Recent Quotes View Full List My Watchlist Create Watchlist Indicators DJI Nasdaq Composite SPX Gold Crude Oil EL&P Market Index Markets Stocks ETFs Tools Overview News Currencies International Treasuries Lazard Ltd Reports Full-year and Fourth-quarter 2021 Results By: Lazard Ltd via Business Wire February 03, 2022 at 06:49 AM EST Record annual and quarterly operating revenue, operating income and net income, as adjusted Record annual and quarterly Financial Advisory operating revenue, reflecting strong broad-based activity across the business Record annual and quarterly Asset Management operating revenue and year-end assets under management Lazard Ltd (NYSE: LAZ) today reported record annual operating revenue1 of $3,139 million for the year ended December 31, 2021. Net income, as adjusted2, was a record $576 million, or $5.04 per share (diluted) for the year. On a U.S. GAAP basis, net income for the year was $528 million, or $4.63 per share (diluted). For the fourth quarter of 2021, net income, as adjusted, was $217 million, or $1.92 per share (diluted), a quarterly record. On a U.S. GAAP basis, net income for the fourth quarter was $210 million, or $1.86 per share (diluted). “Our results underscore the strong performance by both our businesses across our global franchise,” said Kenneth M. Jacobs, Chairman and Chief Executive Officer of Lazard. “With unprecedented advisory activity and a robust level of assets under management, we continue to invest for growth and long-term shareholder value.” ($ in millions, except per share data and AUM) Year Ended Dec. 31, Quarter Ended Dec. 31, 2021 2020 %’21-’20 2021 2020 %’21-’20 Net Income (loss) US GAAP $528 $402 31% $210 $190 11% Per share, diluted $4.63 $3.54 31% $1.86 $1.64 13% Adjusted2 $576 $410 40% $217 $192 13% Per share, diluted $5.04 $3.60 40% $1.92 $1.66 16% Operating Revenue1 Total operating revenue $3,139 $2,524 24% $968 $849 14% Financial Advisory $1,778 $1,403 27% $608 $509 20% Asset Management $1,329 $1,111 20% $347 $336 3% AUM ($ in billions) Period End $274 $259 6% Average $272 $225 21% $274 $246 11% Note: Endnotes are on page 6 of this release. A reconciliation to U.S. GAAP is on page 14-15. OPERATING REVENUE Operating revenue1 was a record $3,139 million for 2021, 24% higher than 2020. Fourth-quarter 2021 operating revenue was a record $968 million, 14% higher than the fourth quarter of 2020. 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 full year of 2021, Financial Advisory operating revenue was a record $1,778 million, 27% higher than 2020. For the fourth quarter of 2021, Financial Advisory operating revenue was a quarterly record $608 million, 20% higher than the fourth quarter of 2020. During and since the fourth quarter of 2021, Lazard has been engaged in significant and complex M&A transactions and other advisory assignments globally, including the following (clients are in italics): The Special Committee of the Board of VMware in Dell’s $52.5 billion spin-off of its 81% equity stake in the company and VMware’s payment of a special cash dividend; Clayton, Dubilier & Rice fund on the sale of its stake in Belron, valuing Belron at €21.0 billion; Air Products & Chemicals’ $12.0 billion joint venture in Jazan, Saudi Arabia; The Special Committee of the Board of Athene in Athene’s $11 billion merger with Apollo; Terminix on its acquisition by Rentokil Initial plc, for an enterprise value of $7.5 billion; 3G Capital on its acquisition of a controlling interest in Hunter Douglas, valuing the company at $7.1 billion; Altice’s $6.3 billion sale of its French towers joint venture with KKR to Cellnex; Affiliate of Lone Star Funds on its €5.2 billion sale of MBCC Group to Sika; SNCF’s €3.2 billion sale of Ermewa to a consortium made of CDPQ and DWS; Blackstone Infrastructure Partners’ approximately $3.0 billion investment in Invenergy Renewables Holdings; Allstate’s $2.8 billion sale of Allstate Life Insurance to Blackstone; Charterhouse Capital Partners in Mirion Technologies’ combination with GS Acquisition Holdings Corp II, valuing Mirion at $2.6 billion; Saint-Gobain’s $2.3 billion acquisition of GCP Applied Technologies; Mubadala Capital’s $1.7 billion acquisition of the RLAM refinery from Petrobras; Vitrolife's €1.25 billion acquisition of Igenomix; Obagi’s $1.2 billion announced combination with Waldencast and Milk Makeup; IBM on the separation of its Managed Infrastructure Services unit; and APEX Clean Energy on the sale of a majority stake in the company to funds managed by Ares Management. 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 fourth quarter of 2021, 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: Alto Maipo S.P.A.; Andrade Gutierrez; Assured Guaranty in connection with Puerto Rico’s restructuring; Basic Energy Services; Brazos Electric Power Cooperative; Corp Grupo Banking S.A.; Grupo GICSA; Intelsat S.A.; NMC Health; Nordic Aviation Capital; Seadrill Limited; and Stoneway Capital. 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 Lazard’s publicly announced Financial Advisory transactions, 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 full year of 2021, Asset Management operating revenue was a record $1,329 million, 20% higher than 2020. For the fourth quarter of 2021, Asset Management operating revenue was a record $347 million, 3% higher than the fourth quarter of 2020. Management fees and other revenue was $1,208 million for full-year 2021, 15% higher than 2020. For the fourth quarter of 2021, management fees and other revenue was $301 million, 6% higher than the fourth quarter of 2020, and 1% lower than the third quarter of 2021. Average assets under management (AUM) for full-year 2021 was a record $272 billion, 21% higher than 2020. Average AUM for the fourth quarter of 2021 was $274 billion, 11% higher than the fourth quarter of 2020, and 2% lower than the third quarter of 2021. AUM as of December 31, 2021 was a year-end record $274 billion, up 6% from December 31, 2020, and approximately even with September 30, 2021. The sequential change from September 30, 2021 was driven by market appreciation of $9.9 billion, partially offset by foreign exchange depreciation of $2.0 billion and net outflows of $6.7 billion. For the full year of 2021, incentive fees were a record $120 million, compared to $58 million for 2020. For the fourth quarter of 2021, incentive fees were $46 million, compared to $52 million for the fourth quarter of 2020. 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). We believe annual awarded compensation reflects the actual annual compensation cost more accurately than 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. Adjusted compensation and benefits expense1 for 2021 was $1,836 million, 22% higher than 2020. The corresponding adjusted compensation ratio1 was 58.5% for 2021, compared to 59.5% for 2020. Awarded compensation expense1 for 2021 was $1,846 million, 22% higher than 2020. The corresponding awarded compensation ratio1 was 58.8% for 2021, compared to 59.8% for 2020. 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 2021 was $472 million, 9% higher than 2020. The ratio of non-compensation expense to operating revenue1 was 15.0% for 2021, compared to 17.1% for 2020. Adjusted non-compensation expense1 for the fourth quarter of 2021 was $134 million, 15% higher than the fourth quarter of 2020. The ratio of non-compensation expense to operating revenue1 was 13.8% for the fourth quarter of 2021, compared to 13.7% for the fourth quarter of 2020. 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 $181 million for full-year 2021 and $54 million for the fourth quarter of 2021. The effective tax rate on the same basis was 23.9% for full-year 2021, compared to 20.2% for full-year 2020. CAPITAL MANAGEMENT AND BALANCE SHEET Our primary capital management goals include managing debt and returning capital to shareholders through dividends and share repurchases. In 2021, Lazard returned $670 million to shareholders, which included: $196 million in dividends; $406 million in share repurchases of our Class A common stock; and $68 million in satisfaction of employee tax obligations in lieu of share issuances upon vesting of equity grants. During 2021, we repurchased 9.1 million shares of our Class A common stock at an average price of $44.51 per share. On February 2, 2022, our Board of Directors authorized additional share repurchases of up to $300 million, which expires as of December 31, 2024, bringing our total outstanding share repurchase authorization to $431 million. On February 2, 2022, Lazard declared a quarterly dividend of $0.47 per share on its outstanding common stock. The dividend is payable on February 25, 2022, to stockholders of record on February 14, 2022. As of December 31, 2021, our cash and cash equivalents were $1,465 million, and stockholders’ equity related to Lazard’s interests was $975 million. *** CONFERENCE CALL Lazard will host a conference call at 8:00 a.m. EST on February 3, 2022, to discuss the company’s financial results for the full year and fourth quarter of 2021. 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) 289-0720 (U.S. and Canada) or +1 (323) 701-0160 (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. EST on February 3, 2022, 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 8108108. ABOUT LAZARD Lazard, one of the world's preeminent financial advisory and asset management firms, operates from more than 41 cities and 26 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, Lazard’s Twitter account (twitter.com/Lazard) and other social media sites 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 Frères 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 U.S. GAAP results, is the most meaningful and useful way to compare our operating results across periods. 2 Fourth-quarter and full-year 2021 adjusted results exclude losses of $23.6 million (full-year) associated with restructuring and closing of certain offices, pre-tax charges of $1.0 million and $4.6 million, respectively, relating to office space reorganization, and $0.1 million and $16.5 million, respectively, relating to expenses associated with restructuring and closing of certain offices and $2.2 million in the fourth quarter and full year relating to our Tax Receivable Agreement obligation. On a U.S. GAAP basis, these resulted in a net charge of $6.8 million, or $0.06 (diluted) per share, for the fourth quarter, and a net charge of $47.6 million, or $0.42 (diluted) per share, for the full year of 2021. LAZ-EPE LAZARD LTD UNAUDITED CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS (U.S. GAAP) Three Months Ended % Change From December 31, September 30, December 31, September 30, December 31, ($ in thousands, except per share data) 2021 2021 2020 2021 2020 Total revenue $ 1,012,841 $ 737,807 $ 898,326 37 % 13 % Interest expense (20,466 ) (20,378 ) (20,172 ) Net revenue 992,375 717,429 878,154 38 % 13 % Operating expenses: Compensation and benefits 559,768 419,627 524,736 33 % 7 % Occupancy and equipment 32,402 31,015 33,592 Marketing and business development 16,850 9,922 8,161 Technology and information services 39,762 37,559 36,100 Professional services 26,060 16,698 20,330 Fund administration and outsourced services 35,784 34,137 26,431 Amortization of intangible assets related to acquisitions 15 15 436 Other 11,197 13,497 11,308 Subtotal 162,070 142,843 136,358 13 % 19 % Provision (benefit) pursuant to tax receivable agreement 2,199 - (439 ) Operating expenses 724,037 562,470 660,655 29 % 10 % Operating income 268,338 154,959 217,499 73 % 23 % Provision for income taxes 57,048 39,446 22,729 45 % 151 % Net income 211,290 115,513 194,770 83 % 8 % Net income attributable to noncontrolling interests 913 8,304 4,881 Net income attributable to Lazard Ltd $ 210,377 $ 107,209 $ 189,889 96 % 11 % Attributable to Lazard Ltd Common Stockholders: Weighted average shares outstanding: Basic 104,689,273 105,415,743 107,316,315 (1 %) (2 %) Diluted 112,278,982 112,994,037 115,144,030 (1 %) (2 %) Net income per share: Basic $ 1.97 $ 1.00 $ 1.73 97 % 14 % Diluted $ 1.86 $ 0.94 $ 1.64 98 % 13 % LAZARD LTD UNAUDITED CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS (U.S. GAAP) Year Ended December 31, December 31, ($ in thousands, except per share data) 2021 2020 % Change Total revenue $ 3,273,816 $ 2,646,769 24 % Interest expense (80,768 ) (80,631 ) Net revenue 3,193,048 2,566,138 24 % Operating expenses: Compensation and benefits 1,895,859 1,550,684 22 % Occupancy and equipment 128,040 127,682 Marketing and business development 42,755 42,426 Technology and information services 146,765 133,544 Professional services 77,702 66,304 Fund administration and outsourced services 130,502 103,070 Amortization of intangible assets related to acquisitions 60 1,795 Other 45,318 38,931 Subtotal 571,142 513,752 11 % Provision (benefit) pursuant to tax receivable agreement 2,199 (439 ) Operating expenses 2,469,200 2,063,997 20 % Operating income 723,848 502,141 44 % Provision for income taxes 181,303 99,449 82 % Net income 542,545 402,692 35 % Net income attributable to noncontrolling interests 14,481 231 Net income attributable to Lazard Ltd $ 528,064 $ 402,461 31 % Attributable to Lazard Ltd Common Stockholders: Weighted average shares outstanding: Basic 106,035,808 106,862,739 (1 %) Diluted 113,674,699 113,483,380 0 % Net income per share: Basic $ 4.90 $ 3.69 33 % Diluted $ 4.63 $ 3.54 31 % LAZARD LTD UNAUDITED CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL CONDITION (U.S. GAAP) December 31, December 31, ($ in thousands) 2021 2020 ASSETS Cash and cash equivalents $ 1,465,022 $ 1,389,876 Deposits with banks and short-term investments 1,347,544 1,134,463 Restricted cash 617,448 44,488 Receivables 805,809 743,141 Investments 1,007,339 658,532 Goodwill and other intangible assets 379,571 384,071 Operating lease right-of-use assets 466,054 513,923 Deferred tax assets 435,308 538,448 Other assets 623,086 564,919 Total Assets $ 7,147,181 $ 5,971,861 LIABILITIES, REDEEMABLE NONCONTROLLING INTERESTS & STOCKHOLDERS' EQUITY Liabilities Deposits and other customer payables $ 1,442,701 $ 1,201,150 Accrued compensation and benefits 972,303 734,544 Operating lease liabilities 552,522 606,963 Tax receivable agreement obligation 213,434 221,451 Senior debt 1,685,227 1,682,741 Other liabilities 628,030 525,579 Total liabilities 5,494,217 4,972,428 Commitments and contingencies Redeemable noncontrolling interests 575,000 - Stockholders' equity Preferred stock, par value $.01 per share - - Common stock, par value $.01 per share 1,128 1,128 Additional paid-in capital 144,729 135,439 Retained earnings 1,560,636 1,295,386 Accumulated other comprehensive loss, net of tax (223,847 ) (238,368 ) Subtotal 1,482,646 1,193,585 Class A common stock held by subsidiaries, at cost (507,426 ) (281,813 ) Total Lazard Ltd stockholders' equity 975,220 911,772 Noncontrolling interests 102,744 87,661 Total stockholders' equity 1,077,964 999,433 Total liabilities, redeemable noncontrolling interests and stockholders' equity $ 7,147,181 $ 5,971,861 LAZARD LTD SELECTED SUMMARY FINANCIAL INFORMATION (a) (Non-GAAP - unaudited) Three Months Ended % Change From December 31, September 30, December 31, September 30, December 31, ($ in thousands, except per share data) 2021 2021 2020 2021 2020 Revenues: Financial Advisory $608,178 $381,295 $508,626 60% 20% Asset Management 346,607 310,566 336,152 12% 3% Corporate 13,160 9,783 3,990 35% NM Operating revenue (b) $967,945 $701,644 $848,768 38% 14% Expenses: Adjusted compensation and benefits expense (c) $544,510 $417,479 $497,260 30% 10% Ratio of adjusted compensation to operating revenue 56.3% 59.5% 58.6% Non-compensation expense (d) $133,903 $116,734 $116,568 15% 15% Ratio of non-compensation to operating revenue 13.8% 16.6% 13.7% Earnings: Earnings from operations (e) $289,532 $167,431 $234,940 73% 23% Operating margin (f) 29.9% 23.9% 27.7% Adjusted net income (g) $217,209 $111,398 $192,444 95% 13% Diluted adjusted net income per share $1.92 $0.98 $1.66 96% 16% Diluted weighted average shares (h) 113,294,302 113,781,092 115,831,033 (0%) (2%) Effective tax rate (i) 19.8% 25.1% 11.1% This presentation includes non-U.S. GAAP ("non-GAAP") measures. Our non-GAAP measures are not meant to be considered in isolation or as a substitute for the corresponding U.S. GAAP measures, and should be read only in conjunction with our consolidated financial statements prepared in accordance with U.S. GAAP. For a detailed explanation of the adjustments made to the corresponding U.S. GAAP measures, see Reconciliation of U.S. GAAP to Selected Summary Financial Information and Notes to Financial Schedules. LAZARD LTD SELECTED SUMMARY FINANCIAL INFORMATION (a) (Non-GAAP - unaudited) Year Ended December 31, December 31, ($ in thousands, except per share data) 2021 2020 % Change Revenues: Financial Advisory $1,777,848 $1,403,282 27% Asset Management 1,328,540 1,111,498 20% Corporate 32,509 8,760 NM Operating revenue (b) $3,138,897 $2,523,540 24% Expenses: Adjusted compensation and benefits expense (c) $1,836,227 $1,502,123 22% Ratio of adjusted compensation to operating revenue 58.5% 59.5% Non-compensation expense (d) $471,947 $431,898 9% Ratio of non-compensation to operating revenue 15.0% 17.1% Earnings: Earnings from operations (e) $830,723 $589,519 41% Operating margin (f) 26.5% 23.4% Adjusted net income (g) $575,626 $410,249 40% Diluted adjusted net income per share $5.04 $3.60 40% Diluted weighted average shares (h) 114,248,065 113,904,200 0% Effective tax rate (i) 23.9% 20.2% This presentation includes non-GAAP measures. Our non-GAAP measures are not meant to be considered in isolation or as a substitute for the corresponding U.S. GAAP measures, and should be read only in conjunction with our consolidated financial statements prepared in accordance with U.S. GAAP. For a detailed explanation of the adjustments made to the corresponding U.S. GAAP measures, see Reconciliation of U.S. GAAP to Selected Summary Financial Information and Notes to Financial Schedules. LAZARD LTD COMPENSATION AND BENEFITS - ANALYSIS (unaudited) ($ in millions except share price) 2014 2015 2016 2017 2018 2019 2020 2021 ADJUSTED U.S. GAAP BASIS (c) Base salary $ 354.0 $ 355.8 $ 372.7 $ 404.9 $ 431.9 $ 446.9 $ 455.0 $ 487.1 Benefits and other 215.6 228.3 201.9 243.4 263.6 258.3 227.7 286.5 Cash incentive compensation 432.9 413.9 398.3 465.5 445.5 390.8 435.3 662.4 Total cash compensation, benefits and other 1,002.5 998.0 972.9 1,113.8 1,141.0 1,096.0 1,118.0 1,436.0 Amortization of deferred incentive awards 299.2 320.8 352.4 367.3 375.6 367.9 384.1 400.2 Compensation and benefits - Adjusted U.S. GAAP basis (j) $ 1,301.7 $ 1,318.8 $ 1,325.3 $ 1,481.1 $ 1,516.6 $ 1,463.9 $ 1,502.1 $ 1,836.2 % of Operating Revenue 55.6 % 55.4 % 56.5 % 55.8 % 55.1 % 57.5 % 59.5 % 58.5 % AWARDED BASIS Total cash compensation and benefits (per above) $ 1,002.5 $ 998.0 $ 972.9 $ 1,113.8 $ 1,141.0 $ 1,096.0 $ 1,118.0 $ 1,436.0 Deferred year-end incentive awards 325.2 336.1 342.4 351.0 377.8 361.3 364.4 389.7 Compensation and benefits before sign-on and other special deferred incentive awards 1,327.7 1,334.1 1,315.3 1,464.8 1,518.8 1,457.3 1,482.4 1,825.7 Sign-on and other special deferred incentive awards (k) 14.2 26.4 29.9 36.2 45.7 37.6 54.9 48.5 Total Compensation and benefits - Notional 1,341.9 1,360.5 1,345.2 1,501.0 1,564.5 1,494.9 1,537.3 1,874.2 Adjustment for actual/estimated forfeitures (l) (25.4 ) (27.2 ) (27.9 ) (25.3 ) (27.5 ) (25.9 ) (27.3 ) (28.5 ) Compensation and benefits - Awarded (m) $ 1,316.5 $ 1,333.3 $ 1,317.3 $ 1,475.7 $ 1,537.0 $ 1,469.0 $ 1,510.0 $ 1,845.7 % of Operating Revenue - Awarded Basis (m) 56.3 % 56.0 % 56.2 % 55.6 % 55.8 % 57.7 % 59.8 % 58.8 % Memo: Total value of deferred equity-based year end incentive awards $ 219.0 $ 267.7 $ 234.8 $ 216.4 $ 253.8 $ 165.5 $ 172.4 TBD Equity-based year end awards - share equivalents ('000) 4,329 7,778 5,395 3,850 6,735 3,858 3,988 TBD Price at issuance $ 50.60 $ 34.42 $ 43.43 $ 56.22 $ 37.69 $ 42.89 $ 43.23 TBD Deferred compensation awards ratio (n) 24.5 % 25.2 % 26.0 % 24.0 % 24.9 % 24.8 % 24.6 % 21.3 % Operating revenue $ 2,340.2 $ 2,380.1 $ 2,344.3 $ 2,654.5 $ 2,754.8 $ 2,546.0 $ 2,523.5 $ 3,138.9 This presentation includes non-GAAP measures. Our non-GAAP measures are not meant to be considered in isolation or as a substitute for the corresponding U.S. GAAP measures, and should be read only in conjunction with our consolidated financial statements prepared in accordance with U.S. GAAP. For a detailed explanation of the adjustments made to the corresponding U.S. GAAP measures, see Reconciliation of U.S. GAAP to Selected Summary Financial Information and Notes to Financial Schedules. LAZARD LTD ASSETS UNDER MANAGEMENT ("AUM") (unaudited) ($ in millions) As of Variance December 31, September 30, December 31, 2021 2021 2020 Qtr to Qtr YTD Equity: Emerging Markets $ 31,227 $ 31,316 $ 33,254 (0.3 %) (6.1 %) Global 59,516 58,348 56,246 2.0 % 5.8 % Local 56,310 54,764 48,672 2.8 % 15.7 % Multi-Regional 73,953 74,840 71,560 (1.2 %) 3.3 % Total Equity 221,006 219,268 209,732 0.8 % 5.4 % Fixed Income: Emerging Markets 12,231 12,917 13,651 (5.3 %) (10.4 %) Global 14,410 14,469 11,962 (0.4 %) 20.5 % Local 6,022 6,070 5,600 (0.8 %) 7.5 % Multi-Regional 13,623 13,731 12,571 (0.8 %) 8.4 % Total Fixed Income 46,286 47,187 43,784 (1.9 %) 5.7 % Alternative Investments 4,203 3,934 2,748 6.8 % 52.9 % Private Equity 1,290 1,288 1,420 0.1 % (9.2 %) Cash Management 954 895 958 6.6 % (0.4 %) Total AUM $ 273,739 $ 272,572 $ 258,642 0.4 % 5.8 % Three Months Ended December 31, Year Ended December 31, 2021 2020 2021 2020 AUM - Beginning of Period $ 272,572 $ 227,752 $ 258,642 $ 248,239 Net Flows (6,735 ) (286 ) (11,573 ) (11,368 ) Market and foreign exchange appreciation 7,902 31,176 26,670 21,771 AUM - End of Period $ 273,739 $ 258,642 $ 273,739 $ 258,642 Average AUM $ 273,514 $ 245,604 $ 272,051 $ 225,361 % Change in average AUM 11.4 % 20.7 % Note: Average AUM generally represents the average of the monthly ending AUM balances for the period. LAZARD LTD RECONCILIATION OF U.S. GAAP TO SELECTED SUMMARY FINANCIAL INFORMATION (a) (unaudited) Three Months Ended Year Ended December 31, September 30, December 31, December 31, December 31, ($ in thousands, except per share data) 2021 2021 2020 2021 2020 Operating Revenue Net revenue - U.S. GAAP Basis $ 992,375 $ 717,429 $ 878,154 $ 3,193,048 $ 2,566,138 Adjustments: Revenue related to noncontrolling interests (o) (7,515 ) (11,994 ) (8,054 ) (31,624 ) (11,497 ) (Gains) losses related to Lazard Fund Interests ("LFI") and other similar arrangements (12,884 ) 1,368 (25,207 ) (35,494 ) (40,634 ) Distribution fees, reimbursable deal costs, bad debt expense and other (p) (22,842 ) (23,876 ) (14,647 ) (85,053 ) (64,983 ) Losses associated with restructuring and closing of certain offices (q) 15 51 - 23,645 - Interest expense 18,796 18,666 18,522 74,375 74,516 Operating revenue, as adjusted (b) $ 967,945 $ 701,644 $ 848,768 $ 3,138,897 $ 2,523,540 Compensation and Benefits Expense Compensation and benefits expense - U.S. GAAP Basis $ 559,768 $ 419,627 $ 524,736 $ 1,895,859 $ 1,550,684 Adjustments: (Charges) credits pertaining to LFI and other similar arrangements (12,884 ) 1,368 (25,207 ) (35,494 ) (40,634 ) Expenses associated with restructuring and closing of certain offices (r) - (1,012 ) - (14,922 ) - Compensation related to noncontrolling interests (o) (2,374 ) (2,504 ) (2,269 ) (9,216 ) (7,927 ) Compensation and benefits expense, as adjusted (c) $ 544,510 $ 417,479 $ 497,260 $ 1,836,227 $ 1,502,123 Non-Compensation Expense Non-compensation expense - Subtotal - U.S. GAAP Basis $ 162,070 $ 142,843 $ 136,358 $ 571,142 $ 513,752 Adjustments: Expenses related to office space reorganization (s) (967 ) (991 ) (4,184 ) (4,611 ) (12,646 ) Distribution fees, reimbursable deal costs, bad debt expense and other (p) (22,842 ) (23,876 ) (14,647 ) (85,053 ) (64,983 ) Amortization of intangible assets related to acquisitions (15 ) (15 ) (436 ) (60 ) (1,795 ) Expenses associated with restructuring and closing of certain offices (r) (115 ) (39 ) - (1,539 ) - Non-compensation expense related to noncontrolling interests (o) (4,228 ) (1,188 ) (523 ) (7,932 ) (2,430 ) Non-compensation expense, as adjusted (d) $ 133,903 $ 116,734 $ 116,568 $ 471,947 $ 431,898 Pre-Tax Income and Earnings From Operations Operating Income - U.S. GAAP Basis $ 268,338 $ 154,959 $ 217,499 $ 723,848 $ 502,141 Adjustments: Provision (benefit) pursuant to tax receivable agreement obligation 2,199 - (439 ) 2,199 (439 ) Losses associated with restructuring and closing of certain offices (q) 15 51 - 23,645 - Expenses related to office space reorganization (s) 967 991 4,184 4,611 12,646 Expenses associated with restructuring and closing of certain offices (r) 115 1,051 - 16,461 - Net income related to noncontrolling interests (o) (913 ) (8,304 ) (4,881 ) (14,481 ) (231 ) Pre-tax income, as adjusted 270,721 148,748 216,363 756,283 514,117 Interest expense 18,796 18,666 18,522 74,375 74,516 Amortization of intangible assets related to acquisitions and other 15 17 55 65 886 Earnings from operations, as adjusted (e) $ 289,532 $ 167,431 $ 234,940 $ 830,723 $ 589,519 Net Income attributable to Lazard Ltd Net income attributable to Lazard Ltd - U.S. GAAP Basis $ 210,377 $ 107,209 $ 189,889 $ 528,064 $ 402,461 Adjustments: Provision (benefit) pursuant to tax receivable agreement obligation 2,199 - (439 ) 2,199 (439 ) Losses associated with restructuring and closing of certain offices (q) 15 51 - 23,645 - Expenses related to office space reorganization (s) 967 991 4,184 4,611 12,646 Expenses associated with restructuring and closing of certain offices (r) 115 1,051 - 16,461 - Tax expense (benefit) allocated to adjustments 3,536 2,096 (1,190 ) 646 (4,419 ) Net income, as adjusted (g) $ 217,209 $ 111,398 $ 192,444 $ 575,626 $ 410,249 Diluted Weighted Average Shares Outstanding Diluted Weighted Average Shares Outstanding - U.S. GAAP Basis 112,278,982 112,994,037 115,144,030 113,674,699 113,483,380 Adjustment: participating securities including profits interest participation rights 1,015,320 787,055 687,003 573,366 420,820 Diluted Weighted Average Shares Outstanding, as adjusted (h) 113,294,302 113,781,092 115,831,033 114,248,065 113,904,200 Diluted net income per share: U.S. GAAP Basis $ 1.86 $ 0.94 $ 1.64 $ 4.63 $ 3.54 Non-GAAP Basis, as adjusted $ 1.92 $ 0.98 $ 1.66 $ 5.04 $ 3.60 This presentation includes non-GAAP measures. Our non-GAAP measures are not meant to be considered in isolation or as a substitute for the corresponding U.S. GAAP measures, and should be read only in conjunction with our consolidated financial statements prepared in accordance with U.S. GAAP. For a detailed explanation of the adjustments made to the corresponding U.S. GAAP measures, see Notes to Financial Schedules. See Notes to Financial Schedules LAZARD LTD RECONCILIATION OF NON-COMPENSATION U.S. GAAP TO ADJUSTED (a) (unaudited) Three Months Ended Year Ended December 31, September 30, December 31, December 31, December 31, ($ in thousands) 2021 2021 2020 2021 2020 Non-compensation expense - U.S. GAAP Basis: Occupancy and equipment $ 32,402 $ 31,015 $ 33,592 $ 128,040 $ 127,682 Marketing and business development 16,850 9,922 8,161 42,755 42,426 Technology and information services 39,762 37,559 36,100 146,765 133,544 Professional services 26,060 16,698 20,330 77,702 66,304 Fund administration and outsourced services 35,784 34,137 26,431 130,502 103,070 Amortization of intangible assets related to acquisitions 15 15 436 60 1,795 Other 11,197 13,497 11,308 45,318 38,931 Non-compensation expense - Subtotal - U.S. GAAP Basis $ 162,070 $ 142,843 $ 136,358 $ 571,142 $ 513,752 Non-compensation expense - Adjustments: Occupancy and equipment (o) (r) (s) ($ 892 ) ($ 1,106 ) ($ 3,419 ) ($ 5,395 ) ($ 11,878 ) Marketing and business development (o) (p) (r) (1,425 ) (1,261 ) (383 ) (4,138 ) (4,014 ) Technology and information services (o) (p) (r) 4 (72 ) 155 (170 ) (616 ) Professional services (o) (p) (r) (s) (3,888 ) (1,143 ) (4,101 ) (8,546 ) (9,806 ) Fund administration and outsourced services (o) (p) (21,661 ) (19,669 ) (12,114 ) (73,426 ) (47,956 ) Amortization of intangible assets related to acquisitions (15 ) (15 ) (436 ) (60 ) (1,795 ) Other (o) (p) (r) (s) (290 ) (2,843 ) 508 (7,460 ) (5,789 ) Subtotal Non-compensation adjustments ($ 28,167 ) ($ 26,109 ) ($ 19,790 ) ($ 99,195 ) ($ 81,854 ) Non-compensation expense, as adjusted: Occupancy and equipment $ 31,510 $ 29,909 $ 30,173 $ 122,645 $ 115,804 Marketing and business development 15,425 8,661 7,778 38,617 38,412 Technology and information services 39,766 37,487 36,255 146,595 132,928 Professional services 22,172 15,555 16,229 69,156 56,498 Fund administration and outsourced services 14,123 14,468 14,317 57,076 55,114 Amortization of intangible assets related to acquisitions - - - - - Other 10,907 10,654 11,816 37,858 33,142 Non-compensation expense, as adjusted (d) $ 133,903 $ 116,734 $ 116,568 $ 471,947 $ 431,898 This presentation includes non-GAAP measures. Our non-GAAP measures are not meant to be considered in isolation or as a substitute for the corresponding U.S. GAAP measures, and should be read only in conjunction with our consolidated financial statements prepared in accordance with U.S. GAAP. For a detailed explanation of the adjustments made to the corresponding U.S. GAAP measures, see Notes to Financial Schedules. See Notes to Financial Schedules LAZARD LTD Notes to Financial Schedules (a) Selected Summary Financial Information are non-GAAP measures. Lazard 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. (b) A non-GAAP measure which excludes (i) revenue related to non-controlling interests (see (o) 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 fees, reimbursable deal costs in accordance with the revenue recognition guidance, bad debt expense, and other (see (p) below), (iv) for the three and twelve month periods ended December 31, 2021 and for the three month period ended September 30, 2021, losses associated with restructuring and closing of certain offices (see (q) below), and (v) interest expense primarily related to corporate financing activities. (c) A non-GAAP measure which excludes (i) (charges) credits related to the changes in the fair value of the compensation liability recorded in connection with Lazard Fund Interests and other similar deferred compensation arrangements, (ii) for the three month period ended September 30, 2021 and the twelve month period ended December 31, 2021, expenses associated with restructuring and closing of certain offices (see (r) below), and (iii) compensation and benefits related to noncontrolling interests (see (o) below). (d) A non-GAAP measure which excludes (i) expenses related to office space reorganization (see (s) below), (ii) expenses related to distribution fees, reimbursable deal costs in accordance with the revenue recognition guidance, bad debt expense, and other (see (p) below), (iii) amortization of intangible assets related to acquisitions, (iv) for the three and twelve month periods ended December 31, 2021 and for the three month period ended September 30, 2021, expenses associated with restructuring and closing of certain offices (see (r) below), and (v) expenses related to noncontrolling interests (see (o) below). (e) A non-GAAP measure which excludes (i) for the three and twelve month periods ended December 31, 2021 and December 31, 2020, a provision (benefit) pursuant to our Tax Receivable Agreement obligation, (ii) for the three and twelve month periods ended December 31, 2021 and for the three month period ended September 30, 2021, losses associated with restructuring and closing of certain offices (see (q) below), (iii) expenses related to office space reorganization (see (s) below), (iv) for the three and twelve month periods ended December 31, 2021 and for the three month period ended September 30, 2021, expenses associated with restructuring and closing of certain offices (see (r) below), (v) net revenue and expenses related to noncontrolling interests (see (o) below), (vi) interest expense primarily related to corporate financing activities, and (vii) amortization of intangible assets related to acquisitions. (f) Represents earnings from operations as a percentage of operating revenue, and is a non-GAAP measure. (g) A non-GAAP measure which excludes (i) for the three and twelve month periods ended December 31, 2021 and December 31, 2020, a provision (benefit) pursuant to our Tax Receivable Agreement obligation, (ii) for the three and twelve month periods ended December 31, 2021 and for the three month period ended September 30, 2021, losses associated with restructuring and closing of certain offices (see (q) below), (iii) expenses related to office space reorganization (see (s) below), and (iv) for the three and twelve month periods ended December 31, 2021 and for the three month period ended September 30, 2021, expenses associated with restructuring and closing of certain offices (see (r) below), net of tax expense (benefits). (h) 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 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. (i) 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 taxes of $53,512, $37,350 and $23,919 for the three month periods ended December 31, 2021, September 30, 2021, and December 31, 2020, respectively, $180,657 and $103,868 for the twelve month periods ended December 31, 2021 and 2020, respectively, and the denominator of which is pre-tax income of $270,721, $148,748 and $216,363 for the three month periods ended December 31, 2021, September 30, 2021 and December 31, 2020, respectively, $756,283 and $514,117 for the twelve month periods ended December 31, 2021 and 2020, respectively. (j) A reconciliation of U.S. GAAP compensation and benefits expense to compensation and benefits expense, as adjusted: Year Ended December 31, ($ in thousands) 2014 2015 2016 2017 2018 2019 2020 2021 Compensation & benefits expense - U.S. GAAP Basis $1,313,606 $1,319,746 $1,340,543 $1,512,873 $1,514,735 $1,563,395 $1,550,684 $1,895,859 Adjustments: Expenses associated with restructuring and closing of certain offices (r) - - - - - - - (14,922) Charges associated with business realignment (t) - - - - - (56,635) - - Charges pertaining to ERP system implementation (u) - - - - (1,190) - - - (Charges) credits pertaining to LFI and other similar arrangements comp. liability (7,326) 3,827 (3,318) (23,526) 14,086 (31,657) (40,634) (35,494) Compensation related to noncontrolling interests (o) (4,567) (4,776) (11,900) (8,285) (10,999) (11,175) (7,927) (9,216) Compensation & benefits expense, as adjusted $1,301,713 $1,318,797 $1,325,325 $1,481,062 $1,516,632 $1,463,928 $1,502,123 $1,836,227 (k) Special deferred incentive awards are granted outside the year end compensation process and include grants to new hires, retention awards, and performance units earned under PRSU grants. (l) Under U.S. GAAP, an estimate is made for future forfeitures of the deferred portion of such awards. This estimate is based on both historical experience and future expectations. The result reflects the cost associated with awards that are expected to vest. This calculation is undertaken in order to present awarded compensation on a similar basis to GAAP compensation. Amounts for 2014-2017 represent actual forfeiture experience. The 2018-2021 amounts represent estimated forfeitures. (m) Awarded Compensation and Benefits was restated in 2017 to eliminate the year-end foreign exchange adjustment to better align awarded compensation with revenue. The impact of the change is not material. (n) Deferred compensation awards ratio is deferred year-end incentive awards, divided by total awarded compensation excluding sign-on and other special deferred incentive awards and actual/estimated forfeitures. (o) Noncontrolling interests include revenue and expenses principally related to Edgewater, ESC Funds and a Special Purpose Acquisition Company. (p) Represents certain distribution, introducer and management fees paid to third parties and reimbursable deal costs for which an equal amount is excluded from both non-GAAP operating revenue and non-compensation expense, respectively, and excludes bad debt expense, which represents fees that are deemed uncollectible. (q) 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. (r) Expenses associated with restructuring and closing of certain offices. (s) Represents incremental rent expense, building depreciation, impairment losses, and legal fees related to office space reorganization. (t) Represents expenses and losses associated with a business realignment which included employee reductions and the closing of subscale offices and investment strategies. (u) Represents expenses associated with Enterprise Resource Planning (ERP) system implementation. NM Not meaningful TBD To be determined View source version on businesswire.com: https://www.businesswire.com/news/home/20220203005343/en/Contacts Media: Judi Frost Mackey +1 212 632 1428 judi.mackey@lazard.com Investors: Alexandra Deignan +1 212 632 6886 alexandra.deignan@lazard.com Data & News supplied by www.cloudquote.io Stock quotes supplied by Barchart Quotes delayed at least 20 minutes. By accessing this page, you agree to the following Privacy Policy and Terms and Conditions.
Lazard Ltd Reports Full-year and Fourth-quarter 2021 Results By: Lazard Ltd via Business Wire February 03, 2022 at 06:49 AM EST Record annual and quarterly operating revenue, operating income and net income, as adjusted Record annual and quarterly Financial Advisory operating revenue, reflecting strong broad-based activity across the business Record annual and quarterly Asset Management operating revenue and year-end assets under management Lazard Ltd (NYSE: LAZ) today reported record annual operating revenue1 of $3,139 million for the year ended December 31, 2021. Net income, as adjusted2, was a record $576 million, or $5.04 per share (diluted) for the year. On a U.S. GAAP basis, net income for the year was $528 million, or $4.63 per share (diluted). For the fourth quarter of 2021, net income, as adjusted, was $217 million, or $1.92 per share (diluted), a quarterly record. On a U.S. GAAP basis, net income for the fourth quarter was $210 million, or $1.86 per share (diluted). “Our results underscore the strong performance by both our businesses across our global franchise,” said Kenneth M. Jacobs, Chairman and Chief Executive Officer of Lazard. “With unprecedented advisory activity and a robust level of assets under management, we continue to invest for growth and long-term shareholder value.” ($ in millions, except per share data and AUM) Year Ended Dec. 31, Quarter Ended Dec. 31, 2021 2020 %’21-’20 2021 2020 %’21-’20 Net Income (loss) US GAAP $528 $402 31% $210 $190 11% Per share, diluted $4.63 $3.54 31% $1.86 $1.64 13% Adjusted2 $576 $410 40% $217 $192 13% Per share, diluted $5.04 $3.60 40% $1.92 $1.66 16% Operating Revenue1 Total operating revenue $3,139 $2,524 24% $968 $849 14% Financial Advisory $1,778 $1,403 27% $608 $509 20% Asset Management $1,329 $1,111 20% $347 $336 3% AUM ($ in billions) Period End $274 $259 6% Average $272 $225 21% $274 $246 11% Note: Endnotes are on page 6 of this release. A reconciliation to U.S. GAAP is on page 14-15. OPERATING REVENUE Operating revenue1 was a record $3,139 million for 2021, 24% higher than 2020. Fourth-quarter 2021 operating revenue was a record $968 million, 14% higher than the fourth quarter of 2020. 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 full year of 2021, Financial Advisory operating revenue was a record $1,778 million, 27% higher than 2020. For the fourth quarter of 2021, Financial Advisory operating revenue was a quarterly record $608 million, 20% higher than the fourth quarter of 2020. During and since the fourth quarter of 2021, Lazard has been engaged in significant and complex M&A transactions and other advisory assignments globally, including the following (clients are in italics): The Special Committee of the Board of VMware in Dell’s $52.5 billion spin-off of its 81% equity stake in the company and VMware’s payment of a special cash dividend; Clayton, Dubilier & Rice fund on the sale of its stake in Belron, valuing Belron at €21.0 billion; Air Products & Chemicals’ $12.0 billion joint venture in Jazan, Saudi Arabia; The Special Committee of the Board of Athene in Athene’s $11 billion merger with Apollo; Terminix on its acquisition by Rentokil Initial plc, for an enterprise value of $7.5 billion; 3G Capital on its acquisition of a controlling interest in Hunter Douglas, valuing the company at $7.1 billion; Altice’s $6.3 billion sale of its French towers joint venture with KKR to Cellnex; Affiliate of Lone Star Funds on its €5.2 billion sale of MBCC Group to Sika; SNCF’s €3.2 billion sale of Ermewa to a consortium made of CDPQ and DWS; Blackstone Infrastructure Partners’ approximately $3.0 billion investment in Invenergy Renewables Holdings; Allstate’s $2.8 billion sale of Allstate Life Insurance to Blackstone; Charterhouse Capital Partners in Mirion Technologies’ combination with GS Acquisition Holdings Corp II, valuing Mirion at $2.6 billion; Saint-Gobain’s $2.3 billion acquisition of GCP Applied Technologies; Mubadala Capital’s $1.7 billion acquisition of the RLAM refinery from Petrobras; Vitrolife's €1.25 billion acquisition of Igenomix; Obagi’s $1.2 billion announced combination with Waldencast and Milk Makeup; IBM on the separation of its Managed Infrastructure Services unit; and APEX Clean Energy on the sale of a majority stake in the company to funds managed by Ares Management. 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 fourth quarter of 2021, 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: Alto Maipo S.P.A.; Andrade Gutierrez; Assured Guaranty in connection with Puerto Rico’s restructuring; Basic Energy Services; Brazos Electric Power Cooperative; Corp Grupo Banking S.A.; Grupo GICSA; Intelsat S.A.; NMC Health; Nordic Aviation Capital; Seadrill Limited; and Stoneway Capital. 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 Lazard’s publicly announced Financial Advisory transactions, 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 full year of 2021, Asset Management operating revenue was a record $1,329 million, 20% higher than 2020. For the fourth quarter of 2021, Asset Management operating revenue was a record $347 million, 3% higher than the fourth quarter of 2020. Management fees and other revenue was $1,208 million for full-year 2021, 15% higher than 2020. For the fourth quarter of 2021, management fees and other revenue was $301 million, 6% higher than the fourth quarter of 2020, and 1% lower than the third quarter of 2021. Average assets under management (AUM) for full-year 2021 was a record $272 billion, 21% higher than 2020. Average AUM for the fourth quarter of 2021 was $274 billion, 11% higher than the fourth quarter of 2020, and 2% lower than the third quarter of 2021. AUM as of December 31, 2021 was a year-end record $274 billion, up 6% from December 31, 2020, and approximately even with September 30, 2021. The sequential change from September 30, 2021 was driven by market appreciation of $9.9 billion, partially offset by foreign exchange depreciation of $2.0 billion and net outflows of $6.7 billion. For the full year of 2021, incentive fees were a record $120 million, compared to $58 million for 2020. For the fourth quarter of 2021, incentive fees were $46 million, compared to $52 million for the fourth quarter of 2020. 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). We believe annual awarded compensation reflects the actual annual compensation cost more accurately than 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. Adjusted compensation and benefits expense1 for 2021 was $1,836 million, 22% higher than 2020. The corresponding adjusted compensation ratio1 was 58.5% for 2021, compared to 59.5% for 2020. Awarded compensation expense1 for 2021 was $1,846 million, 22% higher than 2020. The corresponding awarded compensation ratio1 was 58.8% for 2021, compared to 59.8% for 2020. 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 2021 was $472 million, 9% higher than 2020. The ratio of non-compensation expense to operating revenue1 was 15.0% for 2021, compared to 17.1% for 2020. Adjusted non-compensation expense1 for the fourth quarter of 2021 was $134 million, 15% higher than the fourth quarter of 2020. The ratio of non-compensation expense to operating revenue1 was 13.8% for the fourth quarter of 2021, compared to 13.7% for the fourth quarter of 2020. 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 $181 million for full-year 2021 and $54 million for the fourth quarter of 2021. The effective tax rate on the same basis was 23.9% for full-year 2021, compared to 20.2% for full-year 2020. CAPITAL MANAGEMENT AND BALANCE SHEET Our primary capital management goals include managing debt and returning capital to shareholders through dividends and share repurchases. In 2021, Lazard returned $670 million to shareholders, which included: $196 million in dividends; $406 million in share repurchases of our Class A common stock; and $68 million in satisfaction of employee tax obligations in lieu of share issuances upon vesting of equity grants. During 2021, we repurchased 9.1 million shares of our Class A common stock at an average price of $44.51 per share. On February 2, 2022, our Board of Directors authorized additional share repurchases of up to $300 million, which expires as of December 31, 2024, bringing our total outstanding share repurchase authorization to $431 million. On February 2, 2022, Lazard declared a quarterly dividend of $0.47 per share on its outstanding common stock. The dividend is payable on February 25, 2022, to stockholders of record on February 14, 2022. As of December 31, 2021, our cash and cash equivalents were $1,465 million, and stockholders’ equity related to Lazard’s interests was $975 million. *** CONFERENCE CALL Lazard will host a conference call at 8:00 a.m. EST on February 3, 2022, to discuss the company’s financial results for the full year and fourth quarter of 2021. 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) 289-0720 (U.S. and Canada) or +1 (323) 701-0160 (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. EST on February 3, 2022, 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 8108108. ABOUT LAZARD Lazard, one of the world's preeminent financial advisory and asset management firms, operates from more than 41 cities and 26 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, Lazard’s Twitter account (twitter.com/Lazard) and other social media sites 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 Frères 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 U.S. GAAP results, is the most meaningful and useful way to compare our operating results across periods. 2 Fourth-quarter and full-year 2021 adjusted results exclude losses of $23.6 million (full-year) associated with restructuring and closing of certain offices, pre-tax charges of $1.0 million and $4.6 million, respectively, relating to office space reorganization, and $0.1 million and $16.5 million, respectively, relating to expenses associated with restructuring and closing of certain offices and $2.2 million in the fourth quarter and full year relating to our Tax Receivable Agreement obligation. On a U.S. GAAP basis, these resulted in a net charge of $6.8 million, or $0.06 (diluted) per share, for the fourth quarter, and a net charge of $47.6 million, or $0.42 (diluted) per share, for the full year of 2021. LAZ-EPE LAZARD LTD UNAUDITED CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS (U.S. GAAP) Three Months Ended % Change From December 31, September 30, December 31, September 30, December 31, ($ in thousands, except per share data) 2021 2021 2020 2021 2020 Total revenue $ 1,012,841 $ 737,807 $ 898,326 37 % 13 % Interest expense (20,466 ) (20,378 ) (20,172 ) Net revenue 992,375 717,429 878,154 38 % 13 % Operating expenses: Compensation and benefits 559,768 419,627 524,736 33 % 7 % Occupancy and equipment 32,402 31,015 33,592 Marketing and business development 16,850 9,922 8,161 Technology and information services 39,762 37,559 36,100 Professional services 26,060 16,698 20,330 Fund administration and outsourced services 35,784 34,137 26,431 Amortization of intangible assets related to acquisitions 15 15 436 Other 11,197 13,497 11,308 Subtotal 162,070 142,843 136,358 13 % 19 % Provision (benefit) pursuant to tax receivable agreement 2,199 - (439 ) Operating expenses 724,037 562,470 660,655 29 % 10 % Operating income 268,338 154,959 217,499 73 % 23 % Provision for income taxes 57,048 39,446 22,729 45 % 151 % Net income 211,290 115,513 194,770 83 % 8 % Net income attributable to noncontrolling interests 913 8,304 4,881 Net income attributable to Lazard Ltd $ 210,377 $ 107,209 $ 189,889 96 % 11 % Attributable to Lazard Ltd Common Stockholders: Weighted average shares outstanding: Basic 104,689,273 105,415,743 107,316,315 (1 %) (2 %) Diluted 112,278,982 112,994,037 115,144,030 (1 %) (2 %) Net income per share: Basic $ 1.97 $ 1.00 $ 1.73 97 % 14 % Diluted $ 1.86 $ 0.94 $ 1.64 98 % 13 % LAZARD LTD UNAUDITED CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS (U.S. GAAP) Year Ended December 31, December 31, ($ in thousands, except per share data) 2021 2020 % Change Total revenue $ 3,273,816 $ 2,646,769 24 % Interest expense (80,768 ) (80,631 ) Net revenue 3,193,048 2,566,138 24 % Operating expenses: Compensation and benefits 1,895,859 1,550,684 22 % Occupancy and equipment 128,040 127,682 Marketing and business development 42,755 42,426 Technology and information services 146,765 133,544 Professional services 77,702 66,304 Fund administration and outsourced services 130,502 103,070 Amortization of intangible assets related to acquisitions 60 1,795 Other 45,318 38,931 Subtotal 571,142 513,752 11 % Provision (benefit) pursuant to tax receivable agreement 2,199 (439 ) Operating expenses 2,469,200 2,063,997 20 % Operating income 723,848 502,141 44 % Provision for income taxes 181,303 99,449 82 % Net income 542,545 402,692 35 % Net income attributable to noncontrolling interests 14,481 231 Net income attributable to Lazard Ltd $ 528,064 $ 402,461 31 % Attributable to Lazard Ltd Common Stockholders: Weighted average shares outstanding: Basic 106,035,808 106,862,739 (1 %) Diluted 113,674,699 113,483,380 0 % Net income per share: Basic $ 4.90 $ 3.69 33 % Diluted $ 4.63 $ 3.54 31 % LAZARD LTD UNAUDITED CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL CONDITION (U.S. GAAP) December 31, December 31, ($ in thousands) 2021 2020 ASSETS Cash and cash equivalents $ 1,465,022 $ 1,389,876 Deposits with banks and short-term investments 1,347,544 1,134,463 Restricted cash 617,448 44,488 Receivables 805,809 743,141 Investments 1,007,339 658,532 Goodwill and other intangible assets 379,571 384,071 Operating lease right-of-use assets 466,054 513,923 Deferred tax assets 435,308 538,448 Other assets 623,086 564,919 Total Assets $ 7,147,181 $ 5,971,861 LIABILITIES, REDEEMABLE NONCONTROLLING INTERESTS & STOCKHOLDERS' EQUITY Liabilities Deposits and other customer payables $ 1,442,701 $ 1,201,150 Accrued compensation and benefits 972,303 734,544 Operating lease liabilities 552,522 606,963 Tax receivable agreement obligation 213,434 221,451 Senior debt 1,685,227 1,682,741 Other liabilities 628,030 525,579 Total liabilities 5,494,217 4,972,428 Commitments and contingencies Redeemable noncontrolling interests 575,000 - Stockholders' equity Preferred stock, par value $.01 per share - - Common stock, par value $.01 per share 1,128 1,128 Additional paid-in capital 144,729 135,439 Retained earnings 1,560,636 1,295,386 Accumulated other comprehensive loss, net of tax (223,847 ) (238,368 ) Subtotal 1,482,646 1,193,585 Class A common stock held by subsidiaries, at cost (507,426 ) (281,813 ) Total Lazard Ltd stockholders' equity 975,220 911,772 Noncontrolling interests 102,744 87,661 Total stockholders' equity 1,077,964 999,433 Total liabilities, redeemable noncontrolling interests and stockholders' equity $ 7,147,181 $ 5,971,861 LAZARD LTD SELECTED SUMMARY FINANCIAL INFORMATION (a) (Non-GAAP - unaudited) Three Months Ended % Change From December 31, September 30, December 31, September 30, December 31, ($ in thousands, except per share data) 2021 2021 2020 2021 2020 Revenues: Financial Advisory $608,178 $381,295 $508,626 60% 20% Asset Management 346,607 310,566 336,152 12% 3% Corporate 13,160 9,783 3,990 35% NM Operating revenue (b) $967,945 $701,644 $848,768 38% 14% Expenses: Adjusted compensation and benefits expense (c) $544,510 $417,479 $497,260 30% 10% Ratio of adjusted compensation to operating revenue 56.3% 59.5% 58.6% Non-compensation expense (d) $133,903 $116,734 $116,568 15% 15% Ratio of non-compensation to operating revenue 13.8% 16.6% 13.7% Earnings: Earnings from operations (e) $289,532 $167,431 $234,940 73% 23% Operating margin (f) 29.9% 23.9% 27.7% Adjusted net income (g) $217,209 $111,398 $192,444 95% 13% Diluted adjusted net income per share $1.92 $0.98 $1.66 96% 16% Diluted weighted average shares (h) 113,294,302 113,781,092 115,831,033 (0%) (2%) Effective tax rate (i) 19.8% 25.1% 11.1% This presentation includes non-U.S. GAAP ("non-GAAP") measures. Our non-GAAP measures are not meant to be considered in isolation or as a substitute for the corresponding U.S. GAAP measures, and should be read only in conjunction with our consolidated financial statements prepared in accordance with U.S. GAAP. For a detailed explanation of the adjustments made to the corresponding U.S. GAAP measures, see Reconciliation of U.S. GAAP to Selected Summary Financial Information and Notes to Financial Schedules. LAZARD LTD SELECTED SUMMARY FINANCIAL INFORMATION (a) (Non-GAAP - unaudited) Year Ended December 31, December 31, ($ in thousands, except per share data) 2021 2020 % Change Revenues: Financial Advisory $1,777,848 $1,403,282 27% Asset Management 1,328,540 1,111,498 20% Corporate 32,509 8,760 NM Operating revenue (b) $3,138,897 $2,523,540 24% Expenses: Adjusted compensation and benefits expense (c) $1,836,227 $1,502,123 22% Ratio of adjusted compensation to operating revenue 58.5% 59.5% Non-compensation expense (d) $471,947 $431,898 9% Ratio of non-compensation to operating revenue 15.0% 17.1% Earnings: Earnings from operations (e) $830,723 $589,519 41% Operating margin (f) 26.5% 23.4% Adjusted net income (g) $575,626 $410,249 40% Diluted adjusted net income per share $5.04 $3.60 40% Diluted weighted average shares (h) 114,248,065 113,904,200 0% Effective tax rate (i) 23.9% 20.2% This presentation includes non-GAAP measures. Our non-GAAP measures are not meant to be considered in isolation or as a substitute for the corresponding U.S. GAAP measures, and should be read only in conjunction with our consolidated financial statements prepared in accordance with U.S. GAAP. For a detailed explanation of the adjustments made to the corresponding U.S. GAAP measures, see Reconciliation of U.S. GAAP to Selected Summary Financial Information and Notes to Financial Schedules. LAZARD LTD COMPENSATION AND BENEFITS - ANALYSIS (unaudited) ($ in millions except share price) 2014 2015 2016 2017 2018 2019 2020 2021 ADJUSTED U.S. GAAP BASIS (c) Base salary $ 354.0 $ 355.8 $ 372.7 $ 404.9 $ 431.9 $ 446.9 $ 455.0 $ 487.1 Benefits and other 215.6 228.3 201.9 243.4 263.6 258.3 227.7 286.5 Cash incentive compensation 432.9 413.9 398.3 465.5 445.5 390.8 435.3 662.4 Total cash compensation, benefits and other 1,002.5 998.0 972.9 1,113.8 1,141.0 1,096.0 1,118.0 1,436.0 Amortization of deferred incentive awards 299.2 320.8 352.4 367.3 375.6 367.9 384.1 400.2 Compensation and benefits - Adjusted U.S. GAAP basis (j) $ 1,301.7 $ 1,318.8 $ 1,325.3 $ 1,481.1 $ 1,516.6 $ 1,463.9 $ 1,502.1 $ 1,836.2 % of Operating Revenue 55.6 % 55.4 % 56.5 % 55.8 % 55.1 % 57.5 % 59.5 % 58.5 % AWARDED BASIS Total cash compensation and benefits (per above) $ 1,002.5 $ 998.0 $ 972.9 $ 1,113.8 $ 1,141.0 $ 1,096.0 $ 1,118.0 $ 1,436.0 Deferred year-end incentive awards 325.2 336.1 342.4 351.0 377.8 361.3 364.4 389.7 Compensation and benefits before sign-on and other special deferred incentive awards 1,327.7 1,334.1 1,315.3 1,464.8 1,518.8 1,457.3 1,482.4 1,825.7 Sign-on and other special deferred incentive awards (k) 14.2 26.4 29.9 36.2 45.7 37.6 54.9 48.5 Total Compensation and benefits - Notional 1,341.9 1,360.5 1,345.2 1,501.0 1,564.5 1,494.9 1,537.3 1,874.2 Adjustment for actual/estimated forfeitures (l) (25.4 ) (27.2 ) (27.9 ) (25.3 ) (27.5 ) (25.9 ) (27.3 ) (28.5 ) Compensation and benefits - Awarded (m) $ 1,316.5 $ 1,333.3 $ 1,317.3 $ 1,475.7 $ 1,537.0 $ 1,469.0 $ 1,510.0 $ 1,845.7 % of Operating Revenue - Awarded Basis (m) 56.3 % 56.0 % 56.2 % 55.6 % 55.8 % 57.7 % 59.8 % 58.8 % Memo: Total value of deferred equity-based year end incentive awards $ 219.0 $ 267.7 $ 234.8 $ 216.4 $ 253.8 $ 165.5 $ 172.4 TBD Equity-based year end awards - share equivalents ('000) 4,329 7,778 5,395 3,850 6,735 3,858 3,988 TBD Price at issuance $ 50.60 $ 34.42 $ 43.43 $ 56.22 $ 37.69 $ 42.89 $ 43.23 TBD Deferred compensation awards ratio (n) 24.5 % 25.2 % 26.0 % 24.0 % 24.9 % 24.8 % 24.6 % 21.3 % Operating revenue $ 2,340.2 $ 2,380.1 $ 2,344.3 $ 2,654.5 $ 2,754.8 $ 2,546.0 $ 2,523.5 $ 3,138.9 This presentation includes non-GAAP measures. Our non-GAAP measures are not meant to be considered in isolation or as a substitute for the corresponding U.S. GAAP measures, and should be read only in conjunction with our consolidated financial statements prepared in accordance with U.S. GAAP. For a detailed explanation of the adjustments made to the corresponding U.S. GAAP measures, see Reconciliation of U.S. GAAP to Selected Summary Financial Information and Notes to Financial Schedules. LAZARD LTD ASSETS UNDER MANAGEMENT ("AUM") (unaudited) ($ in millions) As of Variance December 31, September 30, December 31, 2021 2021 2020 Qtr to Qtr YTD Equity: Emerging Markets $ 31,227 $ 31,316 $ 33,254 (0.3 %) (6.1 %) Global 59,516 58,348 56,246 2.0 % 5.8 % Local 56,310 54,764 48,672 2.8 % 15.7 % Multi-Regional 73,953 74,840 71,560 (1.2 %) 3.3 % Total Equity 221,006 219,268 209,732 0.8 % 5.4 % Fixed Income: Emerging Markets 12,231 12,917 13,651 (5.3 %) (10.4 %) Global 14,410 14,469 11,962 (0.4 %) 20.5 % Local 6,022 6,070 5,600 (0.8 %) 7.5 % Multi-Regional 13,623 13,731 12,571 (0.8 %) 8.4 % Total Fixed Income 46,286 47,187 43,784 (1.9 %) 5.7 % Alternative Investments 4,203 3,934 2,748 6.8 % 52.9 % Private Equity 1,290 1,288 1,420 0.1 % (9.2 %) Cash Management 954 895 958 6.6 % (0.4 %) Total AUM $ 273,739 $ 272,572 $ 258,642 0.4 % 5.8 % Three Months Ended December 31, Year Ended December 31, 2021 2020 2021 2020 AUM - Beginning of Period $ 272,572 $ 227,752 $ 258,642 $ 248,239 Net Flows (6,735 ) (286 ) (11,573 ) (11,368 ) Market and foreign exchange appreciation 7,902 31,176 26,670 21,771 AUM - End of Period $ 273,739 $ 258,642 $ 273,739 $ 258,642 Average AUM $ 273,514 $ 245,604 $ 272,051 $ 225,361 % Change in average AUM 11.4 % 20.7 % Note: Average AUM generally represents the average of the monthly ending AUM balances for the period. LAZARD LTD RECONCILIATION OF U.S. GAAP TO SELECTED SUMMARY FINANCIAL INFORMATION (a) (unaudited) Three Months Ended Year Ended December 31, September 30, December 31, December 31, December 31, ($ in thousands, except per share data) 2021 2021 2020 2021 2020 Operating Revenue Net revenue - U.S. GAAP Basis $ 992,375 $ 717,429 $ 878,154 $ 3,193,048 $ 2,566,138 Adjustments: Revenue related to noncontrolling interests (o) (7,515 ) (11,994 ) (8,054 ) (31,624 ) (11,497 ) (Gains) losses related to Lazard Fund Interests ("LFI") and other similar arrangements (12,884 ) 1,368 (25,207 ) (35,494 ) (40,634 ) Distribution fees, reimbursable deal costs, bad debt expense and other (p) (22,842 ) (23,876 ) (14,647 ) (85,053 ) (64,983 ) Losses associated with restructuring and closing of certain offices (q) 15 51 - 23,645 - Interest expense 18,796 18,666 18,522 74,375 74,516 Operating revenue, as adjusted (b) $ 967,945 $ 701,644 $ 848,768 $ 3,138,897 $ 2,523,540 Compensation and Benefits Expense Compensation and benefits expense - U.S. GAAP Basis $ 559,768 $ 419,627 $ 524,736 $ 1,895,859 $ 1,550,684 Adjustments: (Charges) credits pertaining to LFI and other similar arrangements (12,884 ) 1,368 (25,207 ) (35,494 ) (40,634 ) Expenses associated with restructuring and closing of certain offices (r) - (1,012 ) - (14,922 ) - Compensation related to noncontrolling interests (o) (2,374 ) (2,504 ) (2,269 ) (9,216 ) (7,927 ) Compensation and benefits expense, as adjusted (c) $ 544,510 $ 417,479 $ 497,260 $ 1,836,227 $ 1,502,123 Non-Compensation Expense Non-compensation expense - Subtotal - U.S. GAAP Basis $ 162,070 $ 142,843 $ 136,358 $ 571,142 $ 513,752 Adjustments: Expenses related to office space reorganization (s) (967 ) (991 ) (4,184 ) (4,611 ) (12,646 ) Distribution fees, reimbursable deal costs, bad debt expense and other (p) (22,842 ) (23,876 ) (14,647 ) (85,053 ) (64,983 ) Amortization of intangible assets related to acquisitions (15 ) (15 ) (436 ) (60 ) (1,795 ) Expenses associated with restructuring and closing of certain offices (r) (115 ) (39 ) - (1,539 ) - Non-compensation expense related to noncontrolling interests (o) (4,228 ) (1,188 ) (523 ) (7,932 ) (2,430 ) Non-compensation expense, as adjusted (d) $ 133,903 $ 116,734 $ 116,568 $ 471,947 $ 431,898 Pre-Tax Income and Earnings From Operations Operating Income - U.S. GAAP Basis $ 268,338 $ 154,959 $ 217,499 $ 723,848 $ 502,141 Adjustments: Provision (benefit) pursuant to tax receivable agreement obligation 2,199 - (439 ) 2,199 (439 ) Losses associated with restructuring and closing of certain offices (q) 15 51 - 23,645 - Expenses related to office space reorganization (s) 967 991 4,184 4,611 12,646 Expenses associated with restructuring and closing of certain offices (r) 115 1,051 - 16,461 - Net income related to noncontrolling interests (o) (913 ) (8,304 ) (4,881 ) (14,481 ) (231 ) Pre-tax income, as adjusted 270,721 148,748 216,363 756,283 514,117 Interest expense 18,796 18,666 18,522 74,375 74,516 Amortization of intangible assets related to acquisitions and other 15 17 55 65 886 Earnings from operations, as adjusted (e) $ 289,532 $ 167,431 $ 234,940 $ 830,723 $ 589,519 Net Income attributable to Lazard Ltd Net income attributable to Lazard Ltd - U.S. GAAP Basis $ 210,377 $ 107,209 $ 189,889 $ 528,064 $ 402,461 Adjustments: Provision (benefit) pursuant to tax receivable agreement obligation 2,199 - (439 ) 2,199 (439 ) Losses associated with restructuring and closing of certain offices (q) 15 51 - 23,645 - Expenses related to office space reorganization (s) 967 991 4,184 4,611 12,646 Expenses associated with restructuring and closing of certain offices (r) 115 1,051 - 16,461 - Tax expense (benefit) allocated to adjustments 3,536 2,096 (1,190 ) 646 (4,419 ) Net income, as adjusted (g) $ 217,209 $ 111,398 $ 192,444 $ 575,626 $ 410,249 Diluted Weighted Average Shares Outstanding Diluted Weighted Average Shares Outstanding - U.S. GAAP Basis 112,278,982 112,994,037 115,144,030 113,674,699 113,483,380 Adjustment: participating securities including profits interest participation rights 1,015,320 787,055 687,003 573,366 420,820 Diluted Weighted Average Shares Outstanding, as adjusted (h) 113,294,302 113,781,092 115,831,033 114,248,065 113,904,200 Diluted net income per share: U.S. GAAP Basis $ 1.86 $ 0.94 $ 1.64 $ 4.63 $ 3.54 Non-GAAP Basis, as adjusted $ 1.92 $ 0.98 $ 1.66 $ 5.04 $ 3.60 This presentation includes non-GAAP measures. Our non-GAAP measures are not meant to be considered in isolation or as a substitute for the corresponding U.S. GAAP measures, and should be read only in conjunction with our consolidated financial statements prepared in accordance with U.S. GAAP. For a detailed explanation of the adjustments made to the corresponding U.S. GAAP measures, see Notes to Financial Schedules. See Notes to Financial Schedules LAZARD LTD RECONCILIATION OF NON-COMPENSATION U.S. GAAP TO ADJUSTED (a) (unaudited) Three Months Ended Year Ended December 31, September 30, December 31, December 31, December 31, ($ in thousands) 2021 2021 2020 2021 2020 Non-compensation expense - U.S. GAAP Basis: Occupancy and equipment $ 32,402 $ 31,015 $ 33,592 $ 128,040 $ 127,682 Marketing and business development 16,850 9,922 8,161 42,755 42,426 Technology and information services 39,762 37,559 36,100 146,765 133,544 Professional services 26,060 16,698 20,330 77,702 66,304 Fund administration and outsourced services 35,784 34,137 26,431 130,502 103,070 Amortization of intangible assets related to acquisitions 15 15 436 60 1,795 Other 11,197 13,497 11,308 45,318 38,931 Non-compensation expense - Subtotal - U.S. GAAP Basis $ 162,070 $ 142,843 $ 136,358 $ 571,142 $ 513,752 Non-compensation expense - Adjustments: Occupancy and equipment (o) (r) (s) ($ 892 ) ($ 1,106 ) ($ 3,419 ) ($ 5,395 ) ($ 11,878 ) Marketing and business development (o) (p) (r) (1,425 ) (1,261 ) (383 ) (4,138 ) (4,014 ) Technology and information services (o) (p) (r) 4 (72 ) 155 (170 ) (616 ) Professional services (o) (p) (r) (s) (3,888 ) (1,143 ) (4,101 ) (8,546 ) (9,806 ) Fund administration and outsourced services (o) (p) (21,661 ) (19,669 ) (12,114 ) (73,426 ) (47,956 ) Amortization of intangible assets related to acquisitions (15 ) (15 ) (436 ) (60 ) (1,795 ) Other (o) (p) (r) (s) (290 ) (2,843 ) 508 (7,460 ) (5,789 ) Subtotal Non-compensation adjustments ($ 28,167 ) ($ 26,109 ) ($ 19,790 ) ($ 99,195 ) ($ 81,854 ) Non-compensation expense, as adjusted: Occupancy and equipment $ 31,510 $ 29,909 $ 30,173 $ 122,645 $ 115,804 Marketing and business development 15,425 8,661 7,778 38,617 38,412 Technology and information services 39,766 37,487 36,255 146,595 132,928 Professional services 22,172 15,555 16,229 69,156 56,498 Fund administration and outsourced services 14,123 14,468 14,317 57,076 55,114 Amortization of intangible assets related to acquisitions - - - - - Other 10,907 10,654 11,816 37,858 33,142 Non-compensation expense, as adjusted (d) $ 133,903 $ 116,734 $ 116,568 $ 471,947 $ 431,898 This presentation includes non-GAAP measures. Our non-GAAP measures are not meant to be considered in isolation or as a substitute for the corresponding U.S. GAAP measures, and should be read only in conjunction with our consolidated financial statements prepared in accordance with U.S. GAAP. For a detailed explanation of the adjustments made to the corresponding U.S. GAAP measures, see Notes to Financial Schedules. See Notes to Financial Schedules LAZARD LTD Notes to Financial Schedules (a) Selected Summary Financial Information are non-GAAP measures. Lazard 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. (b) A non-GAAP measure which excludes (i) revenue related to non-controlling interests (see (o) 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 fees, reimbursable deal costs in accordance with the revenue recognition guidance, bad debt expense, and other (see (p) below), (iv) for the three and twelve month periods ended December 31, 2021 and for the three month period ended September 30, 2021, losses associated with restructuring and closing of certain offices (see (q) below), and (v) interest expense primarily related to corporate financing activities. (c) A non-GAAP measure which excludes (i) (charges) credits related to the changes in the fair value of the compensation liability recorded in connection with Lazard Fund Interests and other similar deferred compensation arrangements, (ii) for the three month period ended September 30, 2021 and the twelve month period ended December 31, 2021, expenses associated with restructuring and closing of certain offices (see (r) below), and (iii) compensation and benefits related to noncontrolling interests (see (o) below). (d) A non-GAAP measure which excludes (i) expenses related to office space reorganization (see (s) below), (ii) expenses related to distribution fees, reimbursable deal costs in accordance with the revenue recognition guidance, bad debt expense, and other (see (p) below), (iii) amortization of intangible assets related to acquisitions, (iv) for the three and twelve month periods ended December 31, 2021 and for the three month period ended September 30, 2021, expenses associated with restructuring and closing of certain offices (see (r) below), and (v) expenses related to noncontrolling interests (see (o) below). (e) A non-GAAP measure which excludes (i) for the three and twelve month periods ended December 31, 2021 and December 31, 2020, a provision (benefit) pursuant to our Tax Receivable Agreement obligation, (ii) for the three and twelve month periods ended December 31, 2021 and for the three month period ended September 30, 2021, losses associated with restructuring and closing of certain offices (see (q) below), (iii) expenses related to office space reorganization (see (s) below), (iv) for the three and twelve month periods ended December 31, 2021 and for the three month period ended September 30, 2021, expenses associated with restructuring and closing of certain offices (see (r) below), (v) net revenue and expenses related to noncontrolling interests (see (o) below), (vi) interest expense primarily related to corporate financing activities, and (vii) amortization of intangible assets related to acquisitions. (f) Represents earnings from operations as a percentage of operating revenue, and is a non-GAAP measure. (g) A non-GAAP measure which excludes (i) for the three and twelve month periods ended December 31, 2021 and December 31, 2020, a provision (benefit) pursuant to our Tax Receivable Agreement obligation, (ii) for the three and twelve month periods ended December 31, 2021 and for the three month period ended September 30, 2021, losses associated with restructuring and closing of certain offices (see (q) below), (iii) expenses related to office space reorganization (see (s) below), and (iv) for the three and twelve month periods ended December 31, 2021 and for the three month period ended September 30, 2021, expenses associated with restructuring and closing of certain offices (see (r) below), net of tax expense (benefits). (h) 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 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. (i) 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 taxes of $53,512, $37,350 and $23,919 for the three month periods ended December 31, 2021, September 30, 2021, and December 31, 2020, respectively, $180,657 and $103,868 for the twelve month periods ended December 31, 2021 and 2020, respectively, and the denominator of which is pre-tax income of $270,721, $148,748 and $216,363 for the three month periods ended December 31, 2021, September 30, 2021 and December 31, 2020, respectively, $756,283 and $514,117 for the twelve month periods ended December 31, 2021 and 2020, respectively. (j) A reconciliation of U.S. GAAP compensation and benefits expense to compensation and benefits expense, as adjusted: Year Ended December 31, ($ in thousands) 2014 2015 2016 2017 2018 2019 2020 2021 Compensation & benefits expense - U.S. GAAP Basis $1,313,606 $1,319,746 $1,340,543 $1,512,873 $1,514,735 $1,563,395 $1,550,684 $1,895,859 Adjustments: Expenses associated with restructuring and closing of certain offices (r) - - - - - - - (14,922) Charges associated with business realignment (t) - - - - - (56,635) - - Charges pertaining to ERP system implementation (u) - - - - (1,190) - - - (Charges) credits pertaining to LFI and other similar arrangements comp. liability (7,326) 3,827 (3,318) (23,526) 14,086 (31,657) (40,634) (35,494) Compensation related to noncontrolling interests (o) (4,567) (4,776) (11,900) (8,285) (10,999) (11,175) (7,927) (9,216) Compensation & benefits expense, as adjusted $1,301,713 $1,318,797 $1,325,325 $1,481,062 $1,516,632 $1,463,928 $1,502,123 $1,836,227 (k) Special deferred incentive awards are granted outside the year end compensation process and include grants to new hires, retention awards, and performance units earned under PRSU grants. (l) Under U.S. GAAP, an estimate is made for future forfeitures of the deferred portion of such awards. This estimate is based on both historical experience and future expectations. The result reflects the cost associated with awards that are expected to vest. This calculation is undertaken in order to present awarded compensation on a similar basis to GAAP compensation. Amounts for 2014-2017 represent actual forfeiture experience. The 2018-2021 amounts represent estimated forfeitures. (m) Awarded Compensation and Benefits was restated in 2017 to eliminate the year-end foreign exchange adjustment to better align awarded compensation with revenue. The impact of the change is not material. (n) Deferred compensation awards ratio is deferred year-end incentive awards, divided by total awarded compensation excluding sign-on and other special deferred incentive awards and actual/estimated forfeitures. (o) Noncontrolling interests include revenue and expenses principally related to Edgewater, ESC Funds and a Special Purpose Acquisition Company. (p) Represents certain distribution, introducer and management fees paid to third parties and reimbursable deal costs for which an equal amount is excluded from both non-GAAP operating revenue and non-compensation expense, respectively, and excludes bad debt expense, which represents fees that are deemed uncollectible. (q) 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. (r) Expenses associated with restructuring and closing of certain offices. (s) Represents incremental rent expense, building depreciation, impairment losses, and legal fees related to office space reorganization. (t) Represents expenses and losses associated with a business realignment which included employee reductions and the closing of subscale offices and investment strategies. (u) Represents expenses associated with Enterprise Resource Planning (ERP) system implementation. NM Not meaningful TBD To be determined View source version on businesswire.com: https://www.businesswire.com/news/home/20220203005343/en/Contacts Media: Judi Frost Mackey +1 212 632 1428 judi.mackey@lazard.com Investors: Alexandra Deignan +1 212 632 6886 alexandra.deignan@lazard.com
Record annual and quarterly operating revenue, operating income and net income, as adjusted Record annual and quarterly Financial Advisory operating revenue, reflecting strong broad-based activity across the business Record annual and quarterly Asset Management operating revenue and year-end assets under management
Lazard Ltd (NYSE: LAZ) today reported record annual operating revenue1 of $3,139 million for the year ended December 31, 2021. Net income, as adjusted2, was a record $576 million, or $5.04 per share (diluted) for the year. On a U.S. GAAP basis, net income for the year was $528 million, or $4.63 per share (diluted). For the fourth quarter of 2021, net income, as adjusted, was $217 million, or $1.92 per share (diluted), a quarterly record. On a U.S. GAAP basis, net income for the fourth quarter was $210 million, or $1.86 per share (diluted). “Our results underscore the strong performance by both our businesses across our global franchise,” said Kenneth M. Jacobs, Chairman and Chief Executive Officer of Lazard. “With unprecedented advisory activity and a robust level of assets under management, we continue to invest for growth and long-term shareholder value.” ($ in millions, except per share data and AUM) Year Ended Dec. 31, Quarter Ended Dec. 31, 2021 2020 %’21-’20 2021 2020 %’21-’20 Net Income (loss) US GAAP $528 $402 31% $210 $190 11% Per share, diluted $4.63 $3.54 31% $1.86 $1.64 13% Adjusted2 $576 $410 40% $217 $192 13% Per share, diluted $5.04 $3.60 40% $1.92 $1.66 16% Operating Revenue1 Total operating revenue $3,139 $2,524 24% $968 $849 14% Financial Advisory $1,778 $1,403 27% $608 $509 20% Asset Management $1,329 $1,111 20% $347 $336 3% AUM ($ in billions) Period End $274 $259 6% Average $272 $225 21% $274 $246 11% Note: Endnotes are on page 6 of this release. A reconciliation to U.S. GAAP is on page 14-15. OPERATING REVENUE Operating revenue1 was a record $3,139 million for 2021, 24% higher than 2020. Fourth-quarter 2021 operating revenue was a record $968 million, 14% higher than the fourth quarter of 2020. 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 full year of 2021, Financial Advisory operating revenue was a record $1,778 million, 27% higher than 2020. For the fourth quarter of 2021, Financial Advisory operating revenue was a quarterly record $608 million, 20% higher than the fourth quarter of 2020. During and since the fourth quarter of 2021, Lazard has been engaged in significant and complex M&A transactions and other advisory assignments globally, including the following (clients are in italics): The Special Committee of the Board of VMware in Dell’s $52.5 billion spin-off of its 81% equity stake in the company and VMware’s payment of a special cash dividend; Clayton, Dubilier & Rice fund on the sale of its stake in Belron, valuing Belron at €21.0 billion; Air Products & Chemicals’ $12.0 billion joint venture in Jazan, Saudi Arabia; The Special Committee of the Board of Athene in Athene’s $11 billion merger with Apollo; Terminix on its acquisition by Rentokil Initial plc, for an enterprise value of $7.5 billion; 3G Capital on its acquisition of a controlling interest in Hunter Douglas, valuing the company at $7.1 billion; Altice’s $6.3 billion sale of its French towers joint venture with KKR to Cellnex; Affiliate of Lone Star Funds on its €5.2 billion sale of MBCC Group to Sika; SNCF’s €3.2 billion sale of Ermewa to a consortium made of CDPQ and DWS; Blackstone Infrastructure Partners’ approximately $3.0 billion investment in Invenergy Renewables Holdings; Allstate’s $2.8 billion sale of Allstate Life Insurance to Blackstone; Charterhouse Capital Partners in Mirion Technologies’ combination with GS Acquisition Holdings Corp II, valuing Mirion at $2.6 billion; Saint-Gobain’s $2.3 billion acquisition of GCP Applied Technologies; Mubadala Capital’s $1.7 billion acquisition of the RLAM refinery from Petrobras; Vitrolife's €1.25 billion acquisition of Igenomix; Obagi’s $1.2 billion announced combination with Waldencast and Milk Makeup; IBM on the separation of its Managed Infrastructure Services unit; and APEX Clean Energy on the sale of a majority stake in the company to funds managed by Ares Management. 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 fourth quarter of 2021, 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: Alto Maipo S.P.A.; Andrade Gutierrez; Assured Guaranty in connection with Puerto Rico’s restructuring; Basic Energy Services; Brazos Electric Power Cooperative; Corp Grupo Banking S.A.; Grupo GICSA; Intelsat S.A.; NMC Health; Nordic Aviation Capital; Seadrill Limited; and Stoneway Capital. 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 Lazard’s publicly announced Financial Advisory transactions, 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 full year of 2021, Asset Management operating revenue was a record $1,329 million, 20% higher than 2020. For the fourth quarter of 2021, Asset Management operating revenue was a record $347 million, 3% higher than the fourth quarter of 2020. Management fees and other revenue was $1,208 million for full-year 2021, 15% higher than 2020. For the fourth quarter of 2021, management fees and other revenue was $301 million, 6% higher than the fourth quarter of 2020, and 1% lower than the third quarter of 2021. Average assets under management (AUM) for full-year 2021 was a record $272 billion, 21% higher than 2020. Average AUM for the fourth quarter of 2021 was $274 billion, 11% higher than the fourth quarter of 2020, and 2% lower than the third quarter of 2021. AUM as of December 31, 2021 was a year-end record $274 billion, up 6% from December 31, 2020, and approximately even with September 30, 2021. The sequential change from September 30, 2021 was driven by market appreciation of $9.9 billion, partially offset by foreign exchange depreciation of $2.0 billion and net outflows of $6.7 billion. For the full year of 2021, incentive fees were a record $120 million, compared to $58 million for 2020. For the fourth quarter of 2021, incentive fees were $46 million, compared to $52 million for the fourth quarter of 2020. 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). We believe annual awarded compensation reflects the actual annual compensation cost more accurately than 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. Adjusted compensation and benefits expense1 for 2021 was $1,836 million, 22% higher than 2020. The corresponding adjusted compensation ratio1 was 58.5% for 2021, compared to 59.5% for 2020. Awarded compensation expense1 for 2021 was $1,846 million, 22% higher than 2020. The corresponding awarded compensation ratio1 was 58.8% for 2021, compared to 59.8% for 2020. 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 2021 was $472 million, 9% higher than 2020. The ratio of non-compensation expense to operating revenue1 was 15.0% for 2021, compared to 17.1% for 2020. Adjusted non-compensation expense1 for the fourth quarter of 2021 was $134 million, 15% higher than the fourth quarter of 2020. The ratio of non-compensation expense to operating revenue1 was 13.8% for the fourth quarter of 2021, compared to 13.7% for the fourth quarter of 2020. 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 $181 million for full-year 2021 and $54 million for the fourth quarter of 2021. The effective tax rate on the same basis was 23.9% for full-year 2021, compared to 20.2% for full-year 2020. CAPITAL MANAGEMENT AND BALANCE SHEET Our primary capital management goals include managing debt and returning capital to shareholders through dividends and share repurchases. In 2021, Lazard returned $670 million to shareholders, which included: $196 million in dividends; $406 million in share repurchases of our Class A common stock; and $68 million in satisfaction of employee tax obligations in lieu of share issuances upon vesting of equity grants. During 2021, we repurchased 9.1 million shares of our Class A common stock at an average price of $44.51 per share. On February 2, 2022, our Board of Directors authorized additional share repurchases of up to $300 million, which expires as of December 31, 2024, bringing our total outstanding share repurchase authorization to $431 million. On February 2, 2022, Lazard declared a quarterly dividend of $0.47 per share on its outstanding common stock. The dividend is payable on February 25, 2022, to stockholders of record on February 14, 2022. As of December 31, 2021, our cash and cash equivalents were $1,465 million, and stockholders’ equity related to Lazard’s interests was $975 million. *** CONFERENCE CALL Lazard will host a conference call at 8:00 a.m. EST on February 3, 2022, to discuss the company’s financial results for the full year and fourth quarter of 2021. 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) 289-0720 (U.S. and Canada) or +1 (323) 701-0160 (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. EST on February 3, 2022, 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 8108108. ABOUT LAZARD Lazard, one of the world's preeminent financial advisory and asset management firms, operates from more than 41 cities and 26 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, Lazard’s Twitter account (twitter.com/Lazard) and other social media sites 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 Frères 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 U.S. GAAP results, is the most meaningful and useful way to compare our operating results across periods. 2 Fourth-quarter and full-year 2021 adjusted results exclude losses of $23.6 million (full-year) associated with restructuring and closing of certain offices, pre-tax charges of $1.0 million and $4.6 million, respectively, relating to office space reorganization, and $0.1 million and $16.5 million, respectively, relating to expenses associated with restructuring and closing of certain offices and $2.2 million in the fourth quarter and full year relating to our Tax Receivable Agreement obligation. On a U.S. GAAP basis, these resulted in a net charge of $6.8 million, or $0.06 (diluted) per share, for the fourth quarter, and a net charge of $47.6 million, or $0.42 (diluted) per share, for the full year of 2021. LAZ-EPE LAZARD LTD UNAUDITED CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS (U.S. GAAP) Three Months Ended % Change From December 31, September 30, December 31, September 30, December 31, ($ in thousands, except per share data) 2021 2021 2020 2021 2020 Total revenue $ 1,012,841 $ 737,807 $ 898,326 37 % 13 % Interest expense (20,466 ) (20,378 ) (20,172 ) Net revenue 992,375 717,429 878,154 38 % 13 % Operating expenses: Compensation and benefits 559,768 419,627 524,736 33 % 7 % Occupancy and equipment 32,402 31,015 33,592 Marketing and business development 16,850 9,922 8,161 Technology and information services 39,762 37,559 36,100 Professional services 26,060 16,698 20,330 Fund administration and outsourced services 35,784 34,137 26,431 Amortization of intangible assets related to acquisitions 15 15 436 Other 11,197 13,497 11,308 Subtotal 162,070 142,843 136,358 13 % 19 % Provision (benefit) pursuant to tax receivable agreement 2,199 - (439 ) Operating expenses 724,037 562,470 660,655 29 % 10 % Operating income 268,338 154,959 217,499 73 % 23 % Provision for income taxes 57,048 39,446 22,729 45 % 151 % Net income 211,290 115,513 194,770 83 % 8 % Net income attributable to noncontrolling interests 913 8,304 4,881 Net income attributable to Lazard Ltd $ 210,377 $ 107,209 $ 189,889 96 % 11 % Attributable to Lazard Ltd Common Stockholders: Weighted average shares outstanding: Basic 104,689,273 105,415,743 107,316,315 (1 %) (2 %) Diluted 112,278,982 112,994,037 115,144,030 (1 %) (2 %) Net income per share: Basic $ 1.97 $ 1.00 $ 1.73 97 % 14 % Diluted $ 1.86 $ 0.94 $ 1.64 98 % 13 % LAZARD LTD UNAUDITED CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS (U.S. GAAP) Year Ended December 31, December 31, ($ in thousands, except per share data) 2021 2020 % Change Total revenue $ 3,273,816 $ 2,646,769 24 % Interest expense (80,768 ) (80,631 ) Net revenue 3,193,048 2,566,138 24 % Operating expenses: Compensation and benefits 1,895,859 1,550,684 22 % Occupancy and equipment 128,040 127,682 Marketing and business development 42,755 42,426 Technology and information services 146,765 133,544 Professional services 77,702 66,304 Fund administration and outsourced services 130,502 103,070 Amortization of intangible assets related to acquisitions 60 1,795 Other 45,318 38,931 Subtotal 571,142 513,752 11 % Provision (benefit) pursuant to tax receivable agreement 2,199 (439 ) Operating expenses 2,469,200 2,063,997 20 % Operating income 723,848 502,141 44 % Provision for income taxes 181,303 99,449 82 % Net income 542,545 402,692 35 % Net income attributable to noncontrolling interests 14,481 231 Net income attributable to Lazard Ltd $ 528,064 $ 402,461 31 % Attributable to Lazard Ltd Common Stockholders: Weighted average shares outstanding: Basic 106,035,808 106,862,739 (1 %) Diluted 113,674,699 113,483,380 0 % Net income per share: Basic $ 4.90 $ 3.69 33 % Diluted $ 4.63 $ 3.54 31 % LAZARD LTD UNAUDITED CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL CONDITION (U.S. GAAP) December 31, December 31, ($ in thousands) 2021 2020 ASSETS Cash and cash equivalents $ 1,465,022 $ 1,389,876 Deposits with banks and short-term investments 1,347,544 1,134,463 Restricted cash 617,448 44,488 Receivables 805,809 743,141 Investments 1,007,339 658,532 Goodwill and other intangible assets 379,571 384,071 Operating lease right-of-use assets 466,054 513,923 Deferred tax assets 435,308 538,448 Other assets 623,086 564,919 Total Assets $ 7,147,181 $ 5,971,861 LIABILITIES, REDEEMABLE NONCONTROLLING INTERESTS & STOCKHOLDERS' EQUITY Liabilities Deposits and other customer payables $ 1,442,701 $ 1,201,150 Accrued compensation and benefits 972,303 734,544 Operating lease liabilities 552,522 606,963 Tax receivable agreement obligation 213,434 221,451 Senior debt 1,685,227 1,682,741 Other liabilities 628,030 525,579 Total liabilities 5,494,217 4,972,428 Commitments and contingencies Redeemable noncontrolling interests 575,000 - Stockholders' equity Preferred stock, par value $.01 per share - - Common stock, par value $.01 per share 1,128 1,128 Additional paid-in capital 144,729 135,439 Retained earnings 1,560,636 1,295,386 Accumulated other comprehensive loss, net of tax (223,847 ) (238,368 ) Subtotal 1,482,646 1,193,585 Class A common stock held by subsidiaries, at cost (507,426 ) (281,813 ) Total Lazard Ltd stockholders' equity 975,220 911,772 Noncontrolling interests 102,744 87,661 Total stockholders' equity 1,077,964 999,433 Total liabilities, redeemable noncontrolling interests and stockholders' equity $ 7,147,181 $ 5,971,861 LAZARD LTD SELECTED SUMMARY FINANCIAL INFORMATION (a) (Non-GAAP - unaudited) Three Months Ended % Change From December 31, September 30, December 31, September 30, December 31, ($ in thousands, except per share data) 2021 2021 2020 2021 2020 Revenues: Financial Advisory $608,178 $381,295 $508,626 60% 20% Asset Management 346,607 310,566 336,152 12% 3% Corporate 13,160 9,783 3,990 35% NM Operating revenue (b) $967,945 $701,644 $848,768 38% 14% Expenses: Adjusted compensation and benefits expense (c) $544,510 $417,479 $497,260 30% 10% Ratio of adjusted compensation to operating revenue 56.3% 59.5% 58.6% Non-compensation expense (d) $133,903 $116,734 $116,568 15% 15% Ratio of non-compensation to operating revenue 13.8% 16.6% 13.7% Earnings: Earnings from operations (e) $289,532 $167,431 $234,940 73% 23% Operating margin (f) 29.9% 23.9% 27.7% Adjusted net income (g) $217,209 $111,398 $192,444 95% 13% Diluted adjusted net income per share $1.92 $0.98 $1.66 96% 16% Diluted weighted average shares (h) 113,294,302 113,781,092 115,831,033 (0%) (2%) Effective tax rate (i) 19.8% 25.1% 11.1% This presentation includes non-U.S. GAAP ("non-GAAP") measures. Our non-GAAP measures are not meant to be considered in isolation or as a substitute for the corresponding U.S. GAAP measures, and should be read only in conjunction with our consolidated financial statements prepared in accordance with U.S. GAAP. For a detailed explanation of the adjustments made to the corresponding U.S. GAAP measures, see Reconciliation of U.S. GAAP to Selected Summary Financial Information and Notes to Financial Schedules. LAZARD LTD SELECTED SUMMARY FINANCIAL INFORMATION (a) (Non-GAAP - unaudited) Year Ended December 31, December 31, ($ in thousands, except per share data) 2021 2020 % Change Revenues: Financial Advisory $1,777,848 $1,403,282 27% Asset Management 1,328,540 1,111,498 20% Corporate 32,509 8,760 NM Operating revenue (b) $3,138,897 $2,523,540 24% Expenses: Adjusted compensation and benefits expense (c) $1,836,227 $1,502,123 22% Ratio of adjusted compensation to operating revenue 58.5% 59.5% Non-compensation expense (d) $471,947 $431,898 9% Ratio of non-compensation to operating revenue 15.0% 17.1% Earnings: Earnings from operations (e) $830,723 $589,519 41% Operating margin (f) 26.5% 23.4% Adjusted net income (g) $575,626 $410,249 40% Diluted adjusted net income per share $5.04 $3.60 40% Diluted weighted average shares (h) 114,248,065 113,904,200 0% Effective tax rate (i) 23.9% 20.2% This presentation includes non-GAAP measures. Our non-GAAP measures are not meant to be considered in isolation or as a substitute for the corresponding U.S. GAAP measures, and should be read only in conjunction with our consolidated financial statements prepared in accordance with U.S. GAAP. For a detailed explanation of the adjustments made to the corresponding U.S. GAAP measures, see Reconciliation of U.S. GAAP to Selected Summary Financial Information and Notes to Financial Schedules. LAZARD LTD COMPENSATION AND BENEFITS - ANALYSIS (unaudited) ($ in millions except share price) 2014 2015 2016 2017 2018 2019 2020 2021 ADJUSTED U.S. GAAP BASIS (c) Base salary $ 354.0 $ 355.8 $ 372.7 $ 404.9 $ 431.9 $ 446.9 $ 455.0 $ 487.1 Benefits and other 215.6 228.3 201.9 243.4 263.6 258.3 227.7 286.5 Cash incentive compensation 432.9 413.9 398.3 465.5 445.5 390.8 435.3 662.4 Total cash compensation, benefits and other 1,002.5 998.0 972.9 1,113.8 1,141.0 1,096.0 1,118.0 1,436.0 Amortization of deferred incentive awards 299.2 320.8 352.4 367.3 375.6 367.9 384.1 400.2 Compensation and benefits - Adjusted U.S. GAAP basis (j) $ 1,301.7 $ 1,318.8 $ 1,325.3 $ 1,481.1 $ 1,516.6 $ 1,463.9 $ 1,502.1 $ 1,836.2 % of Operating Revenue 55.6 % 55.4 % 56.5 % 55.8 % 55.1 % 57.5 % 59.5 % 58.5 % AWARDED BASIS Total cash compensation and benefits (per above) $ 1,002.5 $ 998.0 $ 972.9 $ 1,113.8 $ 1,141.0 $ 1,096.0 $ 1,118.0 $ 1,436.0 Deferred year-end incentive awards 325.2 336.1 342.4 351.0 377.8 361.3 364.4 389.7 Compensation and benefits before sign-on and other special deferred incentive awards 1,327.7 1,334.1 1,315.3 1,464.8 1,518.8 1,457.3 1,482.4 1,825.7 Sign-on and other special deferred incentive awards (k) 14.2 26.4 29.9 36.2 45.7 37.6 54.9 48.5 Total Compensation and benefits - Notional 1,341.9 1,360.5 1,345.2 1,501.0 1,564.5 1,494.9 1,537.3 1,874.2 Adjustment for actual/estimated forfeitures (l) (25.4 ) (27.2 ) (27.9 ) (25.3 ) (27.5 ) (25.9 ) (27.3 ) (28.5 ) Compensation and benefits - Awarded (m) $ 1,316.5 $ 1,333.3 $ 1,317.3 $ 1,475.7 $ 1,537.0 $ 1,469.0 $ 1,510.0 $ 1,845.7 % of Operating Revenue - Awarded Basis (m) 56.3 % 56.0 % 56.2 % 55.6 % 55.8 % 57.7 % 59.8 % 58.8 % Memo: Total value of deferred equity-based year end incentive awards $ 219.0 $ 267.7 $ 234.8 $ 216.4 $ 253.8 $ 165.5 $ 172.4 TBD Equity-based year end awards - share equivalents ('000) 4,329 7,778 5,395 3,850 6,735 3,858 3,988 TBD Price at issuance $ 50.60 $ 34.42 $ 43.43 $ 56.22 $ 37.69 $ 42.89 $ 43.23 TBD Deferred compensation awards ratio (n) 24.5 % 25.2 % 26.0 % 24.0 % 24.9 % 24.8 % 24.6 % 21.3 % Operating revenue $ 2,340.2 $ 2,380.1 $ 2,344.3 $ 2,654.5 $ 2,754.8 $ 2,546.0 $ 2,523.5 $ 3,138.9 This presentation includes non-GAAP measures. Our non-GAAP measures are not meant to be considered in isolation or as a substitute for the corresponding U.S. GAAP measures, and should be read only in conjunction with our consolidated financial statements prepared in accordance with U.S. GAAP. For a detailed explanation of the adjustments made to the corresponding U.S. GAAP measures, see Reconciliation of U.S. GAAP to Selected Summary Financial Information and Notes to Financial Schedules. LAZARD LTD ASSETS UNDER MANAGEMENT ("AUM") (unaudited) ($ in millions) As of Variance December 31, September 30, December 31, 2021 2021 2020 Qtr to Qtr YTD Equity: Emerging Markets $ 31,227 $ 31,316 $ 33,254 (0.3 %) (6.1 %) Global 59,516 58,348 56,246 2.0 % 5.8 % Local 56,310 54,764 48,672 2.8 % 15.7 % Multi-Regional 73,953 74,840 71,560 (1.2 %) 3.3 % Total Equity 221,006 219,268 209,732 0.8 % 5.4 % Fixed Income: Emerging Markets 12,231 12,917 13,651 (5.3 %) (10.4 %) Global 14,410 14,469 11,962 (0.4 %) 20.5 % Local 6,022 6,070 5,600 (0.8 %) 7.5 % Multi-Regional 13,623 13,731 12,571 (0.8 %) 8.4 % Total Fixed Income 46,286 47,187 43,784 (1.9 %) 5.7 % Alternative Investments 4,203 3,934 2,748 6.8 % 52.9 % Private Equity 1,290 1,288 1,420 0.1 % (9.2 %) Cash Management 954 895 958 6.6 % (0.4 %) Total AUM $ 273,739 $ 272,572 $ 258,642 0.4 % 5.8 % Three Months Ended December 31, Year Ended December 31, 2021 2020 2021 2020 AUM - Beginning of Period $ 272,572 $ 227,752 $ 258,642 $ 248,239 Net Flows (6,735 ) (286 ) (11,573 ) (11,368 ) Market and foreign exchange appreciation 7,902 31,176 26,670 21,771 AUM - End of Period $ 273,739 $ 258,642 $ 273,739 $ 258,642 Average AUM $ 273,514 $ 245,604 $ 272,051 $ 225,361 % Change in average AUM 11.4 % 20.7 % Note: Average AUM generally represents the average of the monthly ending AUM balances for the period. LAZARD LTD RECONCILIATION OF U.S. GAAP TO SELECTED SUMMARY FINANCIAL INFORMATION (a) (unaudited) Three Months Ended Year Ended December 31, September 30, December 31, December 31, December 31, ($ in thousands, except per share data) 2021 2021 2020 2021 2020 Operating Revenue Net revenue - U.S. GAAP Basis $ 992,375 $ 717,429 $ 878,154 $ 3,193,048 $ 2,566,138 Adjustments: Revenue related to noncontrolling interests (o) (7,515 ) (11,994 ) (8,054 ) (31,624 ) (11,497 ) (Gains) losses related to Lazard Fund Interests ("LFI") and other similar arrangements (12,884 ) 1,368 (25,207 ) (35,494 ) (40,634 ) Distribution fees, reimbursable deal costs, bad debt expense and other (p) (22,842 ) (23,876 ) (14,647 ) (85,053 ) (64,983 ) Losses associated with restructuring and closing of certain offices (q) 15 51 - 23,645 - Interest expense 18,796 18,666 18,522 74,375 74,516 Operating revenue, as adjusted (b) $ 967,945 $ 701,644 $ 848,768 $ 3,138,897 $ 2,523,540 Compensation and Benefits Expense Compensation and benefits expense - U.S. GAAP Basis $ 559,768 $ 419,627 $ 524,736 $ 1,895,859 $ 1,550,684 Adjustments: (Charges) credits pertaining to LFI and other similar arrangements (12,884 ) 1,368 (25,207 ) (35,494 ) (40,634 ) Expenses associated with restructuring and closing of certain offices (r) - (1,012 ) - (14,922 ) - Compensation related to noncontrolling interests (o) (2,374 ) (2,504 ) (2,269 ) (9,216 ) (7,927 ) Compensation and benefits expense, as adjusted (c) $ 544,510 $ 417,479 $ 497,260 $ 1,836,227 $ 1,502,123 Non-Compensation Expense Non-compensation expense - Subtotal - U.S. GAAP Basis $ 162,070 $ 142,843 $ 136,358 $ 571,142 $ 513,752 Adjustments: Expenses related to office space reorganization (s) (967 ) (991 ) (4,184 ) (4,611 ) (12,646 ) Distribution fees, reimbursable deal costs, bad debt expense and other (p) (22,842 ) (23,876 ) (14,647 ) (85,053 ) (64,983 ) Amortization of intangible assets related to acquisitions (15 ) (15 ) (436 ) (60 ) (1,795 ) Expenses associated with restructuring and closing of certain offices (r) (115 ) (39 ) - (1,539 ) - Non-compensation expense related to noncontrolling interests (o) (4,228 ) (1,188 ) (523 ) (7,932 ) (2,430 ) Non-compensation expense, as adjusted (d) $ 133,903 $ 116,734 $ 116,568 $ 471,947 $ 431,898 Pre-Tax Income and Earnings From Operations Operating Income - U.S. GAAP Basis $ 268,338 $ 154,959 $ 217,499 $ 723,848 $ 502,141 Adjustments: Provision (benefit) pursuant to tax receivable agreement obligation 2,199 - (439 ) 2,199 (439 ) Losses associated with restructuring and closing of certain offices (q) 15 51 - 23,645 - Expenses related to office space reorganization (s) 967 991 4,184 4,611 12,646 Expenses associated with restructuring and closing of certain offices (r) 115 1,051 - 16,461 - Net income related to noncontrolling interests (o) (913 ) (8,304 ) (4,881 ) (14,481 ) (231 ) Pre-tax income, as adjusted 270,721 148,748 216,363 756,283 514,117 Interest expense 18,796 18,666 18,522 74,375 74,516 Amortization of intangible assets related to acquisitions and other 15 17 55 65 886 Earnings from operations, as adjusted (e) $ 289,532 $ 167,431 $ 234,940 $ 830,723 $ 589,519 Net Income attributable to Lazard Ltd Net income attributable to Lazard Ltd - U.S. GAAP Basis $ 210,377 $ 107,209 $ 189,889 $ 528,064 $ 402,461 Adjustments: Provision (benefit) pursuant to tax receivable agreement obligation 2,199 - (439 ) 2,199 (439 ) Losses associated with restructuring and closing of certain offices (q) 15 51 - 23,645 - Expenses related to office space reorganization (s) 967 991 4,184 4,611 12,646 Expenses associated with restructuring and closing of certain offices (r) 115 1,051 - 16,461 - Tax expense (benefit) allocated to adjustments 3,536 2,096 (1,190 ) 646 (4,419 ) Net income, as adjusted (g) $ 217,209 $ 111,398 $ 192,444 $ 575,626 $ 410,249 Diluted Weighted Average Shares Outstanding Diluted Weighted Average Shares Outstanding - U.S. GAAP Basis 112,278,982 112,994,037 115,144,030 113,674,699 113,483,380 Adjustment: participating securities including profits interest participation rights 1,015,320 787,055 687,003 573,366 420,820 Diluted Weighted Average Shares Outstanding, as adjusted (h) 113,294,302 113,781,092 115,831,033 114,248,065 113,904,200 Diluted net income per share: U.S. GAAP Basis $ 1.86 $ 0.94 $ 1.64 $ 4.63 $ 3.54 Non-GAAP Basis, as adjusted $ 1.92 $ 0.98 $ 1.66 $ 5.04 $ 3.60 This presentation includes non-GAAP measures. Our non-GAAP measures are not meant to be considered in isolation or as a substitute for the corresponding U.S. GAAP measures, and should be read only in conjunction with our consolidated financial statements prepared in accordance with U.S. GAAP. For a detailed explanation of the adjustments made to the corresponding U.S. GAAP measures, see Notes to Financial Schedules. See Notes to Financial Schedules LAZARD LTD RECONCILIATION OF NON-COMPENSATION U.S. GAAP TO ADJUSTED (a) (unaudited) Three Months Ended Year Ended December 31, September 30, December 31, December 31, December 31, ($ in thousands) 2021 2021 2020 2021 2020 Non-compensation expense - U.S. GAAP Basis: Occupancy and equipment $ 32,402 $ 31,015 $ 33,592 $ 128,040 $ 127,682 Marketing and business development 16,850 9,922 8,161 42,755 42,426 Technology and information services 39,762 37,559 36,100 146,765 133,544 Professional services 26,060 16,698 20,330 77,702 66,304 Fund administration and outsourced services 35,784 34,137 26,431 130,502 103,070 Amortization of intangible assets related to acquisitions 15 15 436 60 1,795 Other 11,197 13,497 11,308 45,318 38,931 Non-compensation expense - Subtotal - U.S. GAAP Basis $ 162,070 $ 142,843 $ 136,358 $ 571,142 $ 513,752 Non-compensation expense - Adjustments: Occupancy and equipment (o) (r) (s) ($ 892 ) ($ 1,106 ) ($ 3,419 ) ($ 5,395 ) ($ 11,878 ) Marketing and business development (o) (p) (r) (1,425 ) (1,261 ) (383 ) (4,138 ) (4,014 ) Technology and information services (o) (p) (r) 4 (72 ) 155 (170 ) (616 ) Professional services (o) (p) (r) (s) (3,888 ) (1,143 ) (4,101 ) (8,546 ) (9,806 ) Fund administration and outsourced services (o) (p) (21,661 ) (19,669 ) (12,114 ) (73,426 ) (47,956 ) Amortization of intangible assets related to acquisitions (15 ) (15 ) (436 ) (60 ) (1,795 ) Other (o) (p) (r) (s) (290 ) (2,843 ) 508 (7,460 ) (5,789 ) Subtotal Non-compensation adjustments ($ 28,167 ) ($ 26,109 ) ($ 19,790 ) ($ 99,195 ) ($ 81,854 ) Non-compensation expense, as adjusted: Occupancy and equipment $ 31,510 $ 29,909 $ 30,173 $ 122,645 $ 115,804 Marketing and business development 15,425 8,661 7,778 38,617 38,412 Technology and information services 39,766 37,487 36,255 146,595 132,928 Professional services 22,172 15,555 16,229 69,156 56,498 Fund administration and outsourced services 14,123 14,468 14,317 57,076 55,114 Amortization of intangible assets related to acquisitions - - - - - Other 10,907 10,654 11,816 37,858 33,142 Non-compensation expense, as adjusted (d) $ 133,903 $ 116,734 $ 116,568 $ 471,947 $ 431,898 This presentation includes non-GAAP measures. Our non-GAAP measures are not meant to be considered in isolation or as a substitute for the corresponding U.S. GAAP measures, and should be read only in conjunction with our consolidated financial statements prepared in accordance with U.S. GAAP. For a detailed explanation of the adjustments made to the corresponding U.S. GAAP measures, see Notes to Financial Schedules. See Notes to Financial Schedules LAZARD LTD Notes to Financial Schedules (a) Selected Summary Financial Information are non-GAAP measures. Lazard 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. (b) A non-GAAP measure which excludes (i) revenue related to non-controlling interests (see (o) 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 fees, reimbursable deal costs in accordance with the revenue recognition guidance, bad debt expense, and other (see (p) below), (iv) for the three and twelve month periods ended December 31, 2021 and for the three month period ended September 30, 2021, losses associated with restructuring and closing of certain offices (see (q) below), and (v) interest expense primarily related to corporate financing activities. (c) A non-GAAP measure which excludes (i) (charges) credits related to the changes in the fair value of the compensation liability recorded in connection with Lazard Fund Interests and other similar deferred compensation arrangements, (ii) for the three month period ended September 30, 2021 and the twelve month period ended December 31, 2021, expenses associated with restructuring and closing of certain offices (see (r) below), and (iii) compensation and benefits related to noncontrolling interests (see (o) below). (d) A non-GAAP measure which excludes (i) expenses related to office space reorganization (see (s) below), (ii) expenses related to distribution fees, reimbursable deal costs in accordance with the revenue recognition guidance, bad debt expense, and other (see (p) below), (iii) amortization of intangible assets related to acquisitions, (iv) for the three and twelve month periods ended December 31, 2021 and for the three month period ended September 30, 2021, expenses associated with restructuring and closing of certain offices (see (r) below), and (v) expenses related to noncontrolling interests (see (o) below). (e) A non-GAAP measure which excludes (i) for the three and twelve month periods ended December 31, 2021 and December 31, 2020, a provision (benefit) pursuant to our Tax Receivable Agreement obligation, (ii) for the three and twelve month periods ended December 31, 2021 and for the three month period ended September 30, 2021, losses associated with restructuring and closing of certain offices (see (q) below), (iii) expenses related to office space reorganization (see (s) below), (iv) for the three and twelve month periods ended December 31, 2021 and for the three month period ended September 30, 2021, expenses associated with restructuring and closing of certain offices (see (r) below), (v) net revenue and expenses related to noncontrolling interests (see (o) below), (vi) interest expense primarily related to corporate financing activities, and (vii) amortization of intangible assets related to acquisitions. (f) Represents earnings from operations as a percentage of operating revenue, and is a non-GAAP measure. (g) A non-GAAP measure which excludes (i) for the three and twelve month periods ended December 31, 2021 and December 31, 2020, a provision (benefit) pursuant to our Tax Receivable Agreement obligation, (ii) for the three and twelve month periods ended December 31, 2021 and for the three month period ended September 30, 2021, losses associated with restructuring and closing of certain offices (see (q) below), (iii) expenses related to office space reorganization (see (s) below), and (iv) for the three and twelve month periods ended December 31, 2021 and for the three month period ended September 30, 2021, expenses associated with restructuring and closing of certain offices (see (r) below), net of tax expense (benefits). (h) 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 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. (i) 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 taxes of $53,512, $37,350 and $23,919 for the three month periods ended December 31, 2021, September 30, 2021, and December 31, 2020, respectively, $180,657 and $103,868 for the twelve month periods ended December 31, 2021 and 2020, respectively, and the denominator of which is pre-tax income of $270,721, $148,748 and $216,363 for the three month periods ended December 31, 2021, September 30, 2021 and December 31, 2020, respectively, $756,283 and $514,117 for the twelve month periods ended December 31, 2021 and 2020, respectively. (j) A reconciliation of U.S. GAAP compensation and benefits expense to compensation and benefits expense, as adjusted: Year Ended December 31, ($ in thousands) 2014 2015 2016 2017 2018 2019 2020 2021 Compensation & benefits expense - U.S. GAAP Basis $1,313,606 $1,319,746 $1,340,543 $1,512,873 $1,514,735 $1,563,395 $1,550,684 $1,895,859 Adjustments: Expenses associated with restructuring and closing of certain offices (r) - - - - - - - (14,922) Charges associated with business realignment (t) - - - - - (56,635) - - Charges pertaining to ERP system implementation (u) - - - - (1,190) - - - (Charges) credits pertaining to LFI and other similar arrangements comp. liability (7,326) 3,827 (3,318) (23,526) 14,086 (31,657) (40,634) (35,494) Compensation related to noncontrolling interests (o) (4,567) (4,776) (11,900) (8,285) (10,999) (11,175) (7,927) (9,216) Compensation & benefits expense, as adjusted $1,301,713 $1,318,797 $1,325,325 $1,481,062 $1,516,632 $1,463,928 $1,502,123 $1,836,227 (k) Special deferred incentive awards are granted outside the year end compensation process and include grants to new hires, retention awards, and performance units earned under PRSU grants. (l) Under U.S. GAAP, an estimate is made for future forfeitures of the deferred portion of such awards. This estimate is based on both historical experience and future expectations. The result reflects the cost associated with awards that are expected to vest. This calculation is undertaken in order to present awarded compensation on a similar basis to GAAP compensation. Amounts for 2014-2017 represent actual forfeiture experience. The 2018-2021 amounts represent estimated forfeitures. (m) Awarded Compensation and Benefits was restated in 2017 to eliminate the year-end foreign exchange adjustment to better align awarded compensation with revenue. The impact of the change is not material. (n) Deferred compensation awards ratio is deferred year-end incentive awards, divided by total awarded compensation excluding sign-on and other special deferred incentive awards and actual/estimated forfeitures. (o) Noncontrolling interests include revenue and expenses principally related to Edgewater, ESC Funds and a Special Purpose Acquisition Company. (p) Represents certain distribution, introducer and management fees paid to third parties and reimbursable deal costs for which an equal amount is excluded from both non-GAAP operating revenue and non-compensation expense, respectively, and excludes bad debt expense, which represents fees that are deemed uncollectible. (q) 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. (r) Expenses associated with restructuring and closing of certain offices. (s) Represents incremental rent expense, building depreciation, impairment losses, and legal fees related to office space reorganization. (t) Represents expenses and losses associated with a business realignment which included employee reductions and the closing of subscale offices and investment strategies. (u) Represents expenses associated with Enterprise Resource Planning (ERP) system implementation. NM Not meaningful TBD To be determined View source version on businesswire.com: https://www.businesswire.com/news/home/20220203005343/en/
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