8-K
Lazard, Inc. (LAZ)
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d)
of The Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): October 29, 2021
Lazard Ltd
(Exact name of registrant as specified in its charter)
| Bermuda | |
|---|---|
| (State or other jurisdiction of incorporation) | |
| 001-32492 | 98-0437848 |
| --- | --- |
| (Commission File Number) | (IRS Employer Identification No.) |
| Clarendon House, 2 Church Street, Hamilton, Bermuda | HM 11 |
| (Address of Principal Executive Offices) | (Zip Code) |
Registrant’s telephone number, including area code 441-295-1422
Not Applicable
(Former name or former address, if changed since last report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (seeGeneral Instruction A.2. below):
| ☐ | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
|---|---|
| ☐ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
| --- | --- |
| ☐ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
| --- | --- |
| ☐ | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
| --- | --- |
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading<br> <br>Symbol(s) | Name of each exchange<br> <br>on which registered |
|---|---|---|
| Class A Common Stock | LAZ | New York Stock Exchange |
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
| Item 2.02 | Results of Operations and Financial Condition. |
|---|
On October 29, 2021, Lazard Ltd (the “Company”) issued a press release announcing financial results for its third quarter ended September 30, 2021. A copy of the Company’s press release containing this information is being furnished as Exhibit 99.1 to this Report on Form 8-K and is incorporated herein by reference.
The information furnished pursuant to this Item 2.02, including Exhibit 99.1, shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934 (the “Exchange Act”) or otherwise subject to the liabilities under that Section and shall not be deemed to be incorporated by reference into any filing of the Company under the Securities Act of 1933 or the Exchange Act.
| Item 9.01 | Financial Statements and Exhibits |
|---|
(d) Exhibits. The following exhibits are filed or furnished as part of this Report on Form 8-K:
| Exhibit<br> <br>Number | Description of Exhibit |
|---|---|
| 99.1 | Press Release issued on October 29, 2021 |
| 104 | Cover Page Interactive Data File (embedded within the Inline XBRL document) |
EXHIBIT INDEX
| Exhibit<br> <br>Number | Description of Exhibit |
|---|---|
| 99.1 | Press Release issued on October 29, 2021 |
| 104 | Cover Page Interactive Data File (embedded within the Inline XBRL document) |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this Report on Form 8-K to be signed on its behalf by the undersigned hereunto duly authorized.
| LAZARD LTD | |
|---|---|
| (Registrant) | |
| By: | /s/ Scott D. Hoffman |
| Name: | Scott D. Hoffman |
| Title: | Chief Administrative Officer and General Counsel |
Dated: October 29, 2021
EX-99.1
Exhibit 99.1
LAZARD LTD REPORTS
THIRD-QUARTER AND NINE-MONTH 2021 RESULTS
| Record operating revenue<br><br><br>for the third quarter and first<br><br><br>nine months of 2021 | Record Financial Advisory<br><br><br>third-quarter revenue; high<br><br><br>levels of activity globally | Record average assets<br><br><br>under management of<br><br><br>$278 billion in third quarter |
|---|
NEW YORK, October 29, 2021 – Lazard Ltd (NYSE: LAZ) today reported operating revenue^1^ of $702 million for the quarter ended September 30, 2021. Net income, as adjusted^2^, was $111 million, or $0.98 per share (diluted) for the quarter. On a U.S. GAAP basis, third-quarter 2021 net income was $107 million, or $0.94 per share (diluted).
For the first nine months of 2021, net income, as adjusted, was $358 million, or $3.13 per share (diluted). On a U.S. GAAP basis, net income for the first nine months was $318 million, or $2.78 per share (diluted).
“Record third-quarter and year-to-date operating revenue reflect continued strong performance across the firm globally,” said Kenneth M. Jacobs, Chairman and Chief Executive Officer of Lazard. “We are well positioned with unprecedented advisory activity and a record level of average assets under management, and we continue to invest for growth across our businesses.”
| ( in millions, except per share data and AUM) | Nine Months EndedSept. 30, | ||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| 2020 | %’21-’20 | 2021 | 2020 | %’21-’20 | |||||||||
| Net Income | |||||||||||||
| US GAAP | 107 | $ | 75 | 43 | % | $ | 318 | $ | 213 | 49 | % | ||
| Per share, diluted | 0.94 | $ | 0.66 | 42 | % | $ | 2.78 | $ | 1.88 | 48 | % | ||
| Adjusted2 | 111 | $ | 76 | 46 | % | $ | 358 | $ | 218 | 65 | % | ||
| Per share, diluted | 0.98 | $ | 0.67 | 46 | % | $ | 3.13 | $ | 1.92 | 63 | % | ||
| Operating Revenue1 | |||||||||||||
| Total operating revenue | 702 | $ | 569 | 23 | % | $ | 2,171 | $ | 1,675 | 30 | % | ||
| Financial Advisory | 381 | $ | 307 | 24 | % | $ | 1,170 | $ | 895 | 31 | % | ||
| Asset Management | 311 | $ | 261 | 19 | % | $ | 982 | $ | 775 | 27 | % | ||
| AUM ( in billions) | |||||||||||||
| Period End | 273 | $ | 228 | 20 | % | ||||||||
| Average | 278 | $ | 226 | 23 | % | $ | 272 | $ | 219 | 24 | % |
All values are in US Dollars.
| Media Contact: Judi Frost Mackey | +1 212 632 1428 | judi.mackey@lazard.com |
|---|---|---|
| Investor Contact: Alexandra Deignan | +1 212 632 6886 | alexandra.deignan@lazard.com |
Note: Endnotes are on page 6 of this release. A reconciliation of U.S. GAAP to adjusted GAAP is on pages 13-14.
1
OPERATING REVENUE
Operating revenue^1^ was $702 million for the third quarter of 2021, and $2,171 million for the first nine months of 2021, both record levels, up 23% and 30% from the respective 2020 periods.
Financial Advisory
Our Financial Advisory results include M&A Advisory, Capital Advisory, Capital Raising, Restructuring, Shareholder Advisory, Sovereign Advisory, andother strategic advisory work for clients.
For the third quarter of 2021, Financial Advisory operating revenue was a record $381 million, 24% higher than the third quarter of 2020.
For the first nine months of 2021, Financial Advisory operating revenue was a record $1,170 million, 31% higher than the first nine months of 2020.
During and since the third 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): Faurecia in its €6.7 billion combination with Hella GmbH & Co. KGaA; Macquarie InfrastructureCorporation ’ s $4.5 billion sale of Atlantic Aviation to KKR*;* Brown Brothers Harriman’s $3.5 billion sale of its Investor Services business to State Street; Quanta Services ’ $2.7 billion acquisition of Blattner Energy; Sitel ’ s $2.2 billion acquisition of Sykes Enterprises; Rolls-Royce’s €1.8 billion sale of ITP Aero to a consortium led by Bain Capital; Southwest Gas ’ $2.0 billion acquisition of Questar Pipeline from Dominion Energy; Vitrolife’s €1.25 billion acquisition of Igenomix; Daily Mail and General Trust ’ s £1.4 billion sale of RMS to Moody’s Corporation; St. Modwen Properties on its £1.56 billion recommended cash acquisition by Blackstone; DistroKid ’ s investment from Insight Partners, valuing the company at $1.3 billion; Saint-Gobain ’ s €1.0 billion acquisition of Chryso; Lincoln Financial ’ s reinsurance transaction with Resolution Life; Environmental ResourcesManagement on OMERS and AIMCo’s sale of a majority stake in the company to KKR; APEX Clean Energy on the sale of a majority stake in the company to Ares; and Swinerton’s sale of its Renewable Energy Division & SOLV, Inc. to American Securities.
Lazard has one of the world’s preeminent restructuring practices. During and since the third 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: Andrade Gutierrez; Assured Guaranty in connection with Puerto Rico’s restructuring; Basic Energy Services; Brazos Electric Power Cooperative; Cinepolis; 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.
2
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 third quarter of 2021, Asset Management operating revenue was $311 million, 19% higher than the third quarter of 2020. For the first nine months of 2021, Asset Management operating revenue was a record $982 million, 27% higher than the first nine months of 2020.
For the third quarter of 2021, management fees and other revenue was $303 million, 18% higher than the third quarter of 2020, and 2% lower than the second quarter of 2021. For the first nine months of 2021, management fees and other revenue was $907 million, 18% higher than the first nine months of 2020.
Average assets under management (AUM) for the third quarter of 2021 was a record $278 billion, 23% higher than the third quarter of 2020, and 1% higher than the second quarter of 2021. Average AUM for the first nine months of 2021 was a record $272 billion, 24% higher than the first nine months of 2020.
AUM as of September 30, 2021, was $273 billion, up 20% from September 30, 2020, and down 2% from June 30, 2021. The sequential decrease was driven primarily by foreign exchange depreciation of $3.3 billion and net outflows of $2.3 billion, partially offset by market appreciation of $838 million.
For the third quarter of 2021, incentive fees were $7 million, compared to $3 million for the third quarter of 2020. For the first nine months of 2021, incentive fees were $75 million, compared to $6 million for the first nine months of 2020.
OPERATING EXPENSES
Compensation and Benefits
In managingcompensation 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). Webelieve 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 compensationprincipally 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 inthe future and build shareholder value over time.
For the third quarter of 2021, we accrued adjusted compensation and benefits expense^1^at an adjusted compensation^1^ ratio of 59.5%, compared to the third-quarter 2020 ratio of 60%. This resulted in $417 million of adjusted compensation and benefits expense, compared to $341 million for the third quarter of 2020.
3
For the first nine months of 2021, adjusted compensation and benefits expense^^was $1,292 million, compared to $1,005 million for the first nine months of 2020.
We manage our compensation and benefits expense based on awarded compensation with a consistent deferral policy. We take a disciplined approach to compensation, and our goal is to maintain a compensation-to-operating revenue ratio over the cycle in the mid- to high-50s percentage range on both an awarded and adjusted basis, with consistent deferral policies.
Non-Compensation Expense
Adjusted non-compensation expense^1^ for the third quarter of 2021 was $117 million, 13% higher than the third quarter of 2020. The ratio of adjusted non-compensation expense to operating revenue^1^ for the third quarter of 2021 was 16.6%, compared to 18.1% for the third quarter of 2020.
Adjusted non-compensation expense for the first nine months of 2021 was $338 million, 7% higher than the first nine months of 2020. The ratio of adjusted non-compensation expense to operating revenue for the first nine months of 2021 was 15.6%, compared to 18.8% for the first nine months 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 basis^1^, was $37 million for the third quarter of 2021 and $127 million for the first nine months of 2021. The effective tax rate on the same basis was 25.1% for the third quarter and 26.2% for the first nine months of 2021, compared to 27.9% and 26.9% for the respective 2020 periods.
CAPITAL MANAGEMENT AND BALANCE SHEET
Our primary capital management goals include managing debt and returning capital to shareholders through dividends and share repurchases.
For the third quarter of 2021, Lazard returned $103 million to shareholders, which included: $49 million in dividends; $52 million in share repurchases of our Class A common stock; and $1.9 million in satisfaction of employee tax obligations in lieu of share issuances upon vesting of equity grants.
For the first nine months of 2021, Lazard returned $501 million to shareholders, which included: $148 million in dividends; $286 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 the first nine months of 2021, we repurchased 6.5 million shares at an average price of $44.24 per share, which included 1.1 million shares repurchased in the third quarter at an average price of $46.01 per share. As of September 30, 2021, our remaining share repurchase authorization was $314 million.
4
On October 28, 2021, Lazard declared a quarterly dividend of $0.47 per share on its outstanding common stock. The dividend is payable on November 19, 2021, to stockholders of record on November 8, 2021.
Lazard’s financial position remains strong. As of September 30, 2021, our cash and cash equivalents were $1,185 million. Stockholders’ equity related to Lazard’s interests was $878 million.
***
CONFERENCE CALL
Lazard will host a conference call at 8:00 a.m. EDT on October 29, 2021, to discuss the company’s financial results for the third quarter and first nine months 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) 367-2403 (toll-free, U.S. and Canada) or +1 (334) 777-6978 (outside of the U.S. and Canada), 15 minutes prior to the start of the call.
A replay of the conference call will be available by 10:00 a.m. EDT on October 29, 2021, via the Lazard Investor Relations website, www.lazard.com, or by dialing 1 (888) 203-1112 (toll-free, U.S. and Canada) or +1 (719) 457-0820 (outside of the U.S. and Canada). The replay access code is: 2407222.
ABOUTLAZARD
Lazard, one of the world’s preeminent financial advisory and asset management firms, operates from 41 cities across 26 countries in North America, Europe, Asia, Australia, and 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.
***
5
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 andprojections 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 orimplied 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 thefollowing:
| • | A decline in general economic conditions or the global or regional financial markets;<br> |
|---|---|
| • | 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 currentcompensation levels. |
| --- | --- |
Although we believe the expectations reflected in the forward-looking statements are reasonable, we cannotguarantee 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-lookingstatements 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 doso.
Lazard Ltd is committed to providing timely and accurate information to the investing public, consistent with our legal and regulatoryobligations. 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 ofquarterly 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 AssetManagement 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^ Third-quarter and first-nine-months 2021 adjusted results^1^ exclude losses of $0.1 million and $23.6 million, respectively, associated with restructuring and closing of certain offices; pre-tax charges of $1.0 million and $3.6 million, respectively, relating to office space reorganization; and $1.1 million and $16.3 million, respectively, relating to expenses associated with restructuring and closing of certain offices. On a U.S. GAAP basis, these resulted in a net charge of $4.2 million, or $0.04 (diluted) per share, for the third quarter, and a net charge of $40.7 million, or $0.36 (diluted) per share, for the first nine months of 2021.
LAZ-EPE
6
LAZARD LTD
UNAUDITED CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
(U.S. GAAP)
| Three Months Ended | % Change From | ||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| ($ in thousands, except per share data) | September 30,<br>2021 | June 30,<br>2021 | September 30,<br>2020 | June 30,<br>2021 | September 30,<br>2020 | ||||||||||
| Total revenue | $ | 737,807 | $ | 843,264 | $ | 598,022 | (13 | %) | 23 | % | |||||
| Interest expense | (20,378 | ) | (20,127 | ) | (20,344 | ) | |||||||||
| Net revenue | 717,429 | 823,137 | 577,678 | (13 | %) | 24 | % | ||||||||
| Operating expenses: | |||||||||||||||
| Compensation and benefits | 419,627 | 514,918 | 354,625 | (19 | %) | 18 | % | ||||||||
| Occupancy and equipment | 31,015 | 29,875 | 31,318 | ||||||||||||
| Marketing and business development | 9,922 | 9,332 | 7,562 | ||||||||||||
| Technology and information services | 37,559 | 35,774 | 33,457 | ||||||||||||
| Professional services | 16,698 | 19,996 | 14,701 | ||||||||||||
| Fund administration and outsourced services | 34,137 | 31,302 | 26,196 | ||||||||||||
| Amortization of intangible assets related to acquisitions | 15 | 15 | 458 | ||||||||||||
| Other | 13,497 | 15,664 | 4,681 | ||||||||||||
| Subtotal | 142,843 | 141,958 | 118,373 | 1 | % | 21 | % | ||||||||
| Operating expenses | 562,470 | 656,876 | 472,998 | (14 | %) | 19 | % | ||||||||
| Operating income | 154,959 | 166,261 | 104,680 | (7 | %) | 48 | % | ||||||||
| Provision for income taxes | 39,446 | 41,345 | 28,165 | (5 | %) | 40 | % | ||||||||
| Net income | 115,513 | 124,916 | 76,515 | (8 | %) | 51 | % | ||||||||
| Net income attributable to noncontrolling interests | 8,304 | 1,738 | 1,423 | ||||||||||||
| Net income attributable to Lazard Ltd | $ | 107,209 | $ | 123,178 | $ | 75,092 | (13 | %) | 43 | % | |||||
| Attributable to Lazard Ltd Common Stockholders: | |||||||||||||||
| Weighted average shares outstanding: | |||||||||||||||
| Basic | 105,415,743 | 106,746,654 | 107,168,615 | (1 | %) | (2 | %) | ||||||||
| Diluted | 112,994,037 | 113,603,478 | 113,181,564 | (1 | %) | (0 | %) | ||||||||
| Net income per share: | |||||||||||||||
| Basic | $ | 1.00 | $ | 1.14 | $ | 0.69 | (12 | %) | 45 | % | |||||
| Diluted | $ | 0.94 | $ | 1.08 | $ | 0.66 | (13 | %) | 42 | % |
LAZARD LTD
UNAUDITED CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
(U.S. GAAP)
| Nine Months Ended | |||||||||
|---|---|---|---|---|---|---|---|---|---|
| ($ in thousands, except per share data) | September 30,<br>2021 | September 30,<br>2020 | % Change | ||||||
| Total revenue | $ | 2,260,975 | $ | 1,748,443 | 29 | % | |||
| Interest expense | (60,302 | ) | (60,459 | ) | |||||
| Net revenue | 2,200,673 | 1,687,984 | 30 | % | |||||
| Operating expenses: | |||||||||
| Compensation and benefits | 1,336,091 | 1,025,948 | 30 | % | |||||
| Occupancy and equipment | 95,638 | 94,090 | |||||||
| Marketing and business development | 25,905 | 34,265 | |||||||
| Technology and information services | 107,003 | 97,444 | |||||||
| Professional services | 51,642 | 45,974 | |||||||
| Fund administration and outsourced services | 94,718 | 76,639 | |||||||
| Amortization of intangible assets related to acquisitions | 45 | 1,359 | |||||||
| Other | 34,121 | 27,623 | |||||||
| Subtotal | 409,072 | 377,394 | 8 | % | |||||
| Operating expenses | 1,745,163 | 1,403,342 | 24 | % | |||||
| Operating income | 455,510 | 284,642 | 60 | % | |||||
| Provision for income taxes | 124,255 | 76,720 | 62 | % | |||||
| Net income | 331,255 | 207,922 | 59 | % | |||||
| Net income (loss) attributable to noncontrolling interests | 13,568 | (4,650 | ) | ||||||
| Net income attributable to Lazard Ltd | $ | 317,687 | $ | 212,572 | 49 | % | |||
| Attributable to Lazard Ltd Common Stockholders: | |||||||||
| Weighted average shares outstanding: | |||||||||
| Basic | 106,484,652 | 106,711,547 | (0 | %) | |||||
| Diluted | 114,139,936 | 112,929,830 | 1 | % | |||||
| Net income per share: | |||||||||
| Basic | $ | 2.94 | $ | 1.96 | 50 | % | |||
| Diluted | $ | 2.78 | $ | 1.88 | 48 | % |
LAZARD LTD
UNAUDITED CONDENSED CONSOLIDATED
STATEMENT OF FINANCIAL CONDITION
(U.S. GAAP)
| ( in thousands) | December 31,<br>2020 | ||||
|---|---|---|---|---|---|
| ASSETS | |||||
| Cash and cash equivalents | 1,184,772 | $ | 1,389,876 | ||
| Deposits with banks and short-term investments | 1,360,957 | 1,134,463 | |||
| Restricted cash | 615,297 | 44,488 | |||
| Receivables | 700,136 | 743,141 | |||
| Investments | 914,975 | 658,532 | |||
| Goodwill and other intangible assets | 379,847 | 384,071 | |||
| Operating lease<br>right-of-use assets | 468,524 | 513,923 | |||
| Deferred tax assets | 480,533 | 538,448 | |||
| Other assets | 621,539 | 564,919 | |||
| Total Assets | 6,726,580 | $ | 5,971,861 | ||
| LIABILITIES, REDEEMABLE NONCONTROLLING INTERESTS & STOCKHOLDERS’ EQUITY | |||||
| Liabilities | |||||
| Deposits and other customer payables | 1,450,764 | $ | 1,201,150 | ||
| Accrued compensation and benefits | 711,779 | 734,544 | |||
| Operating lease liabilities | 554,900 | 606,963 | |||
| Tax receivable agreement obligation | 211,236 | 221,451 | |||
| Senior debt | 1,684,606 | 1,682,741 | |||
| Other liabilities | 560,581 | 525,579 | |||
| Total liabilities | 5,173,866 | 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 | 110,470 | 135,439 | |||
| Retained earnings | 1,402,191 | 1,295,386 | |||
| Accumulated other comprehensive loss, net of tax | (246,534 | ) | (238,368 | ) | |
| Subtotal | 1,267,255 | 1,193,585 | |||
| Class A common stock held by subsidiaries, at cost | (389,448 | ) | (281,813 | ) | |
| Total Lazard Ltd stockholders’ equity | 877,807 | 911,772 | |||
| Noncontrolling interests | 99,907 | 87,661 | |||
| Total stockholders’ equity | 977,714 | 999,433 | |||
| Total liabilities, redeemable noncontrolling interests and stockholders’ equity | 6,726,580 | $ | 5,971,861 |
All values are in US Dollars.
LAZARD LTD
SELECTED SUMMARY FINANCIAL INFORMATION (a)
(Non-GAAP - unaudited)
| Three Months Ended | % Change From | ||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| ($ in thousands, except per share data) | September 30,<br>2021 | June 30,<br>2021 | September 30,<br>2020 | June 30,<br>2021 | September 30,<br>2020 | ||||||||||
| Revenues: | |||||||||||||||
| Financial Advisory | $ | 381,295 | $ | 471,075 | $ | 306,977 | (19 | %) | 24 | % | |||||
| Asset Management | 310,566 | 343,453 | 261,047 | (10 | %) | 19 | % | ||||||||
| Corporate | 9,783 | 6,918 | 1,023 | 41 | % | N | M | ||||||||
| Operating revenue (b) | $ | 701,644 | $ | 821,446 | $ | 569,047 | (15 | %) | 23 | % | |||||
| Expenses: | |||||||||||||||
| Adjusted compensation and benefits expense (c) | $ | 417,479 | $ | 488,760 | $ | 341,428 | (15 | %) | 22 | % | |||||
| Ratio of adjusted compensation to operating revenue | 59.5 | % | 59.5 | % | 60.0 | % | |||||||||
| Non-compensation expense (d) | $ | 116,734 | $ | 118,830 | $ | 103,081 | (2 | %) | 13 | % | |||||
| Ratio of non-compensation to operatingrevenue | 16.6 | % | 14.5 | % | 18.1 | % | |||||||||
| Earnings: | |||||||||||||||
| Earnings from operations (e) | $ | 167,431 | $ | 213,856 | $ | 124,538 | (22 | %) | 34 | % | |||||
| Operating margin (f) | 23.9 | % | 26.0 | % | 21.9 | % | |||||||||
| Adjusted net income (g) | $ | 111,398 | $ | 145,798 | $ | 76,102 | (24 | %) | 46 | % | |||||
| Diluted adjusted net income per share | $ | 0.98 | $ | 1.28 | $ | 0.67 | (23 | %) | 46 | % | |||||
| Diluted weighted average shares (h) | 113,781,092 | 114,058,944 | 113,780,625 | (0 | %) | 0 | % | ||||||||
| Effective tax rate (i) | 25.1 | % | 25.2 | % | 27.9 | % |
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)
| Nine Months Ended | |||||||||
|---|---|---|---|---|---|---|---|---|---|
| ($ in thousands, except per share data) | September 30,<br>2021 | September 30,<br>2020 | % Change | ||||||
| Revenues: | |||||||||
| Financial Advisory | $ | 1,169,670 | $ | 894,656 | 31 | % | |||
| Asset Management | 981,933 | 775,346 | 27 | % | |||||
| Corporate | 19,349 | 4,770 | N | M | |||||
| Operating revenue (b) | $ | 2,170,952 | $ | 1,674,772 | 30 | % | |||
| Expenses: | |||||||||
| Adjusted compensation and benefits expense (c) | $ | 1,291,717 | $ | 1,004,863 | 29 | % | |||
| Ratio of adjusted compensation to operating revenue | 59.5 | % | 60.0 | % | |||||
| Non-compensation expense (d) | $ | 338,044 | $ | 315,330 | 7 | % | |||
| Ratio of non-compensation to operatingrevenue | 15.6 | % | 18.8 | % | |||||
| Earnings: | |||||||||
| Earnings from operations (e) | $ | 541,191 | $ | 354,579 | 53 | % | |||
| Operating margin (f) | 24.9 | % | 21.2 | % | |||||
| Adjusted net income (g) | $ | 358,417 | $ | 217,805 | 65 | % | |||
| Diluted adjusted net income per share | $ | 3.13 | $ | 1.92 | 63 | % | |||
| Diluted weighted average shares (h) | 114,565,986 | 113,261,923 | 1 | % | |||||
| Effective tax rate (i) | 26.2 | % | 26.9 | % |
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)
($ inmillions)
| As of | Variance | |||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| September 30,<br>2021 | June 30,<br>2021 | December 31,<br>2020 | Qtr to Qtr | YTD | ||||||||||
| Equity: | ||||||||||||||
| Emerging Markets | $ | 31,316 | $ | 32,363 | $ | 33,254 | (3.2 | %) | (5.8 | %) | ||||
| Global | 58,348 | 61,874 | 56,246 | (5.7 | %) | 3.7 | % | |||||||
| Local | 54,764 | 53,917 | 48,672 | 1.6 | % | 12.5 | % | |||||||
| Multi-Regional | 74,840 | 76,405 | 71,560 | (2.0 | %) | 4.6 | % | |||||||
| Total Equity | 219,268 | 224,559 | 209,732 | (2.4 | %) | 4.5 | % | |||||||
| Fixed Income: | ||||||||||||||
| Emerging Markets | 12,917 | 13,213 | 13,651 | (2.2 | %) | (5.4 | %) | |||||||
| Global | 14,469 | 14,617 | 11,962 | (1.0 | %) | 21.0 | % | |||||||
| Local | 6,070 | 5,788 | 5,600 | 4.9 | % | 8.4 | % | |||||||
| Multi-Regional | 13,731 | 13,532 | 12,571 | 1.5 | % | 9.2 | % | |||||||
| Total Fixed Income | 47,187 | 47,150 | 43,784 | 0.1 | % | 7.8 | % | |||||||
| Alternative Investments | 3,934 | 3,529 | 2,748 | 11.5 | % | 43.2 | % | |||||||
| Private Equity | 1,288 | 1,343 | 1,420 | (4.1 | %) | (9.3 | %) | |||||||
| Cash Management | 895 | 797 | 958 | 12.3 | % | (6.6 | %) | |||||||
| Total AUM | $ | 272,572 | $ | 277,378 | $ | 258,642 | (1.7 | %) | 5.4 | % | ||||
| Three Months Ended<br>September 30 | Nine Months Ended<br>September 30, | |||||||||||||
| 2021 | 2020 | 2021 | 2020 | |||||||||||
| AUM—Beginning of Period | $ | 277,378 | $ | 214,704 | $ | 258,642 | $ | 248,239 | ||||||
| Net Flows | (2,331 | ) | (201 | ) | (4,838 | ) | (11,082 | ) | ||||||
| Market and foreign exchange appreciation (depreciation) | (2,475 | ) | 13,249 | 18,768 | (9,405 | ) | ||||||||
| AUM—End of Period | $ | 272,572 | $ | 227,752 | $ | 272,572 | $ | 227,752 | ||||||
| Average AUM | $ | 277,941 | $ | 226,046 | $ | 271,761 | $ | 218,652 | ||||||
| % Change in average AUM | 23.0 | % | 24.3 | % |
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 | Nine Months Ended | ||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| ($ in thousands, except per share data) | September 30,<br>2021 | June 30,<br>2021 | September 30,<br>2020 | September 30,<br>2021 | September 30,<br>2020 | ||||||||||
| Operating Revenue | **** | ||||||||||||||
| Net revenue—U.S. GAAP Basis | $ | 717,429 | $ | 823,137 | $ | 577,678 | $ | 2,200,673 | $ | 1,687,984 | |||||
| Adjustments: | |||||||||||||||
| Revenue related to noncontrolling interests (j) | (11,994 | ) | (5,754 | ) | (4,042 | ) | (24,109 | ) | (3,443 | ) | |||||
| (Gains) losses related to Lazard Fund Interests (“LFI”) and other similar<br>arrangements | 1,368 | (16,491 | ) | (11,261 | ) | (22,610 | ) | (15,427 | ) | ||||||
| Distribution fees, reimbursable deal costs, bad debt expense and other (k) | (23,876 | ) | (21,625 | ) | (12,016 | ) | (62,211 | ) | (50,336 | ) | |||||
| Losses associated with restructuring and closing of certain offices (l) | 51 | 23,579 | — | 23,630 | — | ||||||||||
| Interest expense | 18,666 | 18,600 | 18,688 | 55,579 | 55,994 | ||||||||||
| Operating revenue, as adjusted (b) | $ | 701,644 | $ | 821,446 | $ | 569,047 | $ | 2,170,952 | $ | 1,674,772 | |||||
| Compensation and Benefits Expense | **** | ||||||||||||||
| Compensation and benefits expense—U.S. GAAP Basis | $ | 419,627 | $ | 514,918 | $ | 354,625 | $ | 1,336,091 | $ | 1,025,948 | |||||
| Adjustments: | |||||||||||||||
| (Charges) credits pertaining to LFI and other similar arrangements | 1,368 | (16,491 | ) | (11,261 | ) | (22,610 | ) | (15,427 | ) | ||||||
| Expenses associated with restructuring and closing of certain offices (m) | (1,012 | ) | (7,287 | ) | — | (14,922 | ) | — | |||||||
| Compensation related to noncontrolling interests (j) | (2,504 | ) | (2,380 | ) | (1,936 | ) | (6,842 | ) | (5,658 | ) | |||||
| Compensation and benefits expense, as adjusted (c) | $ | 417,479 | $ | 488,760 | $ | 341,428 | $ | 1,291,717 | $ | 1,004,863 | |||||
| Non-Compensation Expense | **** | ||||||||||||||
| Non-compensation expense—Subtotal—U.S. GAAP<br>Basis | $ | 142,843 | $ | 141,958 | $ | 118,373 | $ | 409,072 | $ | 377,394 | |||||
| Adjustments: | |||||||||||||||
| Expenses related to office space reorganization (n) | (991 | ) | (1,237 | ) | (2,311 | ) | (3,644 | ) | (8,462 | ) | |||||
| Distribution fees, reimbursable deal costs, bad debt expense and other (k) | (23,876 | ) | (21,625 | ) | (12,016 | ) | (62,211 | ) | (50,336 | ) | |||||
| Amortization of intangible assets related to acquisitions | (15 | ) | (15 | ) | (458 | ) | (45 | ) | (1,359 | ) | |||||
| Income (expenses) associated with restructuring and closing of certain offices (m) | (39 | ) | 1,586 | — | (1,424 | ) | — | ||||||||
| Non-compensation expense related to noncontrolling<br>interests (j) | (1,188 | ) | (1,837 | ) | (507 | ) | (3,704 | ) | (1,907 | ) | |||||
| Non-compensation expense, as adjusted (d) | $ | 116,734 | $ | 118,830 | $ | 103,081 | $ | 338,044 | $ | 315,330 | |||||
| Pre-TaxIncome and Earnings From Operations | **** | ||||||||||||||
| Operating Income—U.S. GAAP Basis | $ | 154,959 | $ | 166,261 | $ | 104,680 | $ | 455,510 | $ | 284,642 | |||||
| Adjustments: | |||||||||||||||
| Losses associated with restructuring and closing of certain offices (l) | 51 | 23,579 | — | 23,630 | — | ||||||||||
| Expenses related to office space reorganization (n) | 991 | 1,237 | 2,311 | 3,644 | 8,462 | ||||||||||
| Expenses associated with restructuring and closing of certain offices (m) | 1,051 | 5,701 | — | 16,346 | — | ||||||||||
| Net (income) loss related to noncontrolling interests (j) | (8,304 | ) | (1,738 | ) | (1,423 | ) | (13,568 | ) | 4,650 | ||||||
| Pre-tax income, as adjusted | 148,748 | 195,040 | 105,568 | 485,562 | 297,754 | ||||||||||
| Interest expense | 18,666 | 18,600 | 18,688 | 55,579 | 55,994 | ||||||||||
| Amortization of intangible assets related to acquisitions and other | 17 | 216 | 282 | 50 | 831 | ||||||||||
| Earnings from operations, as adjusted (e) | $ | 167,431 | $ | 213,856 | $ | 124,538 | $ | 541,191 | $ | 354,579 | |||||
| Net Income attributable to Lazard Ltd | **** | ||||||||||||||
| Net income attributable to Lazard Ltd—U.S. GAAP Basis | $ | 107,209 | $ | 123,178 | $ | 75,092 | $ | 317,687 | $ | 212,572 | |||||
| Adjustments: | |||||||||||||||
| Losses associated with restructuring and closing of certain offices (l) | 51 | 23,579 | — | 23,630 | — | ||||||||||
| Expenses related to office space reorganization (n) | 991 | 1,237 | 2,311 | 3,644 | 8,462 | ||||||||||
| Expenses associated with restructuring and closing of certain offices (m) | 1,051 | 5,701 | — | 16,346 | — | ||||||||||
| Tax expense (benefit) allocated to adjustments | 2,096 | (7,897 | ) | (1,301 | ) | (2,890 | ) | (3,229 | ) | ||||||
| Net income, as adjusted (g) | $ | 111,398 | $ | 145,798 | $ | 76,102 | $ | 358,417 | $ | 217,805 | |||||
| Diluted Weighted Average SharesOutstanding | **** | ||||||||||||||
| Diluted Weighted Average Shares Outstanding—U.S. GAAP Basis | 112,994,037 | 113,603,478 | 113,181,564 | 114,139,936 | 112,929,830 | ||||||||||
| Adjustment: participating securities including profits interest participation rights | 787,055 | 455,466 | 599,061 | 426,050 | 332,093 | ||||||||||
| Diluted Weighted Average Shares Outstanding, as adjusted (h) | 113,781,092 | 114,058,944 | 113,780,625 | 114,565,986 | 113,261,923 | ||||||||||
| Diluted net income per share: | |||||||||||||||
| U.S. GAAP Basis | $ | 0.94 | $ | 1.08 | $ | 0.66 | $ | 2.78 | $ | 1.88 | |||||
| Non-GAAP Basis, as adjusted | $ | 0.98 | $ | 1.28 | $ | 0.67 | $ | 3.13 | $ | 1.92 |
This presentation includes non-GAAP measures. Our non-GAAP measures are not meant to be considered in isolation or as a substitute for comparable 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 comparable 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 | Nine Months Ended | ||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| ($ in thousands) | September 30,<br>2021 | June 30,<br>2021 | September 30,<br>2020 | September 30,<br>2021 | September 30,<br>2020 | ||||||||||
| Non-compensation expense—U.S. GAAP Basis: | |||||||||||||||
| Occupancy and equipment | $ | 31,015 | $ | 29,875 | $ | 31,318 | $ | 95,638 | $ | 94,090 | |||||
| Marketing and business development | 9,922 | 9,332 | 7,562 | 25,905 | 34,265 | ||||||||||
| Technology and information services | 37,559 | 35,774 | 33,457 | 107,003 | 97,444 | ||||||||||
| Professional services | 16,698 | 19,996 | 14,701 | 51,642 | 45,974 | ||||||||||
| Fund administration and outsourced services | 34,137 | 31,302 | 26,196 | 94,718 | 76,639 | ||||||||||
| Amortization of intangible assets related to acquisitions | 15 | 15 | 458 | 45 | 1,359 | ||||||||||
| Other | 13,497 | 15,664 | 4,681 | 34,121 | 27,623 | ||||||||||
| Non-compensation expense—Subtotal—U.S. GAAP<br>Basis | $ | 142,843 | $ | 141,958 | $ | 118,373 | $ | 409,072 | $ | 377,394 | |||||
| Non-compensation expense—Adjustments: | |||||||||||||||
| Occupancy and equipment (j) (m) (n) | ($ | 1,106 | ) | $ | 788 | ($ | 2,278 | ) | ($ | 4,503 | ) | ($ | 8,459 | ) | |
| Marketing and business development (j) (k) (m) | (1,261 | ) | (1,247 | ) | (185 | ) | (2,713 | ) | (3,631 | ) | |||||
| Technology and information services (j) (k) (m) | (72 | ) | (88 | ) | (169 | ) | (174 | ) | (771 | ) | |||||
| Professional services (j) (k) (m) (n) | (1,143 | ) | (2,054 | ) | (2,269 | ) | (4,658 | ) | (5,705 | ) | |||||
| Fund administration and outsourced services (j) (k) | (19,669 | ) | (16,826 | ) | (13,593 | ) | (51,765 | ) | (35,842 | ) | |||||
| Amortization of intangible assets related to acquisitions | (15 | ) | (15 | ) | (458 | ) | (45 | ) | (1,359 | ) | |||||
| Other (j) (k) (m) (n) | (2,843 | ) | (3,686 | ) | 3,660 | (7,170 | ) | (6,297 | ) | ||||||
| Subtotal Non-compensation adjustments | ($ | 26,109 | ) | ($ | 23,128 | ) | ($ | 15,292 | ) | ($ | 71,028 | ) | ($ | 62,064 | ) |
| Non-compensation expense, as adjusted: | |||||||||||||||
| Occupancy and equipment | $ | 29,909 | $ | 30,663 | $ | 29,040 | $ | 91,135 | $ | 85,631 | |||||
| Marketing and business development | 8,661 | 8,085 | 7,377 | 23,192 | 30,634 | ||||||||||
| Technology and information services | 37,487 | 35,686 | 33,288 | 106,829 | 96,673 | ||||||||||
| Professional services | 15,555 | 17,942 | 12,432 | 46,984 | 40,269 | ||||||||||
| Fund administration and outsourced services | 14,468 | 14,476 | 12,603 | 42,953 | 40,797 | ||||||||||
| Amortization of intangible assets related to acquisitions | — | — | — | — | — | ||||||||||
| Other | 10,654 | 11,978 | 8,341 | 26,951 | 21,326 | ||||||||||
| Non-compensation expense, as adjusted (d) | $ | 116,734 | $ | 118,830 | $ | 103,081 | $ | 338,044 | $ | 315,330 |
This presentation includes non-GAAP measures. Our non-GAAP measures are not meant to be considered in isolation or as a substitute for comparable 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 comparable U.S. GAAP measures, 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<br>across periods. |
|---|
| (b) A non-GAAP measure which<br>excludes (i) revenue related to noncontrolling interests (see (j) below), (ii) (gains) losses related to the changes in the fair value of investments held in connection with Lazard Fund Interests and other similar deferred compensation<br>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<br>expense, and other (see (k) below), (iv) for the three and nine month periods ended September 30, 2021 and for the three month period ending June 30, 2021, losses associated with restructuring and closing of certain offices (see<br>(l) below), and (v) interest expense primarily related to corporate financing activities. |
| (c) A non-GAAP measure which<br>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 and nine month<br>periods ended September 30, 2021 and for the three month period ended June 30, 2021, expenses associated with restructuring and closing of certain offices (see (m) below), and (iii) compensation and benefits related to<br>noncontrolling interests (see (j) below). |
| (d) A non-GAAP measure which<br>excludes (i) expenses related to office space reorganization (see (n) below), (ii) expenses related to distribution fees, reimbursable deal costs in accordance with the revenue recognition guidance, bad debt expense, and other (see<br>(k) below), (iii) amortization of intangible assets related to acquisitions, (iv) for the three and nine month periods ended September 30, 2021 and for the three month period ended June 30, 2021, income (expenses) associated with<br>restructuring and closing of certain offices (see (m) below), and (v) expenses related to noncontrolling interests (see (j) below). |
| (e) A non-GAAP measure which<br>excludes (i) for the three and nine month periods ended September 30, 2021 and for the three month period ended June 30, 2021, losses associated with restructuring and closing of certain offices (see (l) below), (ii) expenses<br>related to office space reorganization (see (n) below), (iii) for the three and nine month periods ended September 30, 2021 and for the three month period ended June 30, 2021, expenses associated with restructuring and closing of<br>certain offices (see (m) below), (iv) net revenue and expenses related to noncontrolling interests (see (j) below), (v) interest expense primarily related to corporate financing activities, and (iv) amortization of intangible assets<br>related to acquisitions. |
| (f) Represents earnings from operations as a percentage of operating<br>revenue, and is a non-GAAP measure. |
| (g) A non-GAAP measure which<br>excludes (i) for the three and nine month periods ended September 30, 2021 and for the three month period ended June 30, 2021, losses associated with restructuring and closing of certain offices (see (l) below), (ii) expenses<br>related to office space reorganization (see (n) below), and (iii) for the three and nine month periods ended September 30, 2021 and for the three month period ended June 30, 2021, expenses associated with restructuring and<br>closing of certain offices (see (m) below), net of tax expense (benefits). |
| (h) A non-GAAP measure which<br>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<br>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<br>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<br>adjustments. The computation is based on a quotient, the numerator of which is the provision for income taxes of $37,350, $49,242, and $29,466 for the three month periods ended September 30, 2021, June 30, 2021, and September 30,<br>2020, respectively, $127,145 and $79,949 for the nine month periods ended September 30, 2021 and 2020 and the denominator of which is pre-tax income of $148,748, $195,040 and $105,568 for the three month<br>periods ended September 30, 2021, June 30, 2021, and September 30, 2020, respectively, $485,562 and $297,754 for the nine month periods ended September 30, 2021 and 2020. |
| (j) Noncontrolling interests include revenue and expenses principally related to<br>Edgewater, ESC Funds and a Special Purpose Acquisition Company. |
| (k) Represents certain distribution, introducer and management fees paid to<br>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<br>excludes bad debt expense, which represents fees that are deemed uncollectible. |
| (l) Represents losses related to the reclassification of currency translation adjustments<br>to earnings from accumulated other comprehensive loss associated with restructuring and closing of certain of our offices. |
| (m) Expenses associated with restructuring and closing of certain offices. |
| (n) Represents incremental rent expense, building depreciation, impairment<br>losses, and legal fees related to office space reorganization. |
| NM Not meaningful |