of $455 and $385 for the three months ended June 30, 2024 and 2023, respectively, and $910 and $761 for the six months ended June 30, 2024 and 2023, respectively)	1,485		1,176		2,887		2,336
OTHER COMPREHENSIVE INCOME (LOSS), NET OF TAX	(2,298)		1,069		(16,343)		13,967
COMPREHENSIVE INCOME (LOSS)	49,755		(119,307)		75,934		(121,608)
LESS - COMPREHENSIVE INCOME ATTRIBUTABLE TO NONCONTROLLING INTERESTS	2,144		3,635		6,613		10,609
COMPREHENSIVE INCOME (LOSS) ATTRIBUTABLE TO LAZARD	$	47,611	$	(122,942)	$	69,321	$	(132,217)

See notes to condensed consolidated financial statements.

LAZARD, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

FOR THE SIX MONTH PERIODS ENDED JUNE 30, 2024 AND 2023

(UNAUDITED)

(dollars in thousands)


	Six Months Ended June 30,
	2024		2023
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss)	$	92,277	$	(135,575)
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:
Depreciation and amortization of property	18,319		21,660
Noncash lease expense	32,824		32,509
Amortization of deferred expenses and share-based incentive compensation	258,200		250,030
Amortization and other acquisition-related costs	136		143
Deferred tax benefit	(14,675)		(114,314)
Benefit pursuant to tax receivable agreement	–		(40,435)
Impairment of equity method investments and other receivables	–		22,981
Impairment of assets associated with cost-saving initiatives	–		7,490
Loss on LGAC liquidation	–		17,929
(Increase) decrease in operating assets and increase (decrease) in operating liabilities:
Receivables-net	31,521		(18,079)
Investments	90,016		(112,661)
Other assets	(100,124)		(5,052)
Accrued compensation and benefits and other liabilities	(322,239)		(137,048)
Net cash provided by (used in) operating activities	86,255		(210,422)
CASH FLOWS FROM INVESTING ACTIVITIES:
Additions to property	(13,061)		(11,990)
Disposals of property	1,928		100
Purchase of investments	(98,350)		–
Acquisition of business, net of cash acquired	–		(10,516)
Net cash used in investing activities	(109,483)		(22,406)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from (payments for) customer deposits, net	10,840		(349,479)
Proceeds from:
Issuance of senior debt, net of expenses	396,010		–
Contributions from noncontrolling interests	232		180
Payments for:
Extinguishment of senior debt	(233,073)		–
Distributions to noncontrolling interests	(2,005)		(4,061)
Tax receivable agreement	(30,950)		(32,208)
Distribution to redeemable noncontrolling interests in connection with LGAC redemption	–		(585,891)
Purchase of common stock	(40,816)		(99,097)
Common stock dividends	(88,731)		(85,925)
Settlement of share-based incentive compensation in satisfaction of tax withholding requirements	(61,593)		(48,709)
LFI Consolidated Funds redemptions	(35,141)		(31,789)
Other financing activities	(8,898)		(7,209)
Net cash used in financing activities	(94,125)		(1,244,188)
EFFECT OF EXCHANGE RATE CHANGES ON CASH AND CASH EQUIVALENTS AND RESTRICTED CASH	(23,177)		17,517
NET DECREASE IN CASH AND CASH EQUIVALENTS AND RESTRICTED CASH	(140,530)		(1,459,499)
CASH AND CASH EQUIVALENTS AND RESTRICTED CASH— January 1	1,224,983		2,639,400
CASH AND CASH EQUIVALENTS AND RESTRICTED CASH—June 30	$	1,084,453	$	1,179,901

See notes to condensed consolidated financial statements.


RECONCILIATION OF CASH AND CASH EQUIVALENTS AND RESTRICTED CASH WITHIN THE CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION:

	June 30, 2024		December 31, 2023
Cash and cash equivalents	$	847,555	$	971,316
Deposits with banks and short-term investments	203,809		219,576
Restricted cash	33,089		34,091
TOTAL CASH AND CASH EQUIVALENTS AND RESTRICTED CASH	$	1,084,453	$	1,224,983

See notes to condensed consolidated financial statements.

LAZARD, INC.

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

FOR THE THREE MONTH PERIOD ENDED JUNE 30, 2024

(UNAUDITED)

(dollars in thousands)


	Common Stock			Additional Paid-In- Capital		Retained Earnings		Accumulated Other Comprehensive Income (Loss), Net of Tax		Common Stock Held By Subsidiaries			Total Lazard Stockholders’ Equity		Noncontrolling Interests		Total Stockholders’ Equity		Redeemable Noncontrolling Interests
	Shares	$								Shares	$
Balance - April 1, 2024	112,766,091	$	1,128	$	134,573	$	1,384,829	$	(303,995)	22,248,005	$	(823,821)	$	392,714	$	55,817	$	448,531	$	88,475
Comprehensive income (loss):
Net income						49,909							49,909		1,683		51,592		461
Other comprehensive loss - net of tax								(2,298)					(2,298)		–		(2,298)
Amortization of share-based incentive compensation				88,438									88,438		909		89,347
Dividend equivalents				6,822		(7,019)							(197)		(2,109)		(2,306)
Common stock dividends ($0.50 per share)						(45,016)							(45,016)				(45,016)
Purchase of common stock										491,221	(18,811)		(18,811)				(18,811)
Delivery of common stock in connection with share-based incentive compensation and related tax expense of $117				(11,378)						(142,815)	5,300		(6,078)		–		(6,078)
Distributions to noncontrolling interests, net													–		(765)		(765)
LFI Consolidated Funds													–		–		–		(8,005)
Other										144	(6)		(6)				(6)
Balance - June 30, 2024	112,766,091	$	1,128	$	218,455	$	1,382,703	$	(306,293)	22,596,555	$	(837,338)	$	458,655	$	55,535	$	514,190	$	80,931

See notes to condensed consolidated financial statements.

LAZARD, INC.

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

FOR THE SIX MONTH PERIOD ENDED JUNE 30, 2024

(UNAUDITED)

(dollars in thousands)


	Common Stock			Additional Paid-In- Capital		Retained Earnings		Accumulated Other Comprehensive Income (Loss), Net of Tax		Common Stock Held By Subsidiaries			Total Lazard, Inc. Stockholders’ Equity		Noncontrolling Interests		Total Stockholders’ Equity		Redeemable Noncontrolling Interests
	Shares	$								Shares	$
Balance - January 1, 2024	112,766,091	$	1,128	$	247,204	$	1,402,636	$	(289,950)	25,340,287	$	(937,259)	$	423,759	$	58,428	$	482,187	$	87,675
Comprehensive income (loss):
Net income						85,664							85,664		3,535		89,199		3,078
Other comprehensive loss - net of tax								(16,343)					(16,343)		–		(16,343)
Amortization of share-based incentive compensation				158,211									158,211		1,334		159,545
Dividend equivalents				16,263		(16,866)							(603)		(7,230)		(7,833)
Common stock dividends ($1.00 per share)						(88,731)							(88,731)				(88,731)
Purchase of common stock										1,055,913	(40,816)		(40,816)				(40,816)
Delivery of common stock in connection with share-based incentive compensation and related tax expense of $881				(204,458)						(3,799,789)	140,743		(63,715)		1,241		(62,474)
Business acquisitions and related equity transactions:
Common stock issuable				1,235									1,235		–		1,235		–
Distributions to noncontrolling interests, net													–		(1,773)		(1,773)
LFI Consolidated Funds													–		–		–		(9,822)
Other										144	(6)		(6)				(6)
Balance - June 30, 2024	112,766,091	$	1,128	$	218,455	$	1,382,703	$	(306,293)	22,596,555	$	(837,338)	$	458,655	$	55,535	$	514,190	$	80,931

See notes to condensed consolidated financial statements.

LAZARD, INC.

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

FOR THE THREE MONTH PERIOD ENDED JUNE 30, 2023

(UNAUDITED)

(dollars in thousands)


	Common Stock			Additional Paid-In- Capital		Retained Earnings		Accumulated Other Comprehensive Income (Loss), Net of Tax		Common Stock Held By Subsidiaries			Total Lazard Stockholders’ Equity		Noncontrolling Interests		Total Stockholders’ Equity		Redeemable Noncontrolling Interests
	Shares	$								Shares	$
Balance - April 1, 2023	112,766,091	$	1,128	$	94,312	$	1,604,650	$	(282,957)	26,100,898	$	(965,707)	$	451,426	$	56,983	$	508,409	$	89,472
Comprehensive income (loss):
Net income (loss)						(124,013)							(124,013)		1,034		(122,979)		2,603
Other comprehensive income (loss) - net of tax								1,071					1,071		(2)		1,069
Amortization of share-based incentive compensation				79,072									79,072		1,662		80,734
Dividend equivalents				5,842		(6,055)							(213)		(1,881)		(2,094)
Common stock dividends ($0.50 per share)						(43,401)							(43,401)				(43,401)
Purchase of common stock										5,466	(172)		(172)				(172)
Delivery of common stock in connection with share-based incentive compensation and related tax benefit of $482				(11,023)						(214,903)	7,961		(3,062)		–		(3,062)
Distributions to noncontrolling interests, net													–		(1,889)		(1,889)
LFI Consolidated Funds													–		–		–		(8,492)
Other				(581)						5,240	(149)		(730)		–		(730)
Balance - June 30, 2023	112,766,091	$	1,128	$	167,622	$	1,431,181	$	(281,886)	25,896,701	$	(958,067)	$	359,978	$	55,907	$	415,885	$	83,583

See notes to condensed consolidated financial statements.

LAZARD, INC.

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

FOR THE SIX MONTH PERIOD ENDED JUNE 30, 2023

(UNAUDITED)

(dollars in thousands)


	Common Stock			Additional Paid-In- Capital		Retained Earnings		Accumulated Other Comprehensive Income (Loss), Net of Tax		Common Stock Held By Subsidiaries				Total Lazard, Inc. Stockholders’ Equity		Noncontrolling Interests		Total Stockholders’ Equity		Redeemable Noncontrolling Interests
	Shares	$								Shares		$
Balance - January 1, 2023	112,766,091	$	1,128	$	167,890	$	1,676,713	$	(295,854)	26,814,213		$	(993,414)	$	556,463	$	118,936	$	675,399	$	583,471
Comprehensive income (loss):
Net income (loss)						(146,185)								(146,185)		1,810		(144,375)		8,800
Other comprehensive income (loss) - net of tax								13,968						13,968		(1)		13,967
Amortization of share-based incentive compensation				147,583										147,583		3,685		151,268
Dividend equivalents				12,961		(13,422)								(461)		(6,720)		(7,181)
Common stock dividends ($1.00 per share)						(85,925)								(85,925)				(85,925)
Purchase of common stock										2,697,627		(99,097)		(99,097)				(99,097)
Delivery of Common stock in connection with share-based incentive compensation and related tax benefit of $90				(187,343)						(3,578,995)		133,060		(54,283)		5,664		(48,619)
Business acquisitions and related equity transactions:
Common stock issuable				1,775										1,775				1,775
Delivery of common stock				(1,533)						(41,384)		1,533		–				–
Distributions to noncontrolling interests, net														–		(3,881)		(3,881)
LFI Consolidated Funds														–		(74,164)		(74,164)		76,614
Change in redemption value of redeemable noncontrolling interests				(412)										(412)		(177)		(589)		589
LGAC Liquidation:
Distribution to redeemable noncontrolling interests																				(585,891)
Reversal to net loss of amounts previously charged to additional paid-in-capital and noncontrolling interests				13,195										13,195		4,734		17,929
Reversal of deferred offering costs liability				14,087										14,087		6,038		20,125
Other				(581)						5,240		(149)		(730)		(17)		(747)
Balance - June 30, 2023	112,766,091	$	1,128	$	167,622	$	1,431,181	$	(281,886)	$	25,896,701	$	(958,067)	$	359,978	$	55,907	$	415,885	$	83,583

See notes to condensed consolidated financial statements.

LAZARD, INC.

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, Inc. is one of the world’s preeminent financial advisory and asset management firms, incorporated in Delaware, 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, family offices and individuals.

On January 1, 2024, Lazard completed its conversion (the “Conversion”) from an exempted company incorporated under the laws of Bermuda named Lazard Ltd to a U.S. C-Corporation named Lazard, Inc. Pursuant to the Conversion, each share of Lazard Ltd common stock was converted into one share of Lazard, Inc. common stock. References to “Lazard” or the “Company” refer to (i) Lazard, Inc. and its subsidiaries following the Conversion and (ii) Lazard Ltd and its subsidiaries prior to the Conversion. As the Conversion became effective on January 1, 2024, the accompanying financial statements and related notes as of December 31, 2023 and for the three month and six month periods ended June 30, 2023 reflect Lazard as an exempted company incorporated under the laws of Bermuda named Lazard Ltd.

Lazard, Inc. indirectly held 100% of all outstanding common membership interests of Lazard Group LLC, a Delaware limited liability company (collectively referred to, together with its subsidiaries, as “Lazard Group”) as of June 30, 2024 and December 31, 2023. Lazard, Inc., through its control of the managing members of Lazard Group, controls Lazard Group, which is governed by an Amended and Restated Operating Agreement that is effective as of January 1, 2023 (the “Operating Agreement”).

Lazard, Inc.’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 two 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 strategic and mergers and acquisitions (“M&A”) advisory, capital markets advisory, shareholder advisory, restructuring and liability management, sovereign advisory, geopolitical advisory and other strategic advisory matters and capital raising and placement, 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 and certain contingent obligations.

Basis of Presentation

The accompanying condensed consolidated financial statements of Lazard 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, Inc.’s Annual Report on Form 10-K for the year ended December 31, 2023. The accompanying December 31, 2023 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.

LAZARD, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS-(Continued)

(UNAUDITED)

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

Preparing financial statements requires management to make estimates and assumptions that affect the amounts that are reported in the condensed consolidated 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 estimated 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 condensed consolidated results of operations for the three month and six month periods ended June 30, 2024 are not indicative of the results to be expected for any future interim or annual period.

The condensed consolidated financial statements include Lazard, Inc. 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, Lazard Frères Banque SA (“LFB”) and Lazard Frères Gestion SAS (“LFG”), and Maison Lazard SAS and its subsidiaries; and Lazard & Co., Limited (“LCL”), through Lazard & Co., Holdings Limited (“LCH”), an English private limited company, together with their jointly owned affiliates and subsidiaries.

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

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

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

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 losses or (ii) elects the option to measure its investment at fair value.

Intercompany transactions and balances have been eliminated.

2. RECENT ACCOUNTING DEVELOPMENTS

Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures—In November 2023, the Financial Accounting Standards Board (“FASB”) issued an accounting standard update to improve the disclosures about a public entity’s reportable segments and address requests from investors for additional, more detailed information about each reportable segment’s expenses. The amendments include new annual and interim disclosure requirements primarily related to significant segment expenses, reportable segments’ profit or loss, and information on the chief operating decision maker. The new guidance is effective for annual periods beginning after December 15, 2023, and interim periods beginning after December 15, 2024. The amendments shall be applied retrospectively to all prior periods presented in the consolidated financial statements. The Company is currently evaluating the new guidance.

Income Taxes (Topic 740): Improvements to Income Tax Disclosures —In December 2023, the FASB issued an accounting standard update to enhance the transparency and decision usefulness of income tax disclosures. The amendments include new annual disclosure requirements related to the rate reconciliation, information about income taxes paid, and disaggregated information on pre-tax income or loss and income tax expense from continuing operations. The amendments also eliminated certain disclosure requirements. The new guidance is effective for annual periods beginning after December 15, 2024, and shall be applied on a prospective basis. The Company is currently evaluating the new guidance.

LAZARD, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS-(Continued)

(UNAUDITED)

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

Compensation – Stock Compensation (Topic 718): Scope Application of Profits Interest and Similar Awards — In March 2024, the FASB issued an accounting standard update that provides guidance in determining whether profits interest and similar awards should be accounted for as share-based arrangements within the scope of Topic 718. The amendments are effective for annual periods beginning after December 15, 2024, and shall be applied either retrospectively or prospectively. The Company is currently evaluating the new guidance.

3. 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 June 30,				Six Months Ended June 30,
	2024		2023		2024		2023
Net Revenue:
Financial Advisory (a)	$	411,308	$	352,477	$	864,815	$	630,051

Asset Management:
Management fees and other (b)	$	281,892	$	282,335	$	568,432	$	560,933
Incentive fees (c)	3,595		5,978		12,531		11,424
Total Asset Management	$	285,487	$	288,313	$	580,963	$	572,357

___________________________________

(a)Financial Advisory is comprised of a wide array of financial advisory services regarding M&A advisory, capital markets advisory, shareholder advisory, restructuring and liability management, sovereign advisory, geopolitical advisory and other strategic advisory and capital raising and placement 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 may relate to services performed in prior periods. The advisory fees that may be unrecognized as of the end of a reporting period, primarily comprised of fees associated with transaction announcements and transaction completions, generally remain unrecognized due to the uncertainty associated with those events.

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

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

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

LAZARD, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS-(Continued)

(UNAUDITED)

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

With regard to the disclosure requirement for remaining performance obligations, the Company elected the practical expedients permitted in the guidance to (i) exclude contracts with a duration of one year or less; and (ii) exclude variable consideration, such as transaction completion and transaction announcement fees, that is allocated entirely to unsatisfied performance obligations. Excluded variable consideration typically relates to contracts with a duration of one year or less, and is generally constrained due to uncertainties.

At June 30, 2024, the Company had deferred revenue of $135,286 included in “other liabilities” on the condensed consolidated statements of financial condition. During the three month and six month periods ended June 30, 2024, the Company recognized $4,892 and $10,568 in revenue, respectively, that was included in the deferred revenue balance as of December 31, 2023 of $140,417.

4. RECEIVABLES AND ALLOWANCE FOR CREDIT LOSSES

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 credit losses determined in accordance with the current expected credit losses (“CECL”) model.

Of the Company’s fee receivables at June 30, 2024 and December 31, 2023, $123,124 and $113,929, respectively, represented financing receivables for our Private Capital Advisory fees.

At June 30, 2024 and December 31, 2023, customers and other receivables included $91,704 and $86,412, respectively, of customer loans provided by LFB to high net worth individuals and families, which are fully collateralized and monitored for counterparty creditworthiness, with such collateral having a fair value in excess of the carrying amount of the loans as of both June 30, 2024 and December 31, 2023.

The aggregate carrying amount of other fees and customers and other receivables was $510,660 and $561,978 at June 30, 2024 and December 31, 2023, respectively.

Activity in the allowance for credit losses for the three month and six month periods ended June 30, 2024 and 2023 was as follows:


	Three Months Ended June 30,				Six Months Ended June 30,
	2024		2023		2024		2023
Beginning Balance	$	30,086	$	24,929	$	28,503	$	17,738
Provision for credit losses, net of reversals	(75)		3,194		4,923		11,019
Charge-offs	(260)		(1,044)		(3,483)		(1,886)
Foreign currency translation and other adjustments	(65)		16		(257)		224
Ending Balance	$	29,686	$	27,095	$	29,686	$	27,095

The provision for credit losses, 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.

The allowance for credit losses is substantially all related to Financial Advisory fee receivables and other receivables.

LAZARD, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS-(Continued)

(UNAUDITED)

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

5. INVESTMENTS

The Company’s investments consist of the following at June 30, 2024 and December 31, 2023:


	June 30, 2024		December 31, 2023
Debt	$	99,254	$	4,285
Equity	54,442		54,717
Funds:
Alternative investments (a)	57,679		61,680
Debt (a)	145,151		191,325
Equity (a)	282,782		343,139
Private equity	48,199		46,818
Total funds	533,811		642,962
Investments, at fair value	$	687,507	$	701,964

___________________________________

(a)Interests in alternative investment funds, debt funds and equity funds include investments, including those held by LFI Consolidated Funds (see Note 21), with fair values of $22,807, $128,916 and $225,225, respectively, at June 30, 2024 and $27,454, $175,449 and $284,099, respectively, at December 31, 2023, held in order to satisfy the Company’s obligation 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 interests in a number of Lazard-managed funds, subject to service-based vesting conditions (see Notes 7 and 13).

Debt securities primarily consists of U.S. Treasury securities with remaining maturities at time of purchase of greater than three months and less than one year and investments in government securities held within separately managed accounts in order to seed strategies in our Asset Management business.

Equity securities primarily consist of investments in marketable equity securities of large-, mid- and small-cap domestic, international and global companies held within separately managed accounts in order to seed strategies in 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 investments in funds in order to seed strategies in our Asset Management business, and amounts related to LFI discussed above.

Debt funds primarily consist of investments in debt securities in order to seed strategies in our Asset Management business and amounts related to LFI discussed above.

Equity funds primarily consist of investments in equity securities in order to seed strategies in our Asset Management business, 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, (ii) a fund targeting significant noncontrolling-stake investments in established private companies and (iii) a seed investment in a fund that invests in sustainable private infrastructure opportunities.

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”).

LAZARD, INC.

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 June 30, 2024 and 2023, 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 June 30,				Six Months Ended June 30,
	2024		2023		2024		2023
Net unrealized investment gains (losses)	$	(10,248)	$	13,643	$	753	$	38,430

6. FAIR VALUE MEASUREMENTS

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

Level 1. Assets and liabilities whose values are based on unadjusted quoted prices for identical assets or liabilities in an active market that Lazard has the ability to access.

Level 2. Assets and liabilities whose values are based on (i) quoted prices for similar assets or liabilities in an active market, or quoted prices for identical or similar assets or liabilities in non-active markets, or (ii) inputs other than quoted prices that are directly observable or derived principally from, or corroborated by, market data.

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

The fair value of debt securities, including instruments reported as either cash and cash equivalents, deposits with banks and short-term investments, or investments, is classified as Level 1 when the fair values are based on unadjusted quoted prices in active markets, or Level 2 when based on one or more quoted prices in markets that are not active or for which all significant inputs are observable, either directly or indirectly.

The fair value of equity securities 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 based on the publicly reported closing price for the fund, or Level 2 when based on one or more quoted prices in markets that are not active or for which all significant inputs are observable, either directly or indirectly.

The fair value of investments in certain private equity funds is classified as Level 3 for (i) certain investments that are valued based on the potential transaction value and (ii) when the acquisition price is considered the best measure of fair 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 the contingent consideration liability is classified as Level 3. The contingent consideration liability is initially recorded at fair value on the acquisition date and is included in “other liabilities” on the condensed consolidated statements of financial condition. The fair value of the contingent consideration liability is remeasured at each reporting period. The inputs used to derive the fair value of the contingent consideration include the application of probabilities when assessing certain performance thresholds for the relevant periods. Any change in the fair value is recognized in “amortization and other acquisition-related costs” in the condensed consolidated statements of operations.

LAZARD, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS-(Continued)

(UNAUDITED)

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

Our business acquisitions may involve the potential payment of contingent consideration upon the achievement of certain performance thresholds.

The fair value of derivatives 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. See Note 7.

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

The following tables present, as of June 30, 2024 and December 31, 2023, the classification of (i) investments and certain other assets and liabilities measured at fair value on a recurring basis within the fair value hierarchy and (ii) investments measured at NAV or its equivalent as a practical expedient:


	June 30, 2024
	Level 1		Level 2		Level 3		NAV		Total
Assets:
Cash and cash equivalents (a)	$	69,495	$	–	$	–	$	–	$	69,495
Deposits with banks and short-term investments (a)	24,488		–		–		–		24,488
Investments:
Debt (a)	98,350		904		–		–		99,254
Equity	53,831		–		611		–		54,442
Funds:
Alternative investments	10,540		–		–		47,139		57,679
Debt	130,409		14,739		–		3		145,151
Equity	282,733		–		–		49		282,782
Private equity	–		–		264		47,935		48,199
Derivatives	–		4,879		–		–		4,879
Total	$	669,846	$	20,522	$	875	$	95,126	$	786,369
Liabilities:
Securities sold, not yet purchased	$	5,235	$	–	$	–	$	–	$	5,235
Contingent consideration liability	–		–		4,389		–		4,389
Derivatives	–		274,033		–		–		274,033
Total	$	5,235	$	274,033	$	4,389	$	–	$	283,657

__________________________________

(a)Level 1 represents U.S. Treasury securities.

LAZARD, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS-(Continued)

(UNAUDITED)

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

December 31, 2023

Level 1

Level 2

Level 3

NAV

Total

Assets:

Investments:

Debt