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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549



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FORM 10-Q



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(Mark One)



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



For the quarterly period ended March 31, 2009



OR



| ̈ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|- | ----------------------------------------------------------------------------------------



For the transition period from
 to



333-126751

(Commission File Number)



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LAZARD GROUP LLC

(Exact name of
registrant as specified in its charter)



|                                              |  |                                     
|--------------------------------------------- |  | ------------------------------------
|Delaware                                      |  | 51-0278097                          
|(State or Other Jurisdiction of Incorporation |  | (I.R.S. Employer Identification No.)
|or Organization)                              |  |                                     



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30 Rockefeller Plaza

New York, NY 10020

(Address of principal executive offices)



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



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Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934
during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes  x    No   ̈



Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File
required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such
files).    Yes   ̈    No   ̈



Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company.
See the definitions of large accelerated filer, accelerated filer and smaller reporting company in Rule 12b-2 of the Exchange Act.



| |  |                            |  |                              |  | 
| |  | -------------------------- |  | ---------------------------- |  | 
| |  | Large Accelerated Filer   ̈ |  | Accelerated Filer   ̈         |  | 
| |  | Non-Accelerated Filer  x   |  | Smaller Reporting Company   ̈ |  | 



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



As of April 30, 2009, in addition to profit participation
interests, there were 122,233,664 common membership interests and two managing member interests outstanding.



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TABLE OF CONTENTS



When we use the terms Lazard Group, Lazard, we, us, our, and the
Company, we mean Lazard Group LLC (formerly named Lazard LLC), a Delaware limited liability company that is the current holding company for the subsidiaries that conduct our businesses. Lazard Ltd is a Bermuda exempt company whose shares of
Class A common stock are publicly traded on the New York Stock Exchange under the symbol LAZ. Lazard Ltds subsidiaries include Lazard Group and their respective subsidiaries. Lazard Ltd has no material assets other than indirect
ownership as of March 31, 2009 of approximately 62.6% of the common membership interests in Lazard Group. Lazard Ltd controls Lazard Group through two of its indirect wholly-owned subsidiaries who are co-managing members of Lazard Group.



Lazard Group has two primary holders of its common membership
interests: Lazard Ltd and LAZ-MD Holdings LLC (LAZ-MD Holdings), a holding company that is owned by current and former managing directors of Lazard Group. The Lazard Group common membership interests held by LAZ-MD Holdings are
effectively exchangeable over time on a one-for-one basis with Lazard Ltd for shares of Lazard Ltds Class A common stock. In addition, Lazard Group has granted profit participation interests in Lazard Group to certain of its managing directors
in connection with the recapitalization of Lazard Group at the time of Lazard Ltds equity public offering. The profit participation interests are discretionary profits interests that are intended to enable Lazard Group to compensate its
managing directors in a manner consistent with historical practices.



Please note that, pursuant to Rule 405 of Regulation S-T, Lazard Group is not required to file with the U.S. Securities and Exchange Commission, or post to its corporate Web site, any Interactive Data File prior to June 15, 2011.



|                                                                                               |  |     
|---------------------------------------------------------------------------------------------- |  | ----
|                                                                                               |  | Page
|Part I. Financial Information                                                                  |  |     
|                                                                                               | 
|Item 1. Financial Statements (Unaudited)                                                       |  | 1   
|                                                                                               | 
|Item 2. Managements Discussion and Analysis of Financial Condition and 
Results of Operations |  | 31  
|                                                                                               | 
|Item 3. Quantitative and Qualitative Disclosures About Market Risk                             |  | 62  
|                                                                                               | 
|Item 4. Controls and Procedures                                                                |  | 62  
|                                                                                               | 
|Part II. Other Information                                                                     |  |     
|                                                                                               | 
|Item 1. Legal Proceedings                                                                      |  | 63  
|                                                                                               | 
|Item 1A. Risk Factors                                                                          |  | 63  
|                                                                                               | 
|Item 2. Unregistered Sales of Equity Securities and Use of Proceeds                            |  | 63  
|                                                                                               | 
|Item 3. Defaults Upon Senior Securities                                                        |  | 63  
|                                                                                               | 
|Item 4. Submission of Matters to a Vote of Security Holders                                    |  | 63  
|                                                                                               | 
|Item 5. Other Information                                                                      |  | 63  
|                                                                                               | 
|Item 6. Exhibits                                                                               |  | 63  
|                                                                                               | 
|Signatures                                                                                     |  | 69  



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PART I. FINANCIAL INFORMATION



|Item 1. | Financial Statements (Unaudited)
|------- | --------------------------------



|                                                                                                                |  |     
|--------------------------------------------------------------------------------------------------------------- |  | ----
|                                                                                                                |  | Page
|Condensed Consolidated Statements of Financial Condition as of March 31, 2009 and December 31, 2008             |  | 2   
|Condensed Consolidated Statements of Operations for the three month periods endedMarch 31, 2009 and
2008        |  | 4   
|Condensed Consolidated Statements of Cash Flows for the three month periods endedMarch 31, 2009 and
2008        |  | 5   
|Condensed Consolidated Statement of Changes in Members Equity for the three month period ended 
March 31, 2009 |  | 6   
|Notes to Condensed Consolidated Financial Statements                                                            |  | 7   



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LAZARD GROUP LLC



CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION

MARCH 31, 2009 AND DECEMBER 31, 2008

(UNAUDITED)

(dollars in thousands)



|                                                                                                                                                    |  |               |           |                  |   |          
|--------------------------------------------------------------------------------------------------------------------------------------------------- |  | ------------- | --------- | ---------------- | - | ---------
|                                                                                                                                                    |  | March 31,2009 |           | December 31,2008
|ASSETS                                                                                                                                              |  |               |           |                  |   |          
|Cash and cash equivalents                                                                                                                           |  | $             | 795,932   |                  | $ | 907,278  
|Cash segregated for regulatory purposes or deposited with clearing organizations                                                                    |  |               | 12,396    |                  |   | 14,583   
|                                                                                                                                                    |  |              
|Receivablesnet:                                                                                                                                    |  |               |           |                  |   |          
|Banks                                                                                                                                               |  |               | 15,922    |                  |   | 229,092  
|Fees                                                                                                                                                |  |               | 289,087   |                  |   | 391,251  
|Customers and other                                                                                                                                 |  |               | 86,423    |                  |   | 81,806   
|Related parties                                                                                                                                     |  |               | 65,101    |                  |   | 66,491   
|                                                                                                                                                    |  |               |           |                  |   |          
|                                                                                                                                                    |  |               | 456,533   |                  |   | 768,640  
|Investments:                                                                                                                                        |  |               |           |                  |   |          
|Debt                                                                                                                                                |  |               | 296,041   |                  |   | 333,070  
|Equities                                                                                                                                            |  |               | 50,662    |                  |   | 71,105   
|Other                                                                                                                                               |  |               | 212,228   |                  |   | 215,792  
|                                                                                                                                                    |  |               |           |                  |   |          
|                                                                                                                                                    |  |               | 558,931   |                  |   | 619,967  
|Property (net of accumulated amortization and depreciation of $212,991 and $213,249 at March 31, 2009 and December 31, 2008, respectively)          |  |               | 161,745   |                  |   | 171,443  
|                                                                                                                                                    |  |              
|Goodwill and other intangible assets (net of accumulated amortization of $26,463 and $26,119 at March 31, 2009 and December 31, 2008,
respectively) |  |               | 177,717   |                  |   | 175,144  
|Other assets                                                                                                                                        |  |               | 228,770   |                  |   | 228,527  
|                                                                                                                                                    |  |               |           |                  |   |          
|Total assets                                                                                                                                        |  | $             | 2,392,024 |                  | $ | 2,885,582
|                                                                                                                                                    |  |               |           |                  |   |          



See notes to condensed
consolidated financial statements.



2



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LAZARD GROUP LLC



CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION(Continued)

MARCH 31, 2009 AND DECEMBER 31, 2008

(UNAUDITED)

(dollars in thousands)



|                                                                                                                                                                                   |  |               |           |   |                  |   |           |  
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ------------- | --------- | - | ---------------- | - | --------- | -
|                                                                                                                                                                                   |  | March 31,2009 |           |   | December 31,2008 |  
|LIABILITIES AND MEMBERS EQUITY                                                                                                                                                    |  |               |           |   |                  |   |           |  
|Liabilities:                                                                                                                                                                       |  |               |           |   |                  |   |           |  
|Deposits and other customer payables                                                                                                                                               |  | $             | 317,448   |   |                  | $ | 541,784   |  
|Accrued compensation and benefits                                                                                                                                                  |  |               | 91,441    |   |                  |   | 203,750   |  
|Senior debt                                                                                                                                                                        |  |               | 1,086,850 |   |                  |   | 1,087,750 |  
|Capital lease obligations                                                                                                                                                          |  |               | 24,926    |   |                  |   | 26,825    |  
|Related party payables                                                                                                                                                             |  |               | 262,984   |   |                  |   | 263,975   |  
|Other liabilities                                                                                                                                                                  |  |               | 444,255   |   |                  |   | 484,988   |  
|Subordinated debt                                                                                                                                                                  |  |               | 150,000   |   |                  |   | 150,000   |  
|                                                                                                                                                                                   |  |               |           |   |                  |   |           |  
|Total liabilities                                                                                                                                                                  |  |               | 2,377,904 |   |                  |   | 2,759,072 |  
|Commitments and contingencies                                                                                                                                                      |  |               |           |   |                  |   |           |  
|                                                                                                                                                                                   |  |              
|MEMBERS EQUITY                                                                                                                                                                    |  |               |           |   |                  |   |           |  
|Members equity (net of 9,534,578 and 9,376,162 shares of Lazard Ltd Class A common stock, at cost of $323,768 and $321,852 at March 31,
2009 and December 31, 2008, respectively) |  |               | 149,578   |   |                  |   | 227,036   |  
|Accumulated other comprehensive loss, net of tax                                                                                                                                   |  |               | (149,924  | ) |                  |   | (121,407  | )
|                                                                                                                                                                                   |  |               |           |   |                  |   |           |  
|Total Lazard Group members equity (deficiency)                                                                                                                                    |  |               | (346      | ) |                  |   | 105,629   |  
|Noncontrolling interests                                                                                                                                                           |  |               | 14,466    |   |                  |   | 20,881    |  
|                                                                                                                                                                                   |  |               |           |   |                  |   |           |  
|Total members equity                                                                                                                                                              |  |               | 14,120    |   |                  |   | 126,510   |  
|                                                                                                                                                                                   |  |               |           |   |                  |   |           |  
|Total liabilities and members equity                                                                                                                                              |  | $             | 2,392,024 |   |                  | $ | 2,885,582 |  
|                                                                                                                                                                                   |  |               |           |   |                  |   |           |  



See notes to condensed
consolidated financial statements.



3



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LAZARD GROUP LLC



CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

FOR THE THREE MONTH PERIODS ENDED MARCH 31, 2009 AND 2008

(UNAUDITED)

(dollars in thousands)



|                                                                  |  |                             |         |   |      |   |         |  
|----------------------------------------------------------------- |  | --------------------------- | ------- | - | ---- | - | ------- | -
|                                                                  |  | Three Months EndedMarch 31, |        
|                                                                  |  | 2009                        |         |   | 2008 |  
|REVENUE                                                           |  |                             |         |   |      |   |         |  
|Investment banking and other advisory fees                        |  | $                           | 161,402 |   |      | $ | 196,724 |  
|Money management fees                                             |  |                             | 98,943  |   |      |   | 158,082 |  
|Interest income                                                   |  |                             | 8,293   |   |      |   | 22,390  |  
|Other                                                             |  |                             | 8,034   |   |      |   | (30,992 | )
|                                                                  |  |                             |         |   |      |   |         |  
|Total revenue                                                     |  |                             | 276,672 |   |      |   | 346,204 |  
|Interest expense                                                  |  |                             | 28,805  |   |      |   | 38,696  |  
|                                                                  |  |                             |         |   |      |   |         |  
|Net revenue                                                       |  |                             | 247,867 |   |      |   | 307,508 |  
|                                                                  |  |                             |         |   |      |   |         |  
|OPERATING EXPENSES                                                |  |                             |         |   |      |   |         |  
|Compensation and benefits                                         |  |                             | 203,532 |   |      |   | 193,559 |  
|Occupancy and equipment                                           |  |                             | 20,094  |   |      |   | 29,494  |  
|Marketing and business development                                |  |                             | 13,453  |   |      |   | 20,457  |  
|Technology and information services                               |  |                             | 15,922  |   |      |   | 16,241  |  
|Professional services                                             |  |                             | 7,836   |   |      |   | 12,952  |  
|Fund administration and outsourced services                       |  |                             | 7,746   |   |      |   | 6,570   |  
|Restructuring                                                     |  |                             | 62,550  |   |      |   |        |  
|Other                                                             |  |                             | 7,642   |   |      |   | 10,438  |  
|                                                                  |  |                             |         |   |      |   |         |  
|Total operating expenses                                          |  |                             | 338,775 |   |      |   | 289,711 |  
|                                                                  |  |                             |         |   |      |   |         |  
|OPERATING INCOME (LOSS)                                           |  |                             | (90,908 | ) |      |   | 17,797  |  
|                                                                  |  |                            
|Provision (benefit) for income taxes                              |  |                             | (4,554  | ) |      |   | 4,337   |  
|                                                                  |  |                             |         |   |      |   |         |  
|NET INCOME (LOSS)                                                 |  |                             | (86,354 | ) |      |   | 13,460  |  
|                                                                  |  |                            
|LESS - NET INCOME (LOSS) ATTRIBUTABLE TO NONCONTROLLING INTERESTS |  |                             | (1,071  | ) |      |   | (3,254  | )
|                                                                  |  |                             |         |   |      |   |         |  
|NET INCOME (LOSS) ATTRIBUTABLE TO LAZARD GROUP                    |  | $                           | (85,283 | ) |      | $ | 16,714  |  
|                                                                  |  |                             |         |   |      |   |         |  



See notes to condensed
consolidated financial statements.



4



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LAZARD GROUP LLC



CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

FOR THE THREE MONTH PERIODS ENDED MARCH 31, 2009 AND 2008

(UNAUDITED)

(dollars in thousands)



|                                                                                                   |  |                             |          |   |      |   |           |  
|-------------------------------------------------------------------------------------------------- |  | --------------------------- | -------- | - | ---- | - | --------- | -
|                                                                                                   |  | Three Months EndedMarch 31, |         
|                                                                                                   |  | 2009                        |          |   | 2008 |  
|CASH FLOWS FROM OPERATING ACTIVITIES:                                                              |  |                             |          |   |      |   |           |  
|Net income (loss)                                                                                  |  | $                           | (86,354  | ) |      | $ | 13,460    |  
|Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities: |  |                             |          |   |      |   |           |  
|Noncash charges included in net income (loss):                                                     |  |                             |          |   |      |   |           |  
|Depreciation and amortization of property and intangible assets                                    |  |                             | 6,035    |   |      |   | 6,379     |  
|Amortization of deferred expenses, stock units and interest rate hedge                             |  |                             | 91,207   |   |      |   | 57,841    |  
|Gain on extinguishment of debt                                                                     |  |                             | (258     | ) |      |   |          |  
|(Increase) decrease in operating assets:                                                           |  |                             |          |   |      |   |           |  
|Cash segregated for regulatory purposes or deposited with clearing organizations                   |  |                             | 1,517    |   |      |   | 10,800    |  
|Receivables-net                                                                                    |  |                             | 285,603  |   |      |   | 96,141    |  
|Investments                                                                                        |  |                             | 35,470   |   |      |   | 313,829   |  
|Other assets                                                                                       |  |                             | (1,606   | ) |      |   | (25,870   | )
|Increase (decrease) in operating liabilities:                                                      |  |                             |          |   |      |   |           |  
|Deposits and other payables                                                                        |  |                             | (202,186 | ) |      |   | (147,095  | )
|Accrued compensation and benefits and other liabilities                                            |  |                             | (135,978 | ) |      |   | (393,797  | )
|                                                                                                   |  |                             |          |   |      |   |           |  
|Net cash used in operating activities                                                              |  |                             | (6,550   | ) |      |   | (68,312   | )
|                                                                                                   |  |                             |          |   |      |   |           |  
|CASH FLOWS FROM INVESTING ACTIVITIES:                                                              |  |                             |          |   |      |   |           |  
|Acquisition of joint venture interest and other equity method investments                          |  |                             | (1,780   | ) |      |   | (74,820   | )
|Additions to property                                                                              |  |                             | (2,558   | ) |      |   | (3,186    | )
|Disposals of property                                                                              |  |                             | 916      |   |      |   | 31        |  
|Purchases of available-for-sale securities                                                         |  |                             | (3,249   | ) |      |   | (61,393   | )
|Proceeds from available-for-sale securities                                                        |  |                             | 430      |   |      |   | 3,050     |  
|                                                                                                   |  |                             |          |   |      |   |           |  
|Net cash used in investing activities                                                              |  |                             | (6,241   | ) |      |   | (136,318  | )
|                                                                                                   |  |                             |          |   |      |   |           |  
|CASH FLOWS FROM FINANCING ACTIVITIES:                                                              |  |                             |          |   |      |   |           |  
|Proceeds from:                                                                                     |  |                             |          |   |      |   |           |  
|Short-term borrowings-net                                                                          |  |                             |         |   |      |   | 10,298    |  
|Other financing activities                                                                         |  |                             |         |   |      |   | 339       |  
|Payments for:                                                                                      |  |                             |          |   |      |   |           |  
|Senior borrowings                                                                                  |  |                             | (635     | ) |      |   |          |  
|Capital lease obligations                                                                          |  |                             | (838     | ) |      |   | (778      | )
|Distributions to noncontrolling interests                                                          |  |                             | (5,344   | ) |      |   | (3,888    | )
|Repurchase of Lazard Ltd Class A common stock                                                      |  |                             | (5,629   | ) |      |   | (116,851  | )
|Distribution to members                                                                            |  |                             | (78,669  | ) |      |   | (20,723   | )
|Settlement of vested RSUs and DSUs                                                                 |  |                             | (1,950   | ) |      |   | (712      | )
|                                                                                                   |  |                             |          |   |      |   |           |  
|Net cash used in financing activities                                                              |  |                             | (93,065  | ) |      |   | (132,315  | )
|                                                                                                   |  |                             |          |   |      |   |           |  
|EFFECT OF EXCHANGE RATE CHANGES ON CASH                                                            |  |                             | (5,490   | ) |      |   | (1,081    | )
|                                                                                                   |  |                             |          |   |      |   |           |  
|NET DECREASE IN CASH AND CASH EQUIVALENTS                                                          |  |                             | (111,346 | ) |      |   | (338,026  | )
|CASH AND CASH EQUIVALENTSJanuary 1                                                                |  |                             | 907,278  |   |      |   | 1,000,573 |  
|                                                                                                   |  |                             |          |   |      |   |           |  
|CASH AND CASH EQUIVALENTSMarch 31                                                                 |  | $                           | 795,932  |   |      | $ | 662,547   |  
|                                                                                                   |  |                             |          |   |      |   |           |  



See notes to condensed
consolidated financial statements.



5



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LAZARD GROUP LLC



CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN MEMBERS EQUITY

FOR THE THREE MONTH PERIOD ENDED MARCH 31, 2009

(UNAUDITED)

(dollars in thousands)



|                                                                            |  |                |   |  |                                                |   |  |                                               |   |  |                         |   |  |                      |  
|--------------------------------------------------------------------------- |  | -------------- | - |  | ---------------------------------------------- | - |  | --------------------------------------------- | - |  | ----------------------- | - |  | -------------------- | -
|                                                                            |  | MembersEquity |   |  | Accumulated OtherComprehensiveLoss, Net of Tax |   |  | Total Lazard GroupMembers Equity(Deficiency) |   |  | NoncontrollingInterests |   |  | Total MembersEquity |  
|BalanceJanuary 1, 2009(*)                                                  |  | $227,036       |   |  | $(121,407)                                     |   |  | $105,629                                      |   |  | $20,881                 |   |  | $126,510             |  
|                                                                            |  |                |   |  |                                                |   |  |                                               |   |  |                         |   |  |                      |  
|Comprehensive loss:                                                         |  |                |   |  |                                                |   |  |                                               |   |  |                         |   |  |                      |  
|Net loss                                                                    |  | (85,283        | ) |  |                                                |   |  | (85,283                                       | ) |  | (1,071                  | ) |  | (86,354              | )
|Other comprehensive income (loss) - net of tax:                             |  |                |   |  |                                                |   |  |                                               |   |  |                         |   |  |                      |  
|Currency translation adjustments                                            |  |                |   |  | (19,649                                        | ) |  | (19,649                                       | ) |  |                         |   |  | (19,649              | )
|Amortization of interest rate hedge                                         |  |                |   |  | 270                                            |   |  | 270                                           |   |  |                         |   |  | 270                  |  
|Available-for-sale securities:                                              |  |                |   |  |                                                |   |  |                                               |   |  |                         |   |  |                      |  
|Net unrealized loss                                                         |  |                |   |  | (9,289                                         | ) |  | (9,289                                        | ) |  |                         |   |  | (9,289               | )
|Adjustments for items reclassified to earnings                              |  |                |   |  | 254                                            |   |  | 254                                           |   |  |                         |   |  | 254                  |  
|Employee benefit plans:                                                     |  |                |   |  |                                                |   |  |                                               |   |  |                         |   |  |                      |  
|Adjustments for items reclassified to earnings                              |  |                |   |  | (103                                           | ) |  | (103                                          | ) |  |                         |   |  | (103                 | )
|                                                                            |  |                |   |  |                                                |   |  |                                               |   |  |                         |   |  |                      |  
|Comprehensive loss                                                          |  |                |   |  |                                                |   |  | (113,800                                      | ) |  | (1,071                  | ) |  | (114,871             | )
|                                                                            |  |                |   |  |                                                |   |  |                                               |   |  |                         |   |  |                      |  
|Amortization of stock units                                                 |  | 88,687         |   |  |                                                |   |  | 88,687                                        |   |  |                         |   |  | 88,687               |  
|Distributions to members and noncontrolling interests                       |  | (78,669        | ) |  |                                                |   |  | (78,669                                       | ) |  | (5,344                  | ) |  | (84,013              | )
|Purchase of Lazard Ltd Class A common stock                                 |  | (5,629         | ) |  |                                                |   |  | (5,629                                        | ) |  |                         |   |  | (5,629               | )
|Delivery of Lazard Ltd Class A common stock for settlement of vested RSUs   |  | (1,950         | ) |  |                                                |   |  | (1,950                                        | ) |  |                         |   |  | (1,950               | )
|Adjustments related to prior business acquisitions and related amortization |  | 5,386          |   |  |                                                |   |  | 5,386                                         |   |  |                         |   |  | 5,386                |  
|                                                                            |  |                |   |  |                                                |   |  |                                               |   |  |                         |   |  |                      |  
|BalanceMarch 31, 2009(*)                                                   |  | $149,578       |   |  | $(149,924)                                     |   |  | $(346)                                        |   |  | $14,466                 |   |  | $14,120              |  
|                                                                            |  |                |   |  |                                                |   |  |                                               |   |  |                         |   |  |                      |  



|(*) | Includes 122,233,664 common membership interests at January 1, 2009 and March 31, 2009. Also includes profit participation interests and two managing member interests at each such
date.
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



See notes to condensed consolidated
financial statements.



6



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##### Table of Contents

LAZARD GROUP LLC



NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

(dollars in thousands,
unless otherwise noted)



|1. | ORGANIZATION AND BASIS OF PRESENTATION
|-- | --------------------------------------



Organization



The accompanying condensed consolidated financial statements are those of Lazard Group LLC and subsidiaries (formerly known as Lazard LLC and collectively
referred to with its subsidiaries as Lazard Group or the Company). Lazard Group is a Delaware limited liability company and is governed by an Operating Agreement dated as of May 10, 2005, as amended (the Operating
Agreement).



Lazard Ltd, a Bermuda holding company,
through its subsidiaries held approximately 62.6% and 62.4% of all outstanding Lazard Group common membership interests as of March 31, 2009 and December 31, 2008, respectively. Lazard Ltd, through its control of the managing members of Lazard
Group, controls Lazard Group.



Lazard Ltd, including its
indirect investment in Lazard Group, is a preeminent international financial advisory and asset management firm that has long specialized in crafting solutions to the complex financial and strategic challenges of our clients. We serve a diverse set
of clients around the world, including corporations, partnerships, institutions, governments and high net worth individuals.



LAZ-MD Holdings LLC (LAZ-MD Holdings), an entity owned by Lazard Groups current and former managing directors, held approximately 37.4%
and 37.6% of the outstanding Lazard Group common membership interests as of March 31, 2009 and December 31, 2008, respectively. Subject to certain limitations, LAZ-MD Holdings interests in Lazard Group are exchangeable for Lazard Ltd
Class A common stock, par value $0.01 per share (Class A common stock).



Lazard Groups principal operating activities are included in two business segments:



| |  |  | Financial Advisory, which includes providing advice on mergers and acquisitions (M&A) and strategic advisory matters, restructurings and capital
structure advisory services, capital raising and other transactions, and
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Asset Management, which includes the management of equity and fixed income securities and alternative investment and private equity funds.
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------



In addition, the Company records selected
other activities in its Corporate segment, including management of cash, certain investments and the commercial banking activities of Lazard Groups Paris-based Lazard Frères Banque SA (LFB). LFB is a registered bank
regulated by the Banque de France and its primary operations include asset and liability management for Lazard Groups businesses in France through its money market desk and commercial banking operations, deposit taking and, to a lesser extent,
financing activities and custodial oversight over assets of various clients. The Company also allocates outstanding indebtedness to its Corporate segment.



Basis of Presentation



The accompanying condensed consolidated financial statements of Lazard Group have been prepared pursuant to the rules and regulations of the U.S.
Securities and Exchange Commission (the SEC) regarding interim financial reporting. Accordingly, they do not include all of the information and notes required by accounting principles generally accepted in the United States of America
(U.S. GAAP) for complete financial statements and should be read in conjunction with the audited consolidated financial statements and notes thereto included in Lazard Groups annual report on Form 10-K for the year ended
December 31, 2008 (the Form 10-K). The accompanying December 31,



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##### Table of Contents

LAZARD GROUP LLC



NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS(Continued)

(UNAUDITED)

(dollars in thousands,
unless otherwise noted)



2008 unaudited condensed consolidated statement of financial condition data was derived from audited consolidated financial statements, but does not include
all disclosures required by U.S. GAAP for annual financial statement purposes. The accompanying condensed consolidated financial statements reflect all adjustments, which are, in the opinion of management, necessary for a fair presentation of the
financial position, results of operations and cash flows for the interim periods presented. Preparing financial statements requires management to make estimates and assumptions that affect the amounts that are reported in the financial statements
and the accompanying disclosures. Although these estimates are based on managements knowledge of current events and actions that Lazard may undertake in the future, actual results may differ materially from the estimates. The consolidated
results of operations for the three month period ended March 31, 2009 are not necessarily indicative of the results to be expected for any future period or the full fiscal year.



The condensed consolidated financial statements include Lazard Group and Lazard Groups principal operating
subsidiaries: Lazard Frères & Co. LLC (LFNY), a New York limited liability company, along with its subsidiaries, including Lazard Asset Management LLC and its subsidiaries (collectively referred to as LAM); its
French limited liability companies Compagnie Financière Lazard Frères SAS (CFLF) along with its subsidiaries, LFB and Lazard Frères Gestion SAS (LFG), and Maison Lazard SAS; and Lazard & Co., Limited
(LCL), through Lazard & Co., Holdings Limited, an English private limited company (LCH), together with their jointly owned affiliates and subsidiaries.



The Companys policy is to consolidate (i) entities in which it has a controlling financial interest, (ii) variable
interest entities (VIEs) where the Company has a variable interest and is deemed to be the primary beneficiary and (iii) limited partnerships where the Company is the general partner, unless the presumption of control is overcome. When
the Company does not have a controlling interest in an entity, but exerts significant influence over the entitys operating and financial decisions, the Company applies the equity method of accounting under Accounting Principles Board Opinion
No. 18, The Equity Method of Accounting for Investments in Common Stock (APB Opinion No. 18). All material intercompany transactions and balances have been eliminated.



Certain prior period amounts have been reclassified to conform
to the manner of presentation in the current period, including those amounts pertaining to noncontrolling (minority) interests in subsidiaries as required by Statement of Financial Accounting Standards (SFAS) No. 160,
Noncontrolling Interests in Consolidated Financial Statementsan amendment of ARB No. 51 (SFAS No. 160) (see Note 2 of Notes to Condensed Consolidated Financial Statements).



|2. | RECENT ACCOUNTING DEVELOPMENTS
|-- | ------------------------------



On January 1, 2009, the Company adopted SFAS No. 141 (revised 2007), Business Combinations (SFAS
No. 141(R)), the provisions of which are applicable on a prospective basis. SFAS No. 141(R) replaces SFAS No. 141, Business Combinations (SFAS No. 141), and supersedes or amends other related
authoritative literature although it retains the fundamental requirements in SFAS No. 141 that the acquisition method of accounting (which SFAS No. 141 called the purchase method) be used for all business combinations and for an
acquirer to be identified for each business combination. SFAS No. 141(R) also establishes principles and requirements for how the acquirer (a) recognizes and measures in its financial statements the identifiable assets acquired, the
liabilities assumed and any noncontrolling interest in an acquiree; (b) recognizes and measures the goodwill acquired in a business combination or a gain from a bargain purchase; and (c) determines what information to disclose to enable
users of the financial statements to evaluate the nature and financial effects of a business combination. SFAS No. 141(R) also requires the acquirer to expense, as incurred, costs relating to any acquisitions. The adoption of SFAS No. 141(R) on
January 1, 2009 did not have any impact on the Companys consolidated financial statements but may have an impact in the future to the extent the Company enters into a business combination.



8



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##### Table of Contents

LAZARD GROUP LLC



NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS(Continued)

(UNAUDITED)

(dollars in thousands,
unless otherwise noted)





On January 1, 2008,
the Company adopted, on a prospective basis, the required provisions of SFAS No. 157, Fair Value Measurements (SFAS No. 157), which, among other things, defined fair value, established a framework for
measuring fair value and enhanced disclosure requirements about fair value measurements with respect to its financial assets and financial liabilities. On January 1, 2009, the Company adopted the remaining provisions of SFAS No. 157, as
permitted by the Financial Accounting Standards Board (the FASB) Staff Position (FSP) Financial Accounting Standard (FAS) 157-2, Effective Date of FASB Statement No. 157(FSP
157-2), which delayed the effective date of SFAS No. 157 for all nonfinancial assets and nonfinancial liabilities, except those that are recognized or disclosed at fair value in the financial statements on a recurring basis (at least
annually). These nonfinancial items include, for example, reporting units required to be measured at fair value for annual goodwill impairment testing purposes and nonfinancial assets acquired and liabilities assumed in a business combination.
Neither the partial adoption of the required provisions of SFAS No. 157 on January 1, 2008, nor the adoption of the remaining provisions of SFAS No. 157 on January 1, 2009, as permitted by FSP 157-2, had a material impact on the
Companys consolidated financial statements.



On
January 1, 2009, the Company adopted SFAS No. 160, the presentation and disclosure requirements of which were required to be applied retrospectively. SFAS No. 160 amends Accounting Research Bulletin No. 51,
Consolidated Financial Statements, to establish accounting and reporting standards for the noncontrolling (minority) interest in a subsidiary and for the deconsolidation of a subsidiary. It clarifies that a noncontrolling interest
in a subsidiary is an ownership interest in the consolidated entity that should be reported as equity in the consolidated financial statements. In addition, it also changes the way the consolidated income statement is presented by requiring
consolidated net income to include amounts attributable to both the parent and the noncontrolling interest with separate disclosure of each component on the face of the consolidated income statement. It does not, however, impact the calculation of
net income per share, as such calculation will continue to be based on amounts attributable to the parent.



On January 1, 2009, the Company adopted SFAS No. 161, Disclosures about Derivative Instruments and Hedging Activitiesan amendment
of SFAS No. 133 (SFAS No. 161), on a prospective basis. SFAS No. 161 amends SFAS No. 133, Accounting for Derivative Instruments and Hedging Activities, as amended (SFAS No.
133), to enhance the current disclosure framework in SFAS No. 133 for derivative instruments and hedging activities, including how and why an entity uses derivative instruments, how derivative instruments and related hedged items are
accounted for under SFAS No. 133 and its related interpretations and how derivative instruments and related hedged items affect an entitys financial position, financial performance and cash flows. See Note 4 of Notes to Condensed
Consolidated Financial Statements for the additional disclosures provided pursuant to SFAS No. 161. The adoption of SFAS No. 161 did not materially impact the Companys consolidated financial statements.



In December 2008, the FASB issued FSP FAS 132(R)-1, Employers
Disclosures about Postretirement Benefit Plan Assets (FSP 132(R)-1), which amends SFAS No. 132 (revised 2003), Employers Disclosures about Pensions and Other Postretirement Benefitsan amendment of FASB
Statements No. 87, 88, and 106, to require more detailed disclosures about an employers plan assets, including an employers investment strategies, major categories of plan assets, concentrations of risk within plan assets
and valuation techniques used to measure the fair value of plan assets. The disclosures about plan assets required by FSP 132(R)-1 are required to be provided for fiscal years ending after December 15, 2009. Upon initial application, the
provisions of FSP 132(R)-1 are not required for earlier periods that are presented for comparative purposes. Earlier application of the provisions of FSP 132(R)-1 is permitted. The adoption of FSP 132(R)-1 in 2009 will not materially impact the
Companys consolidated financial statements.



9



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##### Table of Contents

LAZARD GROUP LLC



NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS(Continued)

(UNAUDITED)

(dollars in thousands,
unless otherwise noted)



On April 1, 2009, the FASB issued FSP FAS 141(R)-1, Accounting for Assets Acquired and
Liabilities Assumed in a Business Combination That Arise from Contingencies (FSP 141(R)-1), which amends and clarifies SFAS No. 141(R), to amend the initial recognition and measurement, subsequent measurement and accounting,
and disclosure of assets and liabilities arising from contingencies in a business combination. FSP 141(R)-1 is effective for assets or liabilities arising from contingencies in business combinations for which the acquisition date is on or after
the beginning of the first annual reporting period beginning on or after December 15, 2008. The adoption of FSP 141(R)-1 did not impact the Companys consolidated financial statements but may have an impact in the future to the extent the
Company enters into a business combination.



In April 2009, the
FASB issued several FSPs intended to provide additional application guidance and enhance disclosures regarding fair value measurements and impairments of debt securities. FSP FAS 157-4, Determining Fair Value When the Volume and Level of
Activity for the Asset or Liability Have Significantly Decreased and Identifying Transactions That Are Not Orderly, provides additional guidance on determining fair values when there is no active market or when observable transactions or
quoted prices represent distressed sales, and reaffirms that the objective of fair value measurement is to reflect the price at which an asset or liability would be sold or transferred in an orderly transaction (as opposed to a distressed or forced
transaction) at market conditions prevailing at the date of the financial statements.



FSP FAS 107-1 and FSP APB 28-1, Interim Disclosures about Fair Value of Financial Instruments (FSP 107-1 and FSP APB 28-1, respectively), relate to fair value disclosures for
any financial instruments that are not currently reflected on the balance sheet of companies at fair value. Prior to issuing these FSPs, fair values for these assets and liabilities were only disclosed once a year. FSP 107-1 and FSP APB 28-1
now require these disclosures on a quarterly basis, providing qualitative and quantitative information about fair value estimates for all those financial instruments not measured on the balance sheet at fair value.



FSP FAS 115-2 and FSP FAS 124-2, Recognition and Presentation of
Other-Than-Temporary Impairments, are intended to bring greater consistency to the timing of impairment recognition and provide greater clarity about the credit and noncredit components of debt securities whose fair value is below
amortized cost and that are not expected to be sold, and also require increased disclosures regarding expected cash flows, credit losses and an aging of securities with unrealized losses.



The pronouncements described in the three paragraphs above are effective for interim and annual periods ending after
June 15, 2009. The Company is currently assessing the impact of these FSPs on its consolidated financial statements.



|3. | RECEIVABLESNET
|-- | ---------------



Receivablesnet is comprised of receivables from banks, fees, customers and other and related parties.



Receivables from banks represent those related to LFBs short-term
inter-bank deposits. The level of these inter-bank deposits is primarily driven by the level of LFB customer-related interest-bearing time and demand deposits and short-term inter-bank deposits from banks held at LFB, which can fluctuate
significantly on a daily basis. As the amount of deposits held at LFB change, there is generally a corresponding, but indirect, impact on the level of short-term inter-bank deposits with banks.



Customers and other receivables at March 31, 2009 and December 31, 2008
include $12,355 and $13,109, respectively, of loans by LFB to managing directors and employees in France that are made in the ordinary course of business at market terms and $11,285 and $16,444, respectively, pertaining to a receivable from the
Reserve Primary



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##### Table of Contents

LAZARD GROUP LLC



NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS(Continued)

(UNAUDITED)

(dollars in thousands,
unless otherwise noted)



Fund (the Primary Fund), a money market fund based in New York that is engaged in the liquidation of its assets for distribution to investors
under the supervision of the SEC. In September 2008, the Primary Fund, which held certain securities issued by Lehman Brothers Holdings, Inc., temporarily suspended the payment of redemption proceeds to investors. Through March 31, 2009, the Company
had recovered partial distributions from the Primary Fund aggregating $66,432 of its $77,717 investments in the Primary Fund as of September 15, 2008, and, in April 2009, the Company received additional payments from the Primary Fund aggregating
$3,488. Following the events of September 2008, various investors in the Primary Fund commenced litigations against the Primary Fund, certain officers and trustees of the Primary Fund and certain related entities. On February 26, 2009, the Primary
Fund announced that it would set aside a special reserve of $3.5 billion of its assets to cover damages and expenses claimed in actual and potential litigations against it by Primary Fund investors. The Company expects to receive an
amount approximating the carrying value of its receivable relating to its investment in the Primary Fund, but it is possible that the process of liquidating the Primary Fund may ultimately result in some diminution in value of the Companys
investment position. The Company is closely monitoring the situation and reserving all of its rights.



Receivables are stated net of an estimated allowance for doubtful accounts of $10,690 and $15,883 at March 31, 2009 and December 31, 2008,
respectively, for past due amounts and for specific accounts deemed uncollectible. The Company recorded bad debt expense (recoveries) of $(548) and $3,474 for the three month periods ended March 31, 2009 and 2008, respectively, and recorded
charge-offs, foreign currency translation and other adjustments, which resulted in a net decrease to the allowance for doubtful accounts of $4,645 and $262 for the three month periods ended March 31, 2009 and 2008, respectively. At March 31, 2009
and December 31, 2008, the Company had $11,224 and $17,916, respectively, of receivables deemed past due or uncollectible.



|4. | FAIR VALUE MEASUREMENTS
|-- | -----------------------



The Companys investments and securities sold, not yet purchased consist of the following at March 31, 2009 and December 31, 2008:



|                                                                     |  |               |         |                  |   |        
|-------------------------------------------------------------------- |  | ------------- | ------- | ---------------- | - | -------
|                                                                     |  | March 31,2009 |         | December 31,2008
|Debt:                                                                |  |               |         |                  |   |        
|Bonds - Corporate                                                    |  | $             | 264,462 |                  | $ | 296,674
|Non-U.S. Government and agency securities                            |  |               | 31,579  |                  |   | 36,396 
|                                                                     |  |               |         |                  |   |        
|                                                                     |  |               | 296,041 |                  |   | 333,070
|                                                                     |  |               |         |                  |   |        
|Equities                                                             |  |               | 50,662  |                  |   | 71,105 
|                                                                     |  |               |         |                  |   |        
|Other:                                                               |  |               |         |                  |   |        
|Interest in LAM alternative asset management funds:                  |  |               |         |                  |   |        
|General Partner (GP) interests owned by Lazard                     |  |               | 35,459  |                  |   | 35,300 
|GP interests consolidated by Lazard                                  |  |               | 14,452  |                  |   | 20,866 
|Private equity investments                                           |  |               | 86,324  |                  |   | 83,931 
|Equity method investments                                            |  |               | 75,993  |                  |   | 75,695 
|                                                                     |  |               |         |                  |   |        
|                                                                     |  |               | 212,228 |                  |   | 215,792
|                                                                     |  |               |         |                  |   |        
|Total investments                                                    |  |               | 558,931 |                  |   | 619,967
|Less equity method investments                                       |  |               | 75,993  |                  |   | 75,695 
|                                                                     |  |               |         |                  |   |        
|Investments, at fair value                                           |  | $             | 482,938 |                  | $ | 544,272
|                                                                     |  |               |         |                  |   |        
|Securities sold, not yet purchased (included in other liabilities) |  | $             | 1,849   |                  | $ | 6,975  
|                                                                     |  |               |         |                  |   |        



11



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##### Table of Contents

LAZARD GROUP LLC



NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS(Continued)

(UNAUDITED)

(dollars in thousands,
unless otherwise noted)



Debt securities primarily consist of investments by LFB, which typically holds them long-term, as
part of its asset-liability management program. Such securities primarily consist of fixed and floating rate European corporate bonds and French government debt securities. Debt securities are accounted for as either trading or
available-for-sale securities and consisted of the following at March 31, 2009 and December 31, 2008:



|                                          |  |               |         |                  |   |        
|----------------------------------------- |  | ------------- | ------- | ---------------- | - | -------
|                                          |  | March 31,2009 |         | December 31,2008
|                                          |  |              
|Trading securities:                       |  |               |         |                  |   |        
|Bonds - Corporate                         |  | $             | 4,831   |                  | $ | 7,573  
|Non-U.S. Government and agency securities |  |               | 31,579  |                  |   | 36,396 
|                                          |  |               |         |                  |   |        
|                                          |  |               | 36,410  |                  |   | 43,969 
|Available-for-sale securities:            |  |               |         |                  |   |        
|Bonds - Corporate                         |  |               | 259,631 |                  |   | 289,101
|                                          |  |               |         |                  |   |        
|Total debt securities                     |  | $             | 296,041 |                  | $ | 333,070
|                                          |  |               |         |                  |   |        



Equities principally
represent the Companys investments in marketable equity securities of large-, mid- and small-cap domestic, international and global companies to seed new Asset Management products and includes investments in public and private asset management
funds managed both by LAM and third party asset managers.



Interests in LAM alternative asset management funds represent (i) GP interests owned by Lazard in LAM-managed alternative asset management funds and (ii) GP interests consolidated by the Company pertaining to noncontrolling interests in LAM
alternative asset management funds. Such noncontrolling interests in LAM alternative asset management funds, which represent GP interests held directly by certain of our LAM managing directors or employees of the Company, are deemed to be controlled
by, and therefore consolidated by, the Company in accordance with U.S. GAAP. Pursuant to SFAS No. 160, noncontrolling interests are presented within members equity on the condensed consolidated statements of financial condition
(see Note 10 of Notes to Condensed Consolidated Financial Statements).



Private equity investments are primarily comprised of investments in private equity funds and direct private equity interests. Such investments primarily include (i) a mezzanine fund, which invests in small- and mid-cap buy-out funds and
small- and mid-cap European companies; (ii) Corporate Partners II Limited (CP II), a private equity fund targeting significant noncontrolling-stake investments in established public and private companies; and (iii) Lazard Senior Housing
Partners LP (Senior Housing), which acquires companies and assets in the senior housing, extended-stay hotel and shopping center sectors.



Equity method investments include investments made in the first quarter of 2008 in Sapphire Industrials Corp. (Sapphire) (see Note 9 of Notes
to Condensed Consolidated Financial Statements) and Merchant Bankers Asociados (MBA).



12



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##### Table of Contents

LAZARD GROUP LLC



NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS(Continued)

(UNAUDITED)

(dollars in thousands,
unless otherwise noted)



The following tables present the categorization of investments and certain other assets and
liabilities measured at fair value on a recurring basis as of March 31, 2009 and December 31, 2008 into a three-level fair value hierarchy in accordance with SFAS No. 157:



|                                                    |  |                                                                  |        |         |   |         |  |       |        |  |   |        
|--------------------------------------------------- |  | ---------------------------------------------------------------- | ------ | ------- | - | ------- |  | ----- | ------ |  | - | -------
|                                                    |  | Fair Value Measurements on a Recurring BasisAs of March 31,
2009
|                                                    |  | Level 1                                                          |        | Level 2 |   | Level 3 |  | Total
|Assets:                                             |  |                                                                  |        |         |   |         |  |       |        |  |   |        
|Investments:                                        |  |                                                                  |        |         |   |         |  |       |        |  |   |        
|Debt                                                |  | $                                                                | 36,410 |         | $ | 259,631 |  | $     |       |  | $ | 296,041
|Equities                                            |  |                                                                  | 36,759 |         |   | 13,642  |  |       | 261    |  |   | 50,662 
|Other (excluding equity method investments):        |  |                                                                  |        |         |   |         |  |       |        |  |   |        
|Interest in LAM alternative asset management funds: |  |                                                                  |        |         |   |         |  |       |        |  |   |        
|GP interests owned by Lazard                        |  |                                                                  |       |         |   | 35,459  |  |       |       |  |   | 35,459 
|GP interests consolidated by Lazard                 |  |                                                                  |       |         |   | 14,452  |  |       |       |  |   | 14,452 
|Private equity investments                          |  |                                                                  |       |         |   |        |  |       | 86,324 |  |   | 86,324 
|Derivatives                                         |  |                                                                  |       |         |   | 3,038   |  |       |       |  |   | 3,038  
|                                                    |  |                                                                  |        |         |   |         |  |       |        |  |   |        
|Total Assets                                        |  | $                                                                | 73,169 |         | $ | 326,222 |  | $     | 86,585 |  | $ | 485,976
|                                                    |  |                                                                  |        |         |   |         |  |       |        |  |   |        
|Liabilities:                                        |  |                                                                  |        |         |   |         |  |       |        |  |   |        
|Securities sold, not yet purchased                  |  | $                                                                | 1,849  |         | $ |        |  | $     |       |  | $ | 1,849  
|Derivatives                                         |  |                                                                  |       |         |   | 29,776  |  |       |       |  |   | 29,776 
|                                                    |  |                                                                  |        |         |   |         |  |       |        |  |   |        
|Total Liabilities                                   |  | $                                                                | 1,849  |         | $ | 29,776  |  | $     |       |  | $ | 31,625 
|                                                    |  |                                                                  |        |         |   |         |  |       |        |  |   |        



|                                                    |  |                                                                     |        |         |   |         |  |       |        |  |   |        
|--------------------------------------------------- |  | ------------------------------------------------------------------- | ------ | ------- | - | ------- |  | ----- | ------ |  | - | -------
|                                                    |  | Fair Value Measurements on a Recurring BasisAs of December 31,
2008
|                                                    |  | Level 1                                                             |        | Level 2 |   | Level 3 |  | Total
|Assets:                                             |  |                                                                     |        |         |   |         |  |       |        |  |   |        
|Investments:                                        |  |                                                                     |        |         |   |         |  |       |        |  |   |        
|Debt                                                |  | $                                                                   | 43,969 |         | $ | 289,101 |  | $     |       |  | $ | 333,070
|Equities                                            |  |                                                                     | 54,108 |         |   | 14,544  |  |       | 2,453  |  |   | 71,105 
|Other (excluding equity method investments):        |  |                                                                     |        |         |   |         |  |       |        |  |   |        
|Interest in LAM alternative asset management funds: |  |                                                                     |        |         |   |         |  |       |        |  |   |        
|GP interests owned by Lazard                        |  |                                                                     |       |         |   | 35,300  |  |       |       |  |   | 35,300 
|GP interests consolidated by Lazard                 |  |                                                                     |       |         |   | 20,866  |  |       |       |  |   | 20,866 
|Private equity investments                          |  |                                                                     |       |         |   |        |  |       | 83,931 |  |   | 83,931 
|Derivatives                                         |  |                                                                     |       |         |   | 4,661   |  |       |       |  |   | 4,661  
|                                                    |  |                                                                     |        |         |   |         |  |       |        |  |   |        
|Total Assets                                        |  | $                                                                   | 98,077 |         | $ | 364,472 |  | $     | 86,384 |  | $ | 548,933
|                                                    |  |                                                                     |        |         |   |         |  |       |        |  |   |        
|Liabilities:                                        |  |                                                                     |        |         |   |         |  |       |        |  |   |        
|Securities sold, not yet purchased                  |  | $                                                                   | 6,975  |         | $ |        |  | $     |       |  | $ | 6,975  
|Derivatives                                         |  |                                                                     |       |         |   | 43,990  |  |       |       |  |   | 43,990 
|                                                    |  |                                                                     |        |         |   |         |  |       |        |  |   |        
|Total Liabilities                                   |  | $                                                                   | 6,975  |         | $ | 43,990  |  | $     |       |  | $ | 50,965 
|                                                    |  |                                                                     |        |         |   |         |  |       |        |  |   |        



13



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##### Table of Contents

LAZARD GROUP LLC



NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS(Continued)

(UNAUDITED)

(dollars in thousands,
unless otherwise noted)



The following tables provide a summary of changes in fair value of the Companys Level 3 assets
and liabilities for the three month periods ended March 31, 2009 and 2008.



|                           |  |                                                                         |        |                                                               |   |       |                                      |  |   |                                       |   |  |               |        |   |  |   |       
|-------------------------- |  | ----------------------------------------------------------------------- | ------ | ------------------------------------------------------------- | - | ----- | ------------------------------------ |  | - | ------------------------------------- | - |  | ------------- | ------ | - |  | - | ------
|                           |  | Level 3 Assets and LiabilitiesFor the Three Months Ended March
31, 2009
|                           |  | BeginningBalance                                                        |        | Net Unrealized/RealizedGains (Losses)Included InRevenue-Other |   |       | NetPurchases,IssuancesandSettlements |  |   | ForeignCurrencyTranslationAdjustments |   |  | EndingBalance
|                           |  |                                                                         |        |                                                              
|Level 3 Assets:            |  |                                                                         |        |                                                               |   |       |                                      |  |   |                                       |   |  |               |        |   |  |   |       
|Investments:               |  |                                                                         |        |                                                               |   |       |                                      |  |   |                                       |   |  |               |        |   |  |   |       
|Equities                   |  | $                                                                       | 2,453  |                                                               | $ |      |                                      |  | $ | (2,092                                | ) |  | $             | (100   | ) |  | $ | 261   
|Private equity investments |  |                                                                         | 83,931 |                                                               |   | 19    |                                      |  |   | 4,412                                 |   |  |               | (2,038 | ) |  |   | 86,324
|                           |  |                                                                         |        |                                                               |   |       |                                      |  |   |                                       |   |  |               |        |   |  |   |       
|Total Level 3 Assets       |  | $                                                                       | 86,384 |                                                               | $ | 19    |                                      |  | $ | 2,320                                 |   |  | $             | (2,138 | ) |  | $ | 86,585
|                           |  |                                                                         |        |                                                               |   |       |                                      |  |   |                                       |   |  |               |        |   |  |   |       
|                           | 
|                           |  | Level 3 Assets and LiabilitiesFor the Three Months Ended March
31, 2008
|                           |  | BeginningBalance                                                        |        | Net Unrealized/RealizedGains (Losses)Included InRevenue-Other |   |       | NetPurchases,IssuancesandSettlements |  |   | ForeignCurrencyTranslationAdjustments |   |  | EndingBalance
|                           |  |                                                                         |        |                                                              
|Level 3 Assets:            |  |                                                                         |        |                                                               |   |       |                                      |  |   |                                       |   |  |               |        |   |  |   |       
|Investments:               |  |                                                                         |        |                                                               |   |       |                                      |  |   |                                       |   |  |               |        |   |  |   |       
|Equities                   |  | $                                                                       | 4,469  |                                                               | $ | (209  | )                                    |  | $ |                                      |   |  | $             | 293    |   |  | $ | 4,553 
|Private equity investments |  |                                                                         | 74,051 |                                                               |   | 2,510 |                                      |  |   | 10,790                                |   |  |               | 2,122  |   |  |   | 89,473
|                           |  |                                                                         |        |                                                               |   |       |                                      |  |   |                                       |   |  |               |        |   |  |   |       
|Total Level 3 Assets       |  | $                                                                       | 78,520 |                                                               | $ | 2,301 |                                      |  | $ | 10,790                                |   |  | $             | 2,415  |   |  | $ | 94,026
|                           |  |                                                                         |        |                                                               |   |       |                                      |  |   |                                       |   |  |               |        |   |  |   |       



There were no realized
gains or losses included in income for the three month periods ended March 31, 2009 and 2008 with respect to Level 3 assets and liabilities.



The Company enters into forward foreign currency exchange rate contracts, interest rate swaps, interest rate futures, equity swaps and other derivative
contracts to hedge exposures to fluctuations in interest rates, currency exchange rates and equity markets. The Company reports its derivative instruments separately as assets and liabilities unless a legal right of set-off exists under a master
netting agreement enforceable by law. The Companys derivative instruments are recorded at their fair value, and are included in other assets and other liabilities on the condensed consolidated statements of financial
condition. Except for derivatives hedging available-for-sale securities under SFAS No. 115, Accounting for Certain Investments in Debt and Equity Securities, the Company elected to not apply hedge accounting under
SFAS No. 133 to its other derivative instruments held. Gains and losses on the Companys derivatives not designated as hedging instruments, as well as gains and losses on derivatives accounted for as fair value hedges under SFAS No. 133,
are included in interest income and interest expense, respectively, or revenue  other, depending on the nature of the underlying item, on the condensed consolidated statements of operations.



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##### Table of Contents

LAZARD GROUP LLC



NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS(Continued)

(UNAUDITED)

(dollars in thousands,
unless otherwise noted)



The table below represents the fair values of the Companys derivative assets and liabilities
reported within other assets and other liabilities on the accompanying condensed consolidated statements of financial condition as of March 31, 2009 and December 31, 2008:



|                                                 |  |                                                                |        |                                                                    |   |               |  |                  |        |  |   |       
|------------------------------------------------ |  | -------------------------------------------------------------- | ------ | ------------------------------------------------------------------ | - | ------------- |  | ---------------- | ------ |  | - | ------
|                                                 |  | Derivatives Designatedas Hedging InstrumentsUnder SFAS No. 133 |        | Derivatives Not Designatedas Hedging InstrumentsUnder SFAS No. 133
|                                                 |  | March 31,2009                                                  |        | December 31,2008                                                   |   | March 31,2009 |  | December 31,2008
|Derivative Assets:                               |  |                                                                |        |                                                                    |   |               |  |                  |        |  |   |       
|Forward foreign currency exchange rate contracts |  | $                                                              |       |                                                                    | $ |              |  | $                | 2,752  |  | $ | 4,377 
|Interest rate swaps                              |  |                                                                |       |                                                                    |   | 75            |  |                  | 286    |  |   | 209   
|                                                 |  |                                                                |        |                                                                    |   |               |  |                  |        |  |   |       
|                                                 |  | $                                                              |       |                                                                    | $ | 75            |  | $                | 3,038  |  | $ | 4,586 
|                                                 |  |                                                                |        |                                                                    |   |               |  |                  |        |  |   |       
|Derivative Liabilities:                          |  |                                                                |        |                                                                    |   |               |  |                  |        |  |   |       
|Forward foreign currency exchange rate contracts |  | $                                                              |       |                                                                    | $ |              |  | $                | 11,698 |  | $ | 26,593
|Interest rate swaps                              |  |                                                                | 16,758 |                                                                    |   | 12,980        |  |                  | 1,030  |  |   | 1,051 
|Equity swaps                                     |  |                                                                |       |                                                                    |   |              |  |                  | 290    |  |   | 3,366 
|                                                 |  |                                                                |        |                                                                    |   |               |  |                  |        |  |   |       
|                                                 |  | $                                                              | 16,758 |                                                                    | $ | 12,980        |  | $                | 13,018 |  | $ | 31,010
|                                                 |  |                                                                |        |                                                                    |   |               |  |                  |        |  |   |       



The effect of
derivatives not designated as hedging instruments under SFAS No. 133 on the accompanying condensed consolidated statement of operations for the three month period ended March 31, 2009, by type of derivative, is as follows:



|                                                 |  |                                                               |      
|------------------------------------------------ |  | ------------------------------------------------------------- | -----
|                                                 |  | Amount of Gain (Loss)For The Three MonthsEnded March 31,
2009
|Forward foreign currency exchange rate contracts |  | $                                                             | 168  
|Interest rate swaps                              |  |                                                               | 138  
|Equity swaps                                     |  |                                                               | 3,882
|                                                 |  |                                                               |      
|                                                 |  | $                                                             | 4,188
|                                                 |  |                                                               |      



Gains or (losses) with
respect to the derivatives disclosed in the table above are predominantly reflected in revenue  other on the condensed consolidated statement of operations.



With respect to derivatives designated as hedging instruments under SFAS No. 133, such derivatives relate to interest
rate swaps that hedge available-for-sale securities and are being accounted for as fair value hedges. For the three month period ended March 31, 2009, net pre-tax losses of $3,333 pertaining to the interest rate swaps were offset by net
pre-tax gains of an equivalent amount on the hedged risk portion of such available-for-sale securities.



|5. | LAM MERGER TRANSACTION
|-- | ----------------------



On September 25, 2008, Lazard Ltd, LAM and LAZ Sub I, LLC, a newly-formed subsidiary of LFNY, completed the merger of LAZ Sub I, LLC with and into LAM
(the LAM Merger). Prior to the LAM Merger,



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LAZARD GROUP LLC



NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS(Continued)

(UNAUDITED)

(dollars in thousands,
unless otherwise noted)



the common equity interests of LAM were held by LFNY and certain other equity interests of LAM, representing contingent payments should a fundamental
transaction occur, as described below, were held by present and former employees of LAM. Following the LAM Merger, all equity interests of LAM are owned directly or indirectly by LFNY. The equity interests of LAM that were held, prior to the LAM
Merger, by the then present and former employees of LAM and its subsidiaries (and certain related phantom rights issued as incentive compensation) entitled the holders to payments totaling approximately 23% of the net proceeds or imputed valuation
of LAM (after deductions for payments to creditors of LAM and the return of capital in LAM) in connection with certain specified fundamental transactions concerning LAM or Lazard, including a sale of LAM or Lazard, certain non-ordinary course asset
sales and major acquisitions.



The aggregate non-contingent
consideration relating to the equity interests of LAM (and the phantom rights referred to above) held by present and former employees of LAM and its subsidiaries (the Transaction Consideration) consists of (i) cash payments made from the
closing of the LAM Merger through January 2, 2009 of approximately $60,100, (ii) a cash payment on October 31, 2011 of approximately $90,300 and (iii) an issuance on October 31, 2011 of 2,201,457 shares of Lazard Ltds Class A common
stock (plus additional shares of Class A common stock in an amount determined by reference to the cash dividends paid on Class A common stock since the closing of the LAM Merger), subject, in the case of clause (ii) and (iii) and with respect
to certain present employees of LAM and its subsidiaries, to delayed payment/issuance until the eighth anniversary of the closing of the LAM Merger if the applicable employee is no longer employed by Lazard or its affiliates on October 31, 2011,
subject to certain exceptions. The merger agreement also generally provides that if there is a change in control of the Company or a sale of LAM, any and all of the Transaction Consideration will be payable as of the date of such change in control.
The related liabilities for the present value of the unpaid cash consideration, as of March 31, 2009 and December 31, 2008, have been recorded in accrued compensation and benefits and other liabilities, and amounted to
$13,917 and $61,772, respectively, as of March 31, 2009, and $16,013 and $60,324, respectively, as of December 31, 2008.



|6. | BUSINESS ACQUISITIONS AND JOINT VENTURE INVESTMENT
|-- | --------------------------------------------------



On August 13, 2007, Lazard Group acquired all of the outstanding ownership interests of Goldsmith, Agio, Helms & Lynner,
LLC (GAHL), a Minneapolis-based investment bank specializing in financial advisory services to mid-sized private companies. On July 31, 2007, Lazard Ltd acquired all of the outstanding shares of Carnegie, Wylie & Company (Holdings)
PTY LTD (CWC), an Australia-based financial advisory firm, and concurrently sold such investment to Lazard Group. These purchases were effected though an exchange of a combination of cash, Class A common stock, and by Lazard Ltd issuing
shares of non-participating convertible Series A and Series B preferred stock (the Series A preferred stock and Series B preferred stock, respectively, which are or were each convertible into Class A common stock).
The total number of Class A common shares to be issued in connection with the acquisitions will depend, in part, upon the future performance of each of GAHL and CWC.



The aggregate non-contingent consideration relating to the GAHL and the CWC acquisitions (before transaction costs)
consisted of cash and Lazard Ltd stock and aggregated to approximately $220,500 and $216,200 through March 31, 2009 and December 31, 2008, respectively. At March 31, 2009 and December 31, 2008, 993,024 shares of Class A common stock were
issuable on a non-contingent basis. Additionally, at March 31, 2009 and December 31, 2008, 9,724 and 7,293 shares of Series A preferred stock, respectively, were convertible into Class A common shares on a non-contingent basis, with the number of
Class A common shares dependent, in part, upon future prices of the



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##### Table of Contents

LAZARD GROUP LLC



NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS(Continued)

(UNAUDITED)

(dollars in thousands,
unless otherwise noted)



Class A common stock. At March 31, 2009 and December 31, 2008, 948,631 shares of Class A common stock were contingently issuable and, at March 31, 2009 and
December 31, 2008, 22,021 and 24,452 shares of Series A preferred stock, respectively, were contingently convertible into shares of Class A common stock as of each respective date, dependent upon the future performance of GAHL and CWC.



In connection with Lazard Groups acquisition of GAHL and
Lazard Ltds acquisition of CWC and subsequent contribution of CWC to Lazard Group, Lazard Group recorded related party payables of $48,024 and $43,634 at March 31, 2009 and December 31, 2008, respectively, to subsidiaries of Lazard Ltd. When
combined with the additional members equity recorded by Lazard Group of $18,416 at March 31, 2009 and December 31, 2008, these increases correspond to the increases in stockholders equity recorded by Lazard Ltd for such acquisitions (see
Note 15 of Notes to the Condensed Consolidated Financial Statements).



|7. | GOODWILL AND OTHER INTANGIBLE ASSETS
|-- | ------------------------------------



The components of goodwill and other intangible assets at March 31, 2009 and December 31, 2008, which primarily pertain to the Companys Financial
Advisory segment, are presented below.



|                                                          |  |               |         |                  |   |        
|--------------------------------------------------------- |  | ------------- | ------- | ---------------- | - | -------
|                                                          |  | March 31,2009 |         | December 31,2008
|                                                          |  |              
|Goodwill                                                  |  | $             | 173,194 |                  | $ | 170,277
|Other intangible assets (net of accumulated amortization) |  |               | 4,523   |                  |   | 4,867  
|                                                          |  |               |         |                  |   |        
|                                                          |  | $             | 177,717 |                  | $ | 175,144
|                                                          |  |               |         |                  |   |        



Changes in the
carrying amount of goodwill for the three month periods ended March 31, 2009 and 2008, are as follows:



|                                                                                  |  |                             |         |      |   |        
|--------------------------------------------------------------------------------- |  | --------------------------- | ------- | ---- | - | -------
|                                                                                  |  | Three Months EndedMarch 31,
|                                                                                  |  | 2009                        |         | 2008
|Balance, January 1                                                                |  | $                           | 170,277 |      | $ | 178,446
|Prior business acquisitions, including additional contingent consideration earned |  |                             | 2,780   |      |   | 9,282  
|Foreign currency translation adjustments                                          |  |                             | 137     |      |   | 4,239  
|                                                                                  |  |                             |         |      |   |        
|Balance, March 31                                                                 |  | $                           | 173,194 |      | $ | 191,967
|                                                                                  |  |                             |         |      |   |        



The gross cost and
accumulated amortization of other intangible assets as of March 31, 2009 and December 31, 2008, by major intangible asset category, are as follows:



|                                                                   |  |                |        |                         |   |                   |  |           |       |                         |   |                   |  |   |        |  |   |      
|------------------------------------------------------------------ |  | -------------- | ------ | ----------------------- | - | ----------------- |  | --------- | ----- | ----------------------- | - | ----------------- |  | - | ------ |  | - | -----
|                                                                   |  | March 31, 2009 |        | December 31, 2008      
|                                                                   |  | GrossCost      |        | AccumulatedAmortization |   | NetCarryingAmount |  | GrossCost |       | AccumulatedAmortization |   | NetCarryingAmount
|Success fee contracts                                              |  | $              | 23,969 |                         | $ | 23,969            |  | $         |      |                         | $ | 23,969            |  | $ | 23,969 |  | $ |     
|Management fees, customer relationships and non-compete agreements |  |                | 7,017  |                         |   | 2,494             |  |           | 4,523 |                         |   | 7,017             |  |   | 2,150  |  |   | 4,867
|                                                                   |  |                |        |                         |   |                   |  |           |       |                         |   |                   |  |   |        |  |   |      
|                                                                   |  | $              | 30,986 |                         | $ | 26,463            |  | $         | 4,523 |                         | $ | 30,986            |  | $ | 26,119 |  | $ | 4,867
|                                                                   |  |                |        |                         |   |                   |  |           |       |                         |   |                   |  |   |        |  |   |      



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LAZARD GROUP LLC



NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS(Continued)

(UNAUDITED)

(dollars in thousands,
unless otherwise noted)



Amortization expense of intangible assets for the three month periods ended March 31, 2009 and 2008
was $344 and $1,220, respectively. Estimated future amortization expense is as follows:



|                                   |  |                     |      
|---------------------------------- |  | ------------------- | -----
|Year Ending December 31,           |  | AmortizationExpense
|2009 (April 1 through December 31) |  | $                   | 928  
|2010                               |  |                     | 1,127
|2011                               |  |                     | 903  
|2012                               |  |                     | 511  
|2013                               |  |                     | 400  
|Thereafter                         |  |                     | 654  
|                                   |  |                     |      
|Total amortization expense         |  | $                   | 4,523
|                                   |  |                     |      



|8. | SENIOR AND SUBORDINATED DEBT
|-- | ----------------------------



Senior DebtSenior debt is comprised of the following as of March 31, 2009 and December 31, 2008:



|                                   |  |                        |         |              |               |                    |                  |   |                   |   |           |  |   |          
|---------------------------------- |  | ---------------------- | ------- | ------------ | ------------- | ------------------ | ---------------- | - | ----------------- | - | --------- |  | - | ---------
|                                   |  | InitialPrincipalAmount |         | MaturityDate |               | AnnualInterestRate |                  |   | Outstanding As Of
|                                   |  |                        |         |              | March 31,2009 |                    | December 31,2008
|Lazard Group 7.125% Senior Notes   |  | $                      | 550,000 |              | 2015          |                    | 7.125            | % |                   | $ | 538,500   |  | $ | 538,500  
|Lazard Group 6.85% Senior Notes(a) |  |                        | 600,000 |              | 2017          |                    | 6.85             | % |                   |   | 548,350   |  |   | 549,250  
|Lazard Group Credit Facility       |  |                        | 150,000 |              | 2010          |                    | 1.75             | % |                   |   |          |  |   |         
|                                   |  |                        |         |              |               |                    |                  |   |                   |   |           |  |   |          
|Total                              |  |                        |         |              |               |                    |                  |   |                   | $ | 1,086,850 |  | $ | 1,087,750
|                                   |  |                        |         |              |               |                    |                  |   |                   |   |           |  |   |          



|(a) | During the three month period ended March 31, 2009, the Company repurchased $900 principal amount of the 6.85% Senior Notes at a cost, excluding accrued interest, of $635 and, after
the write-off of unamortized debt issuance costs of $7, recognized a pre-tax gain of $258.
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



Subordinated DebtSubordinated debt at March 31, 2009 and December 31, 2008 amounted to $150,000 at each date and represents a note
which is convertible into a maximum of 2,631,570 shares of Class A common stock at an effective conversion price of $57 per share. The note matures on September 30, 2016 and has a fixed interest rate of 3.25% per annum. One-third in principal amount
became convertible on and after July 1, 2008, an additional one-third will become convertible on and after July 1, 2009 and the last one-third on and after July 1, 2010, and no principal amount will be convertible after June 30, 2011. As of March
31, 2009 there have been no conversions of the note.



Lazard
Group maintains a $150,000 senior revolving credit facility with a group of lenders (the Lazard Group Credit Facility) which contains certain financial condition covenants. In addition, the Lazard Group Credit Facility, the indenture and
supplemental indentures relating to Lazard Groups senior notes as well as its subordinated convertible note contain certain covenants (none of which relate to financial condition), events of default and other customary provisions, including a
customary make-whole provision in the event of early redemption where applicable. As of March 31, 2009, the Company was in compliance with all of these provisions. All of the Companys senior and subordinated debt obligations are unsecured.



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LAZARD GROUP LLC



NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS(Continued)

(UNAUDITED)

(dollars in thousands,
unless otherwise noted)



As of March 31, 2009, the Company had approximately $212,000 in unused lines of credit available to
it, including approximately $41,000 of unused lines of credit available to LFB. In addition, LFB has access to the liquidity facilities of the Banque de France. As of March 31, 2009 and December 31, 2008, LFB had no outstanding
borrowings under such facilities.



|9. | COMMITMENTS AND CONTINGENCIES
|-- | -----------------------------



LeasesLazard has various leases and other contractual commitments arising in the ordinary course of business. In the opinion of
management, the fulfillment of such commitments in accordance with their terms will not have a material adverse effect on Lazards consolidated financial position, results of operations or cash flows.



GuaranteesOn March 12, 2007, Lazard entered into an
agreement to guarantee to a foreign tax jurisdiction the deferred payment of certain income tax obligations and potential tax penalties of certain managing directors of Lazard Group, which, as of March 31, 2009, aggregate to $15,130. These managing
directors have pledged their interests in LAZ-MD Holdings, an entity owned by Lazard Groups current and former managing directors (LAZ-MD Holdings) (which are exchangeable into shares of Class A common stock) and unsold shares of
Class A common stock received in exchange for such interests to collateralize such guarantee, with the value of such collateral in each case exceeding the guarantee provided by Lazard.



In the normal course of business, LFB provides indemnifications to third parties to protect them in the event of
non-performance by its clients. At March 31, 2009, LFB had $7,628 of such indemnifications and held $4,793 of collateral/counter-guarantees to secure these commitments. The Company believes the likelihood of loss with respect to these indemnities is
remote. Accordingly, no liability is recorded in the condensed consolidated statements of financial condition.



Private Equity Funding CommitmentsAt March 31, 2009, the principal commitments by the Company for capital contributions to private
equity investment funds were as set forth below. Senior Housing is managed by Lazard Alternative Investments Holdings LLC (LAI), a subsidiary of LFCM Holdings LLC (LFCM Holdings). LAI owns and operates the alternative
investments of LFCM Holdings (an entity that includes Lazards former Capital Markets and Other business segment as well as other specified non-operating assets and liabilities transferred pursuant to or in anticipation of the separation from
the Company on May 10, 2005). CP II was managed by a subsidiary of LAI until February 16, 2009; however, effective February 17, 2009, ownership and control of CP II was transferred to the investment professionals who manage CP  II.



|               |  |                              |         |  |                             |   |        |                       |  |      |                             |  |   |        | 
|-------------- |  | ---------------------------- | ------- |  | --------------------------- | - | ------ | --------------------- |  | ---- | --------------------------- |  | - | ------ | 
|               |  |                              |         |  | Total Lazard Commitment (b) |  
|Name of Fund   |  | TotalInstitutionalCommitment |         |  | MaximumCommitment           |   |        | FundingExpirationDate |  |      | UnfundedAs ofMarch 31, 2009 | 
|CP II          |  | $                            | 500,000 |  |                             | $ | 50,000 |                       |  | 2010 |                             |  | $ | 15,188 | 
|Senior Housing |  |                              | 201,000 |  |                             |   | 10,000 |                       |  | 2009 | (a)                         |  |   | 1,706  | 
|               |  |                              |         |  |                             |   |        |                       |  |      |                             |  |   |        | 
|               |  | $                            | 701,000 |  |                             | $ | 60,000 |                       |  |      |                             |  | $ | 16,894 | 
|               |  |                              |         |  |                             |   |        |                       |  |      |                             |  |   |        | 



|(a) | Funding expiration date is July 6, 2009. However, under certain circumstances, $829 may be called at any time prior to the fund liquidation.
|--- | --------------------------------------------------------------------------------------------------------------------------------------------



|(b) | The table above excludes other unfunded commitments by Lazard at March 31, 2009 of (i) $3,367 to Company-sponsored private equity investment funds (including $2,531
in connection with the Companys
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



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##### Table of Contents

LAZARD GROUP LLC



NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS(Continued)

(UNAUDITED)

(dollars in thousands,
unless otherwise noted)



| | compensation plans), which are contingent upon certain events and have no definitive final payment dates, and (ii) with respect to Lazard Technology Partners
III, a fund that has not been formed, for which Lazard has a minimum and maximum commitment of $15,000 and $20,000 respectively, contingent upon the formation of such fund.
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



Other CommitmentsIn the normal course of business, LFB
enters into commitments to extend credit, predominately at variable interest rates. The commitments have an expiration date and, once drawn upon, may require the counterparty to post collateral depending on the counterpartys creditworthiness.
Outstanding commitments at March 31, 2009 were $18,991. This amount may not represent future cash requirements as commitments may expire without being drawn upon.



On January 24, 2008, Sapphire, a newly-organized special purpose acquisition company formed by Lazard Funding Limited LLC
(Lazard Funding), a wholly-owned subsidiary of Lazard Group, completed an initial public offering which, prior to offering costs, raised $800,000 through the sale of 80,000,000 units at an offering price of $10.00 per unit (the
Sapphire IPO). Each unit consists of one share of Sapphire common stock and one warrant, with such warrant entitling the holder to purchase one share of Sapphire common stock for $7.00. Sapphire was formed for the purpose of effecting a
merger, capital stock exchange, asset acquisition, stock purchase, reorganization or similar business combination with one or more operating businesses primarily with general industrial companies in North America (collectively referred to as the
Initial Business Combination).



In connection with
the formation of Sapphire, Lazard Funding purchased from Sapphire 15,144,000 units (Founders Units) at a total cost of approximately $95. Each Founders Unit consists of one share of Sapphire common stock and one warrant, with
such warrant entitling the holder to purchase one share of Sapphire common stock for $7.50. On January 24, 2008, in connection with the Sapphire IPO, Lazard Funding purchased (i) 5,000,000 units in the Sapphire IPO at a purchase price equal to
the public offering price of $10.00 per unit (for an aggregate purchase price of $50,000), and (ii) an aggregate of 12,500,000 warrants from Sapphire at a price of $1.00 per warrant (for a total purchase price of $12,500). Furthermore, Lazard
Funding entered into an agreement with the underwriter to purchase, subsequent to the Sapphire IPO and prior to the closing of the Initial Business Combination, up to an additional $37,500 worth of Sapphire common shares in open market purchases.



In connection with the Sapphire IPO, and pursuant to certain
rights afforded LFCM Holdings under the business alliance agreement, dated as of May 10, 2005, between Lazard Group and LFCM Holdings (the business alliance agreement), Lazard Funding offered CP II the right, through the date of a public
announcement of the Initial Business Combination, to purchase from Lazard Funding, at a cost of $10.00 per unit, up to 2,000,000 Sapphire units (for an aggregate purchase price of up to $20,000).



See Notes 5 and 6 of Notes to Condensed Consolidated Financial Statements for
information regarding commitments relating to the LAM Merger and business acquisitions, respectively. See Note 12 of Notes to Condensed Consolidated Financial Statements for information regarding obligations to fund our pension plans in the U.K.



The Company has various other contractual commitments arising
in the ordinary course of business. In the opinion of management, the consummation of such commitments will not have a material adverse effect on the Companys condensed consolidated financial position or results of operations. In addition,
from time-to-time, LFB enters into underwriting commitments in which it participates as a joint underwriter. The settlement of such transactions are not expected to have a material adverse effect on the Companys consolidated financial position
or results of operations.



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LAZARD GROUP LLC



NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS(Continued)

(UNAUDITED)

(dollars in thousands,
unless otherwise noted)



LegalThe Companys businesses, as well as the financial
services industry generally, are subject to extensive regulation throughout the world. The Company is involved from time to time in a number of judicial, regulatory and arbitration proceedings and inquiries concerning matters arising in connection
with the conduct of our businesses, including proceedings initiated by former employees alleging wrongful termination. The Company reviews such matters on a case-by-case basis and establishes any required reserves in accordance with SFAS No. 5,
Accounting For Contingencies. Management believes, based on currently available information, that the results of such matters, in the aggregate, will not have a material adverse effect on its financial condition but might
be material to its operating results or cash flows for any particular period, depending upon the operating results for such period.



|10. | MEMBERS EQUITY
|--- | ---------------



Pursuant to Lazard Groups Operating Agreement, Lazard Group allocates and distributes to its members a substantial portion of its distributable
profits in three monthly installments, as soon as practicable after the end of each fiscal year. Such installment distributions usually begin in February. In addition, Lazard Group makes periodic distributions to its members to fund, among other
things, capital withdrawals and income tax advances made on behalf of its members.



At March 31, 2009 and 2008, Lazard Group common membership interests held by subsidiaries of Lazard Ltd amounted to 62.6% and 48.3%, respectively, and by LAZ-MD Holdings amounted to 37.4% and 51.7%, respectively.
Pursuant to provisions of its Operating Agreement, Lazard Group distributions in respect of its common membership interests are allocated to the holders of such interests on a pro rata basis. Such distributions represent amounts necessary to fund
(i) any dividends Lazard Ltd may declare on its Class A common stock and (ii) tax distributions in respect of income taxes that Lazard Ltds subsidiaries and the members of LAZ-MD Holdings incur as a result of holding Lazard Group common
membership interests. During the three month periods ended March 31, 2009 and 2008, Lazard Group distributed $4,594 and $5,532, respectively, to LAZ-MD Holdings and $6,695 and $4,978, respectively, to the subsidiaries of Lazard Ltd, which latter
amounts were used by Lazard Ltd to pay dividends to third-party holders of its Class A common stock. In addition, during the three month periods ended March 31, 2009 and 2008, Lazard Group made tax distributions of $67,360 and $10,213, respectively,
including $25,316 and $5,277, respectively, paid to LAZ-MD Holdings and $42,044 and $4,936, respectively, paid to subsidiaries of Lazard Ltd.



Exchange of Lazard Group Common Membership InterestsOn March 6, 2009, Lazard Ltd issued 244,968 shares of Class A common stock,
respectively, in connection with the exchange of a like number of common membership interests of Lazard Group (received in exchange for their membership interests in LAZ-MD Holdings).



Share Repurchase Program



The Board of Directors of Lazard Ltd has authorized, on a cumulative basis, the repurchase of up to $500,000 in aggregate
cost of its Class A common stock and Lazard Group common membership interests through December 31, 2009. The Company expects that the share repurchase program, with respect to the Class A common stock, will be used primarily to offset a portion of
the shares that have been or will be issued under the Lazard Ltd 2005 Equity Incentive Plan (the 2005 Plan) and the Lazard Ltd 2008 Incentive Compensation Plan (the 2008 Plan). Purchases may be made in the open market or
through privately negotiated transactions. Pursuant to this authorization, since inception of the program in February 2006 through March 31, 2009, Lazard



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##### Table of Contents

LAZARD GROUP LLC



NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS(Continued)

(UNAUDITED)

(dollars in thousands,
unless otherwise noted)



Group purchased an aggregate of 10,369,189 shares of Class A common stock at an average price of $34.23 per share (including, during the three month period
ended March 31, 2009, 267,419 shares at an average price of $21.05 per share) and an aggregate of 655,751 Lazard Group common membership interests at an average price of $37.21 per common membership interest. As a result of Lazard Groups
delivery of an aggregate of 834,611 shares for the settlement of vested restricted stock unit grants (RSUs) and deferred stock unit grants (DSUs) during the two year period ended December 31, 2008 and the three month period
ended March 31, 2009, there were 9,534,578 and 9,376,162 shares of Class A common stock held by Lazard Group at March 31, 2009 and December 31, 2008, respectively. Such Class A common shares are reported, at cost, as a reduction of
members equity within the condensed consolidated statements of financial condition.



As of March 31, 2009, $120,677 of the initial $500,000 repurchase authorization remained available under the share repurchase program.



Accumulated Other Comprehensive Loss, Net of Tax



The components of accumulated other comprehensive loss, net of
tax at March 31, 2009 and December 31, 2008 are as follows:



|                                                     |  |               |          |   |                  |   |          |  
|---------------------------------------------------- |  | ------------- | -------- | - | ---------------- | - | -------- | -
|                                                     |  | March 31,2009 |          |   | December 31,2008 |  
|Currency translation adjustments                     |  | $             | (46,948  | ) |                  | $ | (27,299  | )
|Interest rate hedge                                  |  |               | (6,581   | ) |                  |   | (6,851   | )
|Net unrealized loss on available-for-sale securities |  |               | (50,547  | ) |                  |   | (41,512  | )
|Employee benefit plans                               |  |               | (45,848  | ) |                  |   | (45,745  | )
|                                                     |  |               |          |   |                  |   |          |  
|Accumulated other comprehensive loss, net of tax     |  | $             | (149,924 | ) |                  | $ | (121,407 | )
|                                                     |  |               |          |   |                  |   |          |  



Noncontrolling
Interests



Noncontrolling interests represent
interests in various LAM-related GP interests that the Company is deemed to control but does not own.



|11. | INCENTIVE PLANS
|--- | ---------------



Share-Based Incentive Plan Awards



A description of Lazard Ltds 2005 Plan and 2008 Plan, and activity with respect thereto during the three month periods ended March 31, 2009 and
2008, is presented below.



Shares Available Under the
2005 Plan and 2008 Plan



The 2005 Plan authorizes the
issuance of up to 25,000,000 shares of Class A common stock pursuant to the grant or exercise of stock options, stock appreciation rights, restricted stock, stock units and other equity-based awards. Each stock unit granted under the 2005 Plan
represents a contingent right to receive one share of Class A common stock, at no cost to the recipient. The fair value of such stock unit awards is determined based on the closing market price of Lazard Ltds Class A common stock at the date
of grant.



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##### Table of Contents

LAZARD GROUP LLC



NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS(Continued)

(UNAUDITED)

(dollars in thousands,
unless otherwise noted)



In addition to the shares available under the 2005 Plan, additional shares of Class A common stock
are available under the 2008 Plan, which was approved by the stockholders of Lazard Ltd on May 6, 2008. The maximum number of shares available under the 2008 Plan is based on a formula that limits the aggregate number of shares that may, at any
time, be subject to awards that are considered outstanding under the 2008 Plan to 30% of the then-outstanding shares of Class A common stock (treating, for this purpose, the then-outstanding exchangeable interests of LAZ-MD Holdings on a
fully-exchanged basis as described in the 2005 Plan).



Restricted Stock Unit Grants



RSUs
require future service as a condition for the delivery of the underlying shares of Class A common stock and convert into Class A common stock on a one-for-one basis after the stipulated vesting periods. The grant date fair value of the RSUs, net of
an estimated forfeiture rate, is amortized over the vesting periods or requisite service periods as required under SFAS No. 123 (revised 2004), Share-Based Payment. Expense relating to RSUs is charged to compensation and
benefits expense (and, in the 2009 period, restructuring expense, with respect to the expense associated with the acceleration of unrecognized expense pertaining to RSUs granted previously to individuals who were terminated in the
restructuring) within the condensed consolidated statements of operations, and amounted to $88,687 (including $24,239 in restructuring expense) and $55,622 for the three month periods ended March 31, 2009 and 2008, respectively. RSUs issued
subsequent to December 31, 2005 generally include a dividend participation right that provides that during vesting periods each RSU is attributed additional RSUs (or fractions thereof) equivalent to any ordinary quarterly dividends paid on Class A
common stock during such period. During the three month periods ended March 31, 2009 and 2008, dividend participation rights required the issuance of 81,167 and 51,432 RSUs, respectively.



During the three month periods ended March 31, 2009 and 2008, 178,720 and 71,742 RSUs vested, respectively. In connection
therewith, and after considering the withholding tax obligations pertaining thereto, 109,003 and 47,316 shares of Class A common stock held by Lazard Group were delivered, respectively.



Deferred Stock Unit Grants



Non-executive members of the Board of Directors of Lazard Group (who are also the same Non-Executive Directors of Lazard
Ltd) receive approximately 55% of their annual compensation for service on the Board of Directors and its committees in the form of DSUs which amounted to none and 897 DSUs granted during the three month periods ended March 31, 2009 and 2008,
respectively. Their remaining compensation is payable in cash, which they may elect to receive in the form of additional DSUs under the Directors Fee Deferral Unit Plan described below. DSUs are convertible into Class A common stock at the
time of cessation of service to the Board. The DSUs include a cash dividend participation right equivalent to any ordinary quarterly dividends paid on Class A common stock resulting in nominal cash payments for the three months ended March 31, 2009
and 2008. DSU awards are expensed at their fair value on their date of grant, which, inclusive of amounts related to the Directors Fee Deferral Unit Plan, totaled $39 and $34 during the three months ended March 31, 2009 and 2008, respectively.



On May 9, 2006, the Board of Directors adopted the
Directors Fee Deferral Unit Plan, which allows the Companys Non-Executive Directors to elect to receive additional DSUs pursuant to the 2005 Plan in lieu of some or all of their cash fees. The number of DSUs that shall be granted to a
Non-Executive Director pursuant to this election will equal the value of cash fees that the applicable Non-Executive Director has elected to forego



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##### Table of Contents

LAZARD GROUP LLC



NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS(Continued)

(UNAUDITED)

(dollars in thousands,
unless otherwise noted)



pursuant to such election, divided by the market value of a share of Class A common stock on the date on which the foregone cash fees would otherwise have
been paid. During the three month periods ended March 31, 2009 and 2008, 2,609 and 1,001 DSUs, respectively, had been granted pursuant to such Plan.



The following is a summary of activity relating to RSUs and DSUs during the three month periods ended March 31, 2009 and 2008:





|                                                                   |  |            |   |      |                                     |       |       |        |                                     |   |      
|------------------------------------------------------------------ |  | ---------- | - | ---- | ----------------------------------- | ----- | ----- | ------ | ----------------------------------- | - | -----
|                                                                   |  | RSUs       |   | DSUs
|                                                                   |  | Units      |   |      | WeightedAverageGrant DateFair Value |       | Units |        | WeightedAverageGrant DateFair Value
|Balance, January 1, 2009                                           |  | 22,141,468 |   |      | $                                   | 39.17 |       | 65,256 |                                     | $ | 40.32
|Granted (including 81,167 RSUs relating to dividend participation) |  | 6,816,601  |   |      | $                                   | 30.91 |       | 2,609  |                                     | $ | 29.34
|Forfeited                                                          |  | (259,593   | ) |      | $                                   | 38.26 |       |       |                                     |   |     
|Vested/Converted                                                   |  | (178,720   | ) |      | $                                   | 40.00 |       |       |                                     |   |     
|                                                                   |  |            |   |      |                                     |       |       |        |                                     |   |      
|Balance, March 31, 2009                                            |  | 28,519,756 |   |      | $                                   | 37.20 |       | 67,865 |                                     | $ | 39.90
|                                                                   |  |            |   |      |                                     |       |       |        |                                     |   |      



|                                                                   |  |            |   |      |                                     |       |       |        |   |                                     |   |      
|------------------------------------------------------------------ |  | ---------- | - | ---- | ----------------------------------- | ----- | ----- | ------ | - | ----------------------------------- | - | -----
|                                                                   |  | RSUs       |   | DSUs
|                                                                   |  | Units      |   |      | WeightedAverageGrant DateFair Value |       | Units |        |   | WeightedAverageGrant DateFair Value
|Balance, January 1, 2008                                           |  | 9,507,935  |   |      | $                                   | 42.35 |       | 35,310 |   |                                     | $ | 43.16
|Granted (including 51,432 RSUs relating to dividend participation) |  | 11,963,072 |   |      | $                                   | 37.33 |       | 1,898  |   |                                     | $ | 35.37
|Forfeited                                                          |  | (48,632    | ) |      | $                                   | 39.97 |       |       |   |                                     |   |     
|Vested/Converted                                                   |  | (71,742    | ) |      | $                                   | 37.81 |       | (5,839 | ) |                                     | $ | 38.28
|                                                                   |  |            |   |      |                                     |       |       |        |   |                                     |   |      
|Balance, March 31, 2008                                            |  | 21,350,633 |   |      | $                                   | 39.56 |       | 31,369 |   |                                     | $ | 43.59
|                                                                   |  |            |   |      |                                     |       |       |        |   |                                     |   |      



As of March 31, 2009,
unrecognized RSU compensation expense, adjusted for estimated forfeitures, was approximately $542,671, with such unrecognized compensation expense expected to be recognized over a weighted average period of approximately 2.4 years subsequent to
March 31, 2009. The ultimate amount of such expense is dependent upon the actual number of RSUs that vest. The Company periodically assesses the forfeiture rates used for such estimates. A change in estimated forfeiture rates would cause the
aggregate amount of compensation expense recognized in future periods to differ from the estimated unrecognized compensation expense described herein.



Deferred Compensation



A portion of the incentive awards granted in February 2009 included a deferred cash component aggregating $146,582, which vests over a maximum period of
four years. Such deferred cash awards vest and are payable as follows: $47,925 on November 30, 2009, $34,990 on each of November 30, 2010 and February 28, 2012 and $28,677 on February 28, 2013. Payments are subject to the
employee meeting the vesting requirements, and, except for the November 30, 2009 payment, earn interest at an annual rate of 5%. The compensation



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LAZARD GROUP LLC



NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS(Continued)

(UNAUDITED)

(dollars in thousands,
unless otherwise noted)



expense with respect to the deferred cash component award, net of estimated forfeitures, is being recognized over weighted average period of 2.2 years.



|12. | EMPLOYEE BENEFIT PLANS
|--- | ----------------------



The Company, through its subsidiaries, provides retirement and other post-employment benefits to certain of its employees through defined contribution and
defined benefit pension plans and other post-retirement benefit plans. The Company has the right to amend or terminate its benefit plans at any time subject to the terms of such plans. Expenses (benefits) related to the Companys employee
benefit plans are included in compensation and benefits expense on the condensed consolidated statements of operations. The Company uses December 31 as the measurement date for its employee benefit plans.



Employer Contributions to Pension
PlansThere have been no contributions to the defined benefit plans made by the Company during the three month periods ended March 31, 2009 and 2008.



The Company is contingently obligated to make further contributions to its U.K. pension plans depending on the cumulative
performance of the plans assets against specific benchmarks as measured on June 1, 2009 (the measurement date) and June 1, 2010 (the remeasurement date). Any liability, as determined on the measurement date, would be
funded over four years in equal monthly installments and will be subject to further adjustment on the remeasurement date. Any remaining liability as of the remeasurement date will be payable over the subsequent four years in equal monthly
installments. If March 31, 2009 had been the measurement date of the plans assets, the estimated liability related to the cumulative underperformance as of that date would amount to approximately $29,400.



The following table summarizes the components of total benefit cost (credit)
for the three month periods ended March 31, 2009 and 2008:



|                                                  |  |                                      |        |   |                        |   |                              |      |  |      |    |      |   |    |      |   |      |   |  |   |      |  
|------------------------------------------------- |  | ------------------------------------ | ------ | - | ---------------------- | - | ---------------------------- | ---- |  | ---- | -- | ---- | - | -- | ---- | - | ---- | - |  | - | ---- | -
|                                                  |  | Pension Plans                        |        |   | Pension PlanSupplement |   | Post-RetirementMedical Plans |     
|                                                  |  | For The Three Months Ended March 31, |       
|                                                  |  | 2009                                 |        |   | 2008                   |   |                              | 2009 |  | 2008 |    | 2009 |   |    | 2008 |  
|Components of Net Periodic Benefit Cost (Credit): |  |                                      |        |   |                        |   |                              |      |  |      |    |      |   |    |      |   |      |   |  |   |      |  
|Service cost                                      |  | $                                    |       |   |                        | $ |                             |      |  | $    |   |      | $ |   |      | $ | 28   |   |  | $ | 26   |  
|Interest cost                                     |  |                                      | 5,503  |   |                        |   | 7,772                        |      |  |      | 16 |      |   | 16 |      |   | 95   |   |  |   | 107  |  
|Expected return on plan assets                    |  |                                      | (6,130 | ) |                        |   | (8,974                       | )    |  |      |   |      |   |   |      |   |     |   |  |   |     |  
|Amortization of:                                  |  |                                      |        |   |                        |   |                              |      |  |      |    |      |   |    |      |   |      |   |  |   |      |  
|Prior service credit                              |  |                                      |       |   |                        |   |                             |      |  |      |   |      |   |   |      |   | (346 | ) |  |   | (346 | )
|Net actuarial loss                                |  |                                      | 208    |   |                        |   | 95                           |      |  |      |   |      |   |   |      |   | 27   |   |  |   | 36   |  
|                                                  |  |                                      |        |   |                        |   |                              |      |  |      |    |      |   |    |      |   |      |   |  |   |      |  
|Net periodic benefit cost (credit)                |  | $                                    | (419   | ) |                        | $ | (1,107                       | )    |  | $    | 16 |      | $ | 16 |      | $ | (196 | ) |  | $ | (177 | )
|                                                  |  |                                      |        |   |                        |   |                              |      |  |      |    |      |   |    |      |   |      |   |  |   |      |  



|13. | RESTRUCTURING PLAN
|--- | ------------------



In February, 2009, the Company announced a restructuring plan to optimize its mix of personnel, which included certain staff reductions and realignments
of personnel. In connection with such plan, the Company recorded an increase to the after-tax loss attributable to Lazard Group in the three month period ended March 31, 2009 of $56,149, as a result of a charge of $62,550 (principally consisting of
compensation-related expenses, including the acceleration of unrecognized expense pertaining to RSUs previously granted to individuals who were terminated pursuant to the restructuring), with this charge partially offset by an associated income tax
credit of $6,401.



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##### Table of Contents

LAZARD GROUP LLC



NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS(Continued)

(UNAUDITED)

(dollars in thousands,
unless otherwise noted)



As of March 31, 2009, the remaining liability associated with the restructuring plan was
approximately $32,000 and primarily relates to severance and benefit payments and other costs associated with the restructuring. Such aggregate amount is reported within accrued compensation and benefits and other liabilities
on the accompanying condensed consolidated statement of financial condition as of March 31, 2009. The Company expects to deliver the shares of Class A common stock underlying the above-mentioned RSUs during the second and third quarters of 2009.



|14. | INCOME TAXES
|--- | ------------



The Company had an income tax benefit of $4,554 and an income tax provision of $4,337 for the three month periods ended March 31, 2009 and 2008,
respectively, representing effective tax rates of 5.0% and 24.4%, respectively. Excluding the income tax benefit of $6,401 related to the $62,550 restructuring charge in the first quarter of 2009, the Company had an income tax provision of $1,847.



Although a portion of Lazard Groups income is subject to
U.S. federal income taxes, the principal difference between the U.S. federal statutory tax rate of 35.0% and Lazard Groups effective tax rates above is due to Lazard Group primarily operating in the U.S. as a limited liability company that is
treated as a partnership for U.S. federal income tax purposes. As a result, Lazard Groups income from its U.S. operations is generally not subject to U.S. federal income taxes because such income is attributable to the individual partners.
Lazard Group, however, is subject to Unincorporated Business Tax (UBT) which is attributable to Lazard Groups operations apportioned to New York City. UBT is incremental to the U.S. federal statutory tax rate. Outside the U.S.,
Lazard Group operates principally through subsidiary corporations that are subject to local income taxes.



|15. | RELATED PARTIES
|--- | ---------------



Amounts receivable from, and payable to, related parties as of March 31, 2009 and December 31, 2008 are set forth below:



|                        |  |               |         |                  |   |        
|----------------------- |  | ------------- | ------- | ---------------- | - | -------
|                        |  | March 31,2009 |         | December 31,2008
|                        | 
|Receivables             |  |               |         |                  |   |        
|LFCM Holdings           |  | $             | 7,546   |                  | $ | 10,377 
|Lazard Ltd Subsidiaries |  |               | 57,508  |                  |   | 56,114 
|Other                   |  |               | 47      |                  |   |       
|                        |  |               |         |                  |   |        
|Total                   |  |               | 65,101  |                  | $ | 66,491 
|                        |  |               |         |                  |   |        
|Payables                |  |               |         |                  |   |        
|LFCM Holdings           |  | $             | 790     |                  | $ | 704    
|Lazard Ltd Subsidiaries |  |               | 262,128 |                  |   | 262,875
|Other                   |  |               | 66      |                  |   | 396    
|                        |  |               |         |                  |   |        
|                        |  | $             | 262,984 |                  | $ | 263,975
|                        |  |               |         |                  |   |        



LFCM Holdings



LFCM Holdings owns and operates the capital markets business
and fund management activities as well as other specified non-operating assets and liabilities that were transferred by Lazard Group (referred to as the



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##### Table of Contents

LAZARD GROUP LLC



NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS(Continued)

(UNAUDITED)

(dollars in thousands,
unless otherwise noted)



separated businesses) in May 2005 and is owned by the current and former working members, including certain of Lazards current and former
managing directors (which also include our executive officers) who are also members of LAZ-MD Holdings. In addition to the master separation agreement, which effected the separation and recapitalization that occurred in May 2005, LFCM Holdings
entered into an insurance matters agreement and a license agreement that addressed various business matters associated with the separation, as well as employee benefits, administrative services, business alliance and lease indemnity agreements, all
of which are described in the Companys Form 10-K.



For
the three month periods ended March 31, 2009 and 2008, amounts recorded by Lazard Group relating to administrative and support services under the administrative services agreement (the administrative services agreement) amounted to
$1,457 and $972, respectively, and net referral fees for underwriting, private placement, M&A and restructuring transactions under the business alliance agreement amounted to $157 and $9,767 respectively. Such amounts are reported as reductions
to operating expenses and as other revenue, respectively.



With
respect to the lease indemnity agreement, the net present value of the receivable due from LFCM Holdings with respect to its indemnification for obligations relating to abandoned lease space in the U.K. at March 31, 2009 and December 31, 2008 was
$4,161 and $4,085, respectively. The balance is due based on a schedule of periodic payments through May 10, 2010.



The remaining receivables from LFCM Holdings and its subsidiaries as of March 31, 2009 and December 31, 2008 primarily include $1,437 and $4,949,
respectively, related to administrative and support services and reimbursement of expenses incurred on behalf of LFCM Holdings and $1,544 and $1,087, respectively, related to referral fees for underwriting and private placement transactions.



Lazard Ltd Subsidiaries



Lazard Groups receivables from subsidiaries of Lazard Ltd at March 31,
2009 and December 31, 2008 include interest-bearing loans of $55,715 at both dates, including accrued interest thereon.



As of March 31, 2009 and December 31, 2008, Lazard Groups payables to subsidiaries of Lazard Ltd included $64,808 and $64,512, respectively, related
to the LAM Merger (see Note 5 of Notes to Condensed Consolidated Financial Statements), as well as payables at March 31, 2009 and December 31, 2008 in connection with Lazard Groups acquisition of GAHL and Lazard Ltds acquisition of CWC
and subsequent contribution of CWC to Lazard Group of $48,024 and $43,634, respectively (see Note 6 of Notes to Condensed Consolidated Financial Statements). In addition, as of March 31, 2009 and December 31, 2008, Lazard Groups payables to
subsidiaries of Lazard Ltd include interest-bearing loans, plus accrued interest thereon, of $149,137 and $154,706, respectively, with related interest expense amounting to $1,828 and $0 for the three month periods ended March 31, 2009 and 2008,
respectively.



LAZ-MD Holdings



Lazard Group provides selected administrative and support services to
LAZ-MD Holdings through the administrative services agreement, with such services generally to be provided until December 31, 2014 unless terminated earlier because of a change in control of either party. Lazard Group charges LAZ-MD Holdings for
these services based on Lazard Groups cost allocation methodology and, for the three month periods ended March 31, 2009 and 2008 such charges amounted to $188 in each period.



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##### Table of Contents

LAZARD GROUP LLC



NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS(Continued)

(UNAUDITED)

(dollars in thousands,
unless otherwise noted)



Other



For the three month periods ended March 31, 2009 and 2008, expenses recorded by Lazard Group relating to referral fees for
restructuring transactions and fee sharing with MBA amounted to $219 and $0, respectively. At March 31, 2009 and December 31, 2008, the balance of such related party transactions are included within related party payables in the
accompanying condensed consolidated statement of financial condition and amounted to $66 and $396, respectively.



In addition, see Note 9 of Notes to Condensed Consolidated Financial Statements for information regarding CP II and the Sapphire IPO.



|16. | REGULATORY AUTHORITIES
|--- | ----------------------



LFNY is a U.S. registered broker-dealer and is subject to the net capital requirements of Rule 15c3-1 under the Exchange Act. Under the basic method
permitted by this rule, the minimum required net capital, as defined, is a specified fixed percentage of total aggregate indebtedness recorded in LFNYs Financial and Operational Combined Uniform Single (FOCUS) report filed with the
Financial Industry Regulatory Authority (FINRA), or $100, whichever is greater. At March 31, 2009, LFNYs regulatory net capital was $126,311, which exceeded the minimum requirement by $120,070.



Certain U.K. subsidiaries of the Company, including LCL, Lazard Fund Managers
Limited and Lazard Asset Management Limited (the U.K. Subsidiaries) are regulated by the Financial Services Authority. At March 31, 2009, the aggregate regulatory net capital of the U.K. Subsidiaries was $199,783, which exceeded the
minimum requirement by $164,437.



CFLF, through which
non-corporate finance advisory activities are carried out in France, is subject to regulation by the Commission Bancaire and the Comité des Etablissements de Crédit et des Entreprises dInvestissement for its banking activities
conducted through its subsidiary, LFB. In addition, the investment services activities of the Paris group, exercised through LFB and other subsidiaries of CFLF, primarily LFG (asset management) and Fonds Partenaires Gestion (private equity), are
subject to regulation and supervision by the Autorité des Marchés Financiers. At March 31, 2009, the consolidated regulatory net capital of CFLF was $176,963, which exceeded the minimum requirement set for regulatory capital levels by
$79,581.



Certain other U.S. and non-U.S. subsidiaries are
subject to various capital adequacy requirements promulgated by various regulatory and exchange authorities in the countries in which they operate. At March 31, 2009, for those subsidiaries with regulatory capital requirements, their
aggregate net capital was $70,153, which exceeded the minimum required capital by $51,056.



At March 31, 2009, each of these subsidiaries individually was in compliance with its regulatory capital requirements.



Effective April 1, 2008, Lazard Ltd became subject to supervision by the SEC as a Supervised Investment Bank Holding Company (SIBHC). As a
SIBHC, Lazard Ltd is subject to group-wide supervision, which requires it to compute allowable capital and risk allowances on a consolidated basis. Reporting as a SIBHC began in the second quarter of 2008. We believe that Lazard Ltd is the only
institution currently subject to supervision by the SEC as a SIBHC. We are currently in discussions with the SEC regarding the scope and nature of Lazard Ltds reporting and other obligations under the SIBHC program.



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LAZARD GROUP LLC



NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS(Continued)

(UNAUDITED)

(dollars in thousands,
unless otherwise noted)



|17. | SEGMENT INFORMATION
|--- | -------------------



The Companys reportable segments offer different products and services and are managed separately as different levels and types of expertise are
required to effectively manage the segments transactions. Each segment is reviewed to determine the allocation of resources and to assess its performance. The Companys principal operating activities are included in two business segments:
Financial Advisory (which includes providing advice on M&A and strategic advisory matters, restructurings and capital structure advisory services, capital raising and other transactions), and Asset Management (which includes the management of
equity and fixed income securities and alternative investment and private equity funds). In addition, the Company records selected other activities in its Corporate segment, including management of cash, certain investments and the commercial
banking activities of LFB. The Company also allocates outstanding indebtedness to its Corporate segment.



The Companys segment information for the three month periods ended March 31, 2009 and 2008 is prepared using the following methodology:



| |  |  | Revenue and expenses directly associated with each segment are included in determining operating income (loss).
| | - |  | ---------------------------------------------------------------------------------------------------------------



| |  |  | Expenses not directly associated with specific segments are allocated based on the most relevant measures applicable, including headcount, square footage and other
factors.
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Segment assets are based on those directly associated with each segment, and include an allocation of certain assets relating to various segments, based on the most
relevant measures applicable, including headcount, square footage and other factors.
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



The Company allocates investment gains and losses, interest income and interest expense among the various segments based on the segment in which the
underlying asset or liability is reported.



Each segments
operating expenses include (i) compensation and benefits expenses incurred directly in support of the businesses and (ii) other operating expenses, which include directly incurred expenses for occupancy and equipment, marketing and business
development, technology and information services, professional services, fund administration and outsourced services and indirect support costs (including compensation and other operating expenses related thereto) for administrative services. Such
administrative services include, but are not limited to, accounting, tax, legal, facilities management and senior management activities.



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LAZARD GROUP LLC



NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS(Continued)

(UNAUDITED)

(dollars in thousands,
unless otherwise noted)



Management evaluates segment results based on net revenue and operating income (loss) and believes
that the following information provides a reasonable representation of each segments contribution to operations with respect to net revenue, operating income (loss) and total assets:



|                   |  |                             |  |                             |         |   |      |   |         |  
|------------------ |  | --------------------------- |  | --------------------------- | ------- | - | ---- | - | ------- | -
|                   |  |                             |  | Three Months EndedMarch 31, |        
|                   |  |                             |  | 2009                        |         |   | 2008 |  
|Financial Advisory |  | Net Revenue                 |  | $                           | 162,977 |   |      | $ | 212,263 |  
|                   |  | Operating Expenses          |  |                             | 177,621 |   |      |   | 174,760 |  
|                   |  |                             |  |                             |         |   |      |   |         |  
|                   |  | Operating Income (Loss)     |  | $                           | (14,644 | ) |      | $ | 37,503  |  
|                   |  |                             |  |                             |         |   |      |   |         |  
|                   |  |                             | 
|Asset Management   |  | Net Revenue                 |  | $                           | 101,523 |   |      | $ | 165,031 |  
|                   |  | Operating Expenses          |  |                             | 90,440  |   |      |   | 114,643 |  
|                   |  |                             |  |                             |         |   |      |   |         |  
|                   |  | Operating Income            |  | $                           | 11,083  |   |      | $ | 50,388  |  
|                   |  |                             |  |                             |         |   |      |   |         |  
|                   |  |                             | 
|Corporate          |  | Net Revenue                 |  | $                           | (16,633 | ) |      | $ | (69,786 | )
|                   |  | Operating Expenses (a)      |  |                             | 70,714  |   |      |   | 308     |  
|                   |  |                             |  |                             |         |   |      |   |         |  
|                   |  | Operating Income (Loss) (a) |  | $                           | (87,347 | ) |      | $ | (70,094 | )
|                   |  |                             |  |                             |         |   |      |   |         |  
|                   |  |                             | 
|Total              |  | Net Revenue                 |  | $                           | 247,867 |   |      | $ | 307,508 |  
|                   |  | Operating Expenses          |  |                             | 338,775 |   |      |   | 289,711 |  
|                   |  |                             |  |                             |         |   |      |   |         |  
|                   |  | Operating Income (Loss)     |  | $                           | (90,908 | ) |      | $ | 17,797  |  
|                   |  |                             |  |                             |         |   |      |   |         |  



|(a) | Includes, in the three month period ended March 31, 2009, restructuring expense of $62,550 (see Note 13 of Notes to Condensed Consolidated Financial Statements).
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------



|                   |  |   |           |  |   |           |  |               |  |                  |  | 
|------------------ |  | - | --------- |  | - | --------- |  | ------------- |  | ---------------- |  | 
|                   |  |   |           | 
|                   |  |   |           |  |   |           |  | As of        
|                   |  |   |           |  |   |           |  | March 31,2009 |  | December 31,2008
|Total Assets:      |  |   |           |  |   |           |  |               |  |                 
|Financial Advisory |  | $ | 673,343   |  | $ | 739,444  
|Asset Management   |  |   | 376,209   |  |   | 419,858  
|Corporate          |  |   | 1,342,472 |  |   | 1,726,280
|                   |  |   |           |  |   |           |  |               |  |                  |  | 
|Total              |  | $ | 2,392,024 |  | $ | 2,885,582
|                   |  |   |           |  |   |           |  |               |  |                  |  | 



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|Item 2. | Managements Discussion and Analysis of Financial Condition and Results of Operations
|------- | -------------------------------------------------------------------------------------



The following discussion should be read in conjunction with Lazard Groups condensed consolidated financial
statements and the related notes included elsewhere in this Quarterly Report on Form 10-Q (the Form 10-Q).



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



Management has included in Parts I and II of this Form 10-Q, including in its Managements Discussion and Analysis of
Financial Condition and Results of Operations (the MD&A), statements that are forward-looking statements. In some cases, you can identify these statements by forward-looking words such as may, might,
will, should, expect, plan, anticipate, believe, estimate, predict, potential 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 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 the forward-looking statements. These factors include, but are not limited to, those discussed in our Annual Report on
Form 10-K for the year ended December 31, 2008 (the Form 10-K) under the caption Risk Factors, including the following:



| |  |  | a decline in general economic conditions or the global financial markets,
| | - |  | -------------------------------------------------------------------------



| |  |  | 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 our employees.
| | - |  | ----------------------------------------------------------------------------------



These risks and uncertainties are not exhaustive. Other sections of the Form 10-K may include additional factors, which
could adversely impact our business and financial performance. Moreover, we operate in a very competitive and rapidly changing environment. New risks and uncertainties emerge from time to time, and it is not possible for our management to predict
all risks and uncertainties, nor can management assess the impact of all factors on our business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking
statements.



Although we believe the expectations reflected in
the forward-looking statements are reasonable, we cannot guarantee future results, level of activity, performance or achievements. Moreover, neither we nor any other person assumes responsibility for the accuracy or completeness of any of these
forward-looking statements. You should not rely upon forward-looking statements as predictions of future events. We are under no duty to update any of these forward-looking statements after the date of this Form 10-Q to conform our prior statements
to actual results or revised expectations and we do not intend to do so.



Forward-looking statements include, but are not limited to, statements about the:



| |  |  | business possible or assumed future results of operations and operating cash flows,
| | - |  | ------------------------------------------------------------------------------------



| |  |  | business strategies and investment policies,
| | - |  | ---------------------------------------------



| |  |  | business financing plans and the availability of short-term borrowing,
| | - |  | -----------------------------------------------------------------------



| |  |  | business competitive position,
| | - |  | -------------------------------



| |  |  | future acquisitions, including the consideration to be paid and the timing of consummation,
| | - |  | -------------------------------------------------------------------------------------------



| |  |  | potential growth opportunities available to our businesses,
| | - |  | -----------------------------------------------------------



| |  |  | recruitment and retention of managing directors and employees,
| | - |  | --------------------------------------------------------------



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| |  |  | target levels of compensation expense,
| | - |  | --------------------------------------



| |  |  | business potential operating performance, achievements, productivity improvements, efficiency and cost reduction efforts,
| | - |  | --------------------------------------------------------------------------------------------------------------------------



| |  |  | likelihood of success and impact of litigation,
| | - |  | -----------------------------------------------



| |  |  | expected tax rate,
| | - |  | ------------------



| |  |  | changes in interest and tax rates,
| | - |  | ----------------------------------



| |  |  | expectation with respect to the economy, securities markets, the market for mergers, acquisitions and strategic advisory activity, the market for asset management
activity and other industry trends,
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | effects of competition on our business, and
| | - |  | -------------------------------------------



| |  |  | impact of future legislation and regulation on our business.
| | - |  | ------------------------------------------------------------



The Company is committed to providing timely and accurate information to the investing public, consistent with our legal and
regulatory obligations. To that end, the Company uses its websites to convey information about its 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 (AUM) in various mutual funds, hedge funds and other investment products managed by Lazard Asset Management LLC and its subsidiaries (LAM). Monthly updates of these funds are
posted to the LAM website (www.lazardnet.com) on the third business day following the end of each month. Investors can link to Lazard Ltd, Lazard Group and their operating company websites through www.lazard.com. Our websites and the
information contained therein or connected thereto are not incorporated into this Form 10-Q.



Business Summary



The
Companys principal sources of revenue are derived from activities in the following business segments:



| |  |  | Financial Advisory, which includes providing advice on mergers and acquisitions (M&A) and strategic advisory matters, restructurings and capital
structure advisory services, capital raising and other transactions, and
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Asset Management, which includes strategies for the management of equity and fixed income securities and alternative investment and private equity funds.
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------



In addition, the Company records selected
other activities in its Corporate segment, including management of cash, certain investments and the commercial banking activities of Lazard Groups Paris-based Lazard Frères Banque SA (LFB, or our bank). The
Company also allocates outstanding indebtedness to its Corporate segment.



LFB is a registered bank regulated by the Banque de France and its primary operations include asset and liability management for Lazard Groups Paris House through its money market desk and commercial banking
operations, deposit taking and, to a lesser extent, financing activities and custodial oversight over assets of various clients. LFB engages in underwritten offerings of securities in France and we expect that it may expand its scope to include
placements elsewhere in Europe.



On September 25, 2008,
pursuant to a definitive merger agreement dated August 14, 2008, the Company, LAM, and LAZ Sub I, LLC, a newly formed subsidiary of Lazard Frères & Co. LLC (LFNY), completed the merger of LAZ Sub I, LLC with and into
LAM (the LAM Merger). See Note 5 of Notes to Condensed Consolidated Financial Statements for additional information relating to the LAM Merger.



Lazard also has a long history of making alternative investments with its own capital, usually alongside capital of qualified institutional and individual
investors. At the time of Lazard Ltds equity public offering and as a part of the separation, we transferred to LFCM Holdings LLC (LFCM Holdings) all of our alternative



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investment activities, except for Fonds Partenaires Gestion (FPG), our private equity business in France. Such activities transferred to LFCM
Holdings represented the alternative investment activities of Lazard Alternative Investments Holdings LLC (LAI) and included private equity investments of Corporate Partners II Limited (CP II) and Lazard Senior Housing
Partners LP. CP II was managed by a subsidiary of LAI until February 16, 2009. Effective February 17, 2009, ownership and control of CP II was transferred to the investment professionals who manage CP II. We also transferred to LFCM Holdings certain
principal investments by Lazard Group in the funds managed by the separated businesses, subject to certain options by us to reacquire such investments, while we retained our investment in our French private equity funds. Since 2005, consistent with
our obligations to LFCM Holdings, we have engaged in a number of alternative investments and private equity activities. See Note 9 of Notes to Condensed Consolidated Financial Statements for additional information regarding alternative
investments.



We continue to explore and discuss opportunities
to expand the scope of our alternative investment and private equity activities in Europe, the U.S. and elsewhere. These opportunities could include internal growth of new funds and direct investments by us, partnerships or strategic relationships,
investments with third parties or acquisitions of existing funds or management companies. Also, consistent with our obligations to LFCM Holdings, we may explore discrete capital markets opportunities.



For the three month periods ended March 31, 2009 and 2008, the Companys
consolidated net revenue was derived from the following segments:



|                   |  |                             |   |  |      |  
|------------------ |  | --------------------------- | - |  | ---- | -
|                   |  | Three Months EndedMarch 31, |  
|                   |  | 2009                        |   |  | 2008 |  
|Financial Advisory |  | 66                          | % |  | 69   | %
|Asset Management   |  | 41                          |   |  | 54   |  
|Corporate          |  | (7                          | ) |  | (23  | )
|                   |  |                             |   |  |      |  
|Total              |  | 100                         | % |  | 100  | %
|                   |  |                             |   |  |      |  



Business Environment



The global financial markets have experienced
extraordinary disruption and volatility during 2008 and the three month period ended March 31, 2009, and therefore challenging market conditions persisted throughout most of such period. Contraction in worldwide credit markets due in part to
sub-prime lending issues, volatile currency and commodity markets, major write-downs within the financial sector and volatile oil prices have raised significant uncertainty about the state of the U.S. and global economies. These economic and market
conditions have negatively affected our financial performance in both the Financial Advisory and Asset Management businesses, particularly in the second half of 2008 and through March 31, 2009, and may continue to further adversely affect our
financial performance in 2009. The deterioration of the equity and credit markets has also negatively impacted our banks portfolio of debt securities in the Corporate segment.



Lazard operates in a very competitive and rapidly changing environment. New risks and uncertainties emerge from time to
time, and it is not possible for Lazards management to predict all risks and uncertainties, nor can Lazard assess the impact of all potentially applicable factors on its business or the extent to which any factor, or combination of factors,
may cause actual results to differ materially from those contained in any forward-looking statements. See the section entitled Risk Factors in the Form 10-K. Furthermore, net income (loss) and revenue in any period may not be indicative
of full-year results or the results of any other period and may vary significantly from year to year and quarter to quarter.



Financial Advisory



M&A activity for the three month period ended March 31, 2009 decreased substantially versus the corresponding period in 2008 for global completed
transactions as well as global and trans-atlantic announced transactions, while activity in financial restructuring accelerated during the 2009 period driven by a significant



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increase in the number of corporate debt defaults. According to Moodys Investors Service, Inc., in the three month period ended March 31, 2009, a total
of 79 issuers defaulted as compared to 16 in the corresponding period in 2008. Moodys is expecting further increases in the default rates throughout 2009. The following table sets forth industry statistics regarding the volume of M&A
transactions in the 2008 to 2009 periods:



|                            |  |                              |     |      |   |               |  |     |   
|--------------------------- |  | ---------------------------- | --- | ---- | - | ------------- |  | --- | --
|                            |  | Three Months Ended March 31, |    
|                            |  | 2009                         |     | 2008 |   | %Incr /(Decr) | 
|                            |  | ($ in billions)              |    
|Completed M&A Transactions: |  |                              |     |      |   |               |  |     |   
|Global                      |  | $                            | 466 |      | $ | 797           |  | (42 | )%
|Trans-Atlantic              |  |                              | 53  |      |   | 46            |  | 15  | % 
|                            |  |                              |    
|Announced M&A Transactions: |  |                              |     |      |   |               |  |     |   
|Global                      |  |                              | 450 |      |   | 518           |  | (13 | )%
|Trans-Atlantic              |  |                              | 7   |      |   | 42            |  | (83 | )%



|Source: | Thomson Financial as of April 13, 2009
|------- | --------------------------------------



While overall M&A industry statistics regarding the number and size of announced transactions continued to decline in the first three months of 2009
and the industry outlook for the remainder of 2009 remains challenging, we believe that even in the current environment we are relatively well positioned, due to the expertise and insights of our bankers, the investments we have made in our business
and the diversity of our products. Nevertheless, we expect 2009 to be a challenging year. Generally, during such periods of unfavorable market or economic conditions, the volume and value of M&A transactions may decrease, thereby reducing the
demand for our advisory services and increasing competition among financial services companies seeking such engagements.



We expect that our Financial Restructuring practice should benefit over the next several years from the significant acceleration in the level of
corporate defaults, as well as from advising companies during this period of volatility on matters relating to debt and financing restructuring and other on- and off-balance sheet assignments. Our Financial Restructuring assignments normally are
executed over a six- to eighteen-month period.



In April 2009,
government officials in New York announced a new policy banning the use of placement agents by funds seeking investment contributions from the New York State and New York City public pension funds. Our Private Fund Advisory Group, which is part of
our Financial Advisory segment, acts as placement agent for investment funds, including investment funds that have historically received capital from these New York public pension funds. We are currently evaluating the potential impact of this new
policy on our Private Fund Advisory Group.



Asset
Management



As shown in the table below, major global
market indices at March 31, 2009 decreased significantly as compared to such indices at both December 31, 2008 and March 31, 2008, principally as a result of the continued deterioration in the global equity markets.



|                             |  |                                     |    |  |               |   
|---------------------------- |  | ----------------------------------- | -- |  | ------------- | --
|                             |  | Percentage ChangeMarch 31, 2009 vs. |   
|                             |  | December 31,2008                    |    |  | March 31,2008 |   
|MSCI World Index             |  | (13                                 | )% |  | (44           | )%
|CAC 40                       |  | (13                                 | )% |  | (40           | )%
|DAX                          |  | (15                                 | )% |  | (38           | )%
|FTSE 100                     |  | (12                                 | )% |  | (31           | )%
|TOPIX 100                    |  | (11                                 | )% |  | (39           | )%
|MSCI Emerging Market         |  | 1                                   | %  |  | (48           | )%
|Dow Jones Industrial Average |  | (13                                 | )% |  | (38           | )%
|NASDAQ                       |  | (3                                  | )% |  | (33           | )%
|S&P 500                      |  | (12                                 | )% |  | (40           | )%



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Because the fees that we receive for providing investment management and advisory services are primarily
driven by the level of AUM, market downturns or volatility in foreign currencies that reduce the level of our AUM reduce the revenues we receive from our Asset Management business. Market depreciation reflected in the changes in Lazards AUM
during the three month period ended March 31, 2009 generally corresponded to the changes in global market indices. During the first three months of 2009, our Asset Management business continued to be adversely impacted by a reduction in our AUM and
may be impacted further should there be a sustained market downturn.



Financial Statement Overview



Net
Revenue



The majority of Lazards Financial
Advisory net revenue is earned from the successful completion of M&A transactions, strategic advisory matters, restructuring and capital structure advisory services, capital raising and similar transactions. The main driver of Financial Advisory
net revenue is overall M&A activity, the level of corporate debt defaults and the environment for capital raising activities, particularly in the industries and geographic markets in which Lazard focuses. In some client engagements, often those
involving financially distressed companies, revenue is earned in the form of retainers and similar fees that are contractually agreed upon with each client for each assignment and are not necessarily linked to the completion of a transaction. In
addition, Lazard also earns fees from providing strategic advice to clients, with such fees not being dependent on a specific transaction. Lazards Financial Advisory segment also earns revenue from public and private securities offerings in
the form of referral fees for referring opportunities to LFCM Holdings for underwriting and distribution of securities. The referral fees received from LFCM Holdings are generally one-half of the revenue recorded by LFCM Holdings in respect of such
activities. Significant fluctuations in Financial Advisory net revenue can occur over the course of any given year. These fluctuations arise because a significant portion of Financial Advisory net revenue is earned upon the successful completion of
a transaction, financial restructuring or capital raising activity, the timing of which is uncertain and is not subject to Lazards control.



Lazards Asset Management segment principally includes LAM, Lazard Frères Gestion SAS (LFG) and FPG. Asset Management net revenue
is derived from fees for investment management and advisory services provided to institutional and private clients. The main driver of Asset Management net revenue is the level of AUM, which is influenced by Lazards investment performance, its
ability to successfully attract and retain assets, the broader performance of the global equity markets and, to a lesser extent, fixed income markets. As a result, fluctuations in financial markets and client asset inflows and outflows have a direct
effect on Asset Management net revenue and operating income. Asset Management fees are generally based on the level of AUM measured as of the end of a quarter or month, and an increase or reduction in AUM at such dates, due to market price
fluctuations, currency fluctuations, net client asset flows or otherwise, will result in a corresponding increase or decrease in management fees. The majority of our investment advisory contracts are generally terminable at any time or on notice of
30 days or less. Institutional and individual clients, and firms with which we have strategic alliances, can terminate their relationship with us, reduce the aggregate amount of AUM or shift their funds to other types of accounts with different rate
structures for a number of reasons, including investment performance, changes in prevailing interest rates and financial market performance. In addition, as Lazards AUM include significant assets that are denominated in currencies other than
U.S. dollars, changes in the value of the U.S. dollar relative to foreign currencies will impact the value of Lazards AUM. Fees vary with the type of assets managed, with higher fees earned on equity assets, alternative investments (such as
hedge funds) and private equity investments, and lower fees earned on fixed income and cash management products.



The Company earns performance-based incentive fees on various investment products, including traditional products and alternative investment funds such as
hedge funds and private equity funds. Incentive fees are calculated based on a specified percentage of a funds net appreciation, in some cases in excess of established benchmarks. Incentive fees on private equity funds also may be earned in
the form of a carried interest if profits from investments exceed a specified threshold. These incentive fees are paid at the end of the measurement period, and those fees received at the end of the measurement period are not subject to reversal or
payback. Incentive fees



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on hedge funds generally are subject to loss carryforward provisions in which losses incurred by the funds in any year are applied against certain future
period net appreciation before any incentive fees can be earned. Incentive fees earned on our private equity funds are generally not recorded until potential uncertainties regarding the ultimate realizable amounts have been determined. For most of
our alternative investment strategies, the determination date is at year-end (unless an account terminates during the year), and therefore such incentive fees are recorded in the fourth quarter of Lazards fiscal year.



Corporate segment net revenue consists primarily of net interest income,
including amounts earned at LFB, and investment gains and losses on LAM-managed equity funds and principal investments in equities and alternative investment funds managed by LAI and FPG, and on debt securities at our bank. Interest expense is also
included in Corporate net revenue. Corporate net revenue can fluctuate due to changes in the fair value of investments classified as trading, and with respect to available-for-sale, when realized, or when a decline is
determined to be other than temporary, as well as due to changes in interest and currency exchange rates and in the levels of cash, investments and indebtedness.



Effective July 1, 2008, as permitted by Statement of Financial Accounting Standards (SFAS) No. 115,
Accounting for Certain Investments in Debt and Equity Securities(SFAS No. 115), the portion of our banks corporate debt portfolio that had been previously designated as trading was re-designated to
available-for-sale. During the three month period ended March 31, 2009, the Company recorded markdowns of $9 million in accumulated other comprehensive income (loss), net of tax (AOCI) related to such
re-designated debt securities.



Although Corporate segment net
revenue during the three month period ended March 31, 2009 represented (7)% of Lazards net revenue, total assets in Corporate represented 56% of Lazards consolidated total assets as of March 31, 2009, principally attributable to assets
associated with LFB, and, to a lesser extent, investments in LAM-managed funds, other securities and cash.



Operating Expenses



The majority of Lazards operating expenses relate to compensation and benefits for employees and managing directors. We have a policy that targets
our ongoing compensation and benefits expense in our traditional businesses, excluding special items, to not exceed 57.5% of operating revenue each year, including compensation and benefits payable to our managing directors and amortization of the
relevant portion of the restricted stock unit awards (RSUs) under the Lazard Ltd 2005 Equity Incentive Plan, the Lazard Ltd 2008 Incentive Compensation Plan and the related deferred cash component of such incentive awards, with such
amortization determined on a straight-line basis over the vesting periods and not on the basis of revenue recognition (see Note 11 of Notes to Condensed Consolidated Financial Statements). As discussed in our Form 10-K, there can be no
guarantee that this target ratio will continue to be achieved in future periods or that our policy may not change in the future, including to adapt to changes in the economic environment, or that a change may not be necessitated by lower operating
revenues or to fund a major expansion. Increased competition for senior professionals, continued turmoil and volatility in the financial markets generally or other factors could prevent us from continuing to maintain this target ratio.



In the three month periods ended March 31, 2009 and 2008 (excluding the
restructuring charge incurred in the 2009 period), our compensation expense-to-operating revenue ratio was 74.4% and 56.8%, respectively. As a result of the challenging market conditions in the 2009 period described above, and the resulting decline
in operating revenue, the ratio in the 2009 period exceeded our target ratio. Our compensation ratio for the first quarter of 2009 is not necessarily representative of the ratio for the full year.



Lazards operating expenses also include non-compensation
expense and, in the 2009 period, restructuring expense. Non-compensation expense includes costs for occupancy and equipment, marketing and business development, technology and information services, professional services, fund
administration and outsourced



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services, and other expenses. Restructuring expense relates to the recent reduction of headcount and includes severance and related benefits expense, the
acceleration of unrecognized expense pertaining to RSUs previously granted to individuals who were terminated and certain other costs related to this initiative.



Income Taxes



Lazard Group primarily operates in the U.S. as a limited liability company that is treated as a partnership for U.S. federal income tax purposes. As a
result, Lazard Groups income from its U.S. operations is generally not subject to U.S. federal income taxes because such income is attributable to the individual partners. Outside the U.S., Lazard Group operates principally through
corporations and is subject to local income taxes. Income taxes shown on Lazards condensed consolidated statements of operations are attributable to taxes incurred in non-U.S. entities and to New York City Unincorporated Business Tax
(UBT) attributable to Lazards operations apportioned to New York City.



Noncontrolling Interests



The Company records a charge (credit) attributable to the noncontrolling interests in various LAM-related general partnerships (GPs) held directly by certain of our LAM managing directors.



See Note 10 of Notes to Condensed Consolidated Financial Statements for
information regarding noncontrolling interests.



Consolidated Results of
Operations



Lazards consolidated financial
statements are presented in U.S. dollars. Many of our non-U.S. subsidiaries have a functional currency (i.e., the currency in which operational activities are primarily conducted) that is other than the U.S. dollar, generally the currency of
the country in which the subsidiaries are domiciled. Such subsidiaries assets and liabilities are translated into U.S. dollars using exchange rates as of the respective balance sheet date, while revenue and expenses are translated at average
exchange rates during the respective periods based on the daily closing exchange rates. Adjustments that result from translating amounts from a subsidiarys functional currency are reported as a component of members equity. Foreign
currency remeasurement gains and losses on transactions in non-functional currencies are included in the consolidated statements of operations.



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##### Table of Contents

A discussion of the Companys consolidated results of operations for the three month periods ended
March 31, 2009 and 2008 is set forth below, followed by a more detailed discussion of business segment results.



|                                                                                   |  |                             |         |    |      |   |         |  
|---------------------------------------------------------------------------------- |  | --------------------------- | ------- | -- | ---- | - | ------- | -
|                                                                                   |  | Three Months EndedMarch 31, |        
|                                                                                   |  | 2009                        |         |    | 2008 |  
|                                                                                   |  | ($ in thousands)            |        
|Revenue                                                                            |  |                             |         |    |      |   |         |  
|Investment banking and other advisory fees                                         |  | $                           | 161,402 |    |      | $ | 196,724 |  
|Money management fees                                                              |  |                             | 98,943  |    |      |   | 158,082 |  
|Interest income                                                                    |  |                             | 8,293   |    |      |   | 22,390  |  
|Other                                                                              |  |                             | 8,034   |    |      |   | (30,992 | )
|                                                                                   |  |                             |         |    |      |   |         |  
|Total revenue                                                                      |  |                             | 276,672 |    |      |   | 346,204 |  
|Interest expense                                                                   |  |                             | 28,805  |    |      |   | 38,696  |  
|                                                                                   |  |                             |         |    |      |   |         |  
|Net revenue                                                                        |  |                             | 247,867 |    |      |   | 307,508 |  
|                                                                                   |  |                             |         |    |      |   |         |  
|Operating Expenses                                                                 |  |                             |         |    |      |   |         |  
|Compensation and benefits                                                          |  |                             | 203,532 |    |      |   | 193,559 |  
|Non-compensation                                                                   |  |                             | 72,693  |    |      |   | 96,152  |  
|Restructuring(a)                                                                   |  |                             | 62,550  |    |      |   |        |  
|                                                                                   |  |                             |         |    |      |   |         |  
|Total operating expenses                                                           |  |                             | 338,775 |    |      |   | 289,711 |  
|                                                                                   |  |                             |         |    |      |   |         |  
|Operating Income (Loss)                                                            |  |                             | (90,908 | )  |      |   | 17,797  |  
|Provision (benefit) for income taxes(b)                                            |  |                             | (4,554  | )  |      |   | 4,337   |  
|                                                                                   |  |                             |         |    |      |   |         |  
|Net Income (Loss)                                                                  |  |                             | (86,354 | )  |      |   | 13,460  |  
|LessNet Income (Loss) Attributable to Noncontrolling Interests                    |  |                             | (1,071  | )  |      |   | (3,254  | )
|                                                                                   |  |                             |         |    |      |   |         |  
|Net Income (Loss) Attributable to Lazard Group                                     |  | $                           | (85,283 | )  |      | $ | 16,714  |  
|                                                                                   |  |                             |         |    |      |   |         |  
|Net Income (Loss) Attributable to Lazard Group, Excluding Restructuring Expense(c) |  | $                           | (29,134 | )  |      | $ | 16,714  |  
|                                                                                   |  |                             |         |    |      |   |         |  
|As a % of Net Revenue:                                                             |  |                             |         |    |      |   |         |  
|Operating Income (Loss)                                                            |  |                             | (37     | )% |      |   | 6       | %
|                                                                                   |  |                             |         |    |      |   |         |  
|Operating Income (Loss), Excluding Restructuring Expense                           |  |                             | (11     | )% |      |   | 6       | %
|                                                                                   |  |                             |         |    |      |   |         |  





|(a) | Relates to costs associated with staff reductions and realignments as announced in February 2009. See Note 13 of Notes to Condensed Consolidated Financial Statements.
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(b) | Includes a benefit of $6,401 in the 2009 period relating to the restructuring expense.
|--- | --------------------------------------------------------------------------------------

|(c) | A non-GAAP measure that management believes provides the most meaningful comparison between historical, present and future periods.
|--- | -----------------------------------------------------------------------------------------------------------------------------------



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##### Table of Contents

The table below describes the components of operating revenue, a non-GAAP measure used by the Company to
manage total compensation and benefits expense to managing directors and employees. Management believes operating revenue provides the most meaningful basis for comparison between present, historical and future periods.



|                                            |  |                             |   |  |          |  
|------------------------------------------- |  | --------------------------- | - |  | -------- | -
|                                            |  | Three Months EndedMarch 31, |  
|                                            |  | 2009                        |   |  | 2008     |  
|                                            |  | ($ in thousands)            |  
|Operating revenue                           |  |                             |   |  |          |  
|Total revenue                               |  | $276,672                    |   |  | $346,204 |  
|Add (deduct):                               |  |                             |   |  |          |  
|LFB interest expense(a)                     |  | (4,017                      | ) |  | (8,901   | )
|Loss related to consolidation of LAM GPs(b) |  | 1,070                       |   |  | 3,253    |  
|                                            |  |                             |   |  |          |  
|Operating revenue                           |  | $273,725                    |   |  | $340,556 |  
|                                            |  |                             |   |  |          |  



|(a) | The interest expense incurred by LFB is excluded from total revenue because LFB is a commercial bank and we consider its interest expense to be a cost directly related to the
conduct of its business.
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(b) | LAM GP loss is excluded because we do not deem such amount as operating in nature and the Company has no economic interest in such amount. Further, such LAM GP loss is directly
offset by a credit to noncontrolling interests for the corresponding amount.
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



Certain key ratios, statistics and headcount information for the three month periods ended March 31, 2009 and 2008 are set forth below:



|                                            |  |                             |   |  |      |  
|------------------------------------------- |  | --------------------------- | - |  | ---- | -
|                                            |  | Three Months EndedMarch 31, |  
|                                            |  | 2009                        |   |  | 2008 |  
|As a % of Net Revenue, By Revenue Category: |  |                             |   |  |      |  
|Investment banking and other advisory fees  |  | 65                          | % |  | 64   | %
|Money management fees                       |  | 40                          |   |  | 51   |  
|Interest income                             |  | 3                           |   |  | 8    |  
|Other                                       |  | 3                           |   |  | (10  | )
|Interest expense                            |  | (11                         | ) |  | (13  | )
|                                            |  |                             |   |  |      |  
|Net Revenue                                 |  | 100                         | % |  | 100  | %
|                                            |  |                             |   |  |      |  



|                                          |  |                 |  |      
|----------------------------------------- |  | --------------- |  | -----
|                                          |  | As of March 31,
|                                          |  | 2009            |  | 2008 
|Headcount:                                |  |                 |  |      
|Managing Directors:                       |  |                 |  |      
|Financial Advisory                        |  | 154             |  | 155  
|Asset Management                          |  | 56              |  | 55   
|Corporate                                 |  | 8               |  | 8    
|Limited Managing Directors                |  | 4               |  | 4    
|Other Employees:                          |  |                 |  |      
|Business segment professionals            |  | 964             |  | 994  
|All other professionals and support staff |  | 1,121           |  | 1,274
|                                          |  |                 |  |      
|Total                                     |  | 2,307           |  | 2,490
|                                          |  |                 |  |      



During the first
quarter of 2009, we continued to hire key professionals on a selective basis, and to redeploy employees into areas where we saw potential for growth. As described above, to further optimize our mix of



39



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personnel we have reduced staff in other areas, including the back office. Headcount as of March 31, 2009 reflects most, but not all, of the headcount
reductions related to the restructuring expense recorded in the 2009 period. The remaining headcount reductions will be reflected in the second quarter of 2009.



Operating Results



The Companys quarterly revenue and profits can fluctuate materially depending on the number, size and timing of completed transactions on which
it advised, as well as seasonality and other factors. Accordingly, the revenue and profits in any particular quarter may not be indicative of future results. Lazard management believes that annual results are the most meaningful basis for comparison
among present, historical and future periods.



Three Months Ended March
31, 2009 versus March 31, 2008



The Company reported a net
loss attributable to Lazard Group of $85 million for the three month period ended March 31, 2009, a decline of $102 million as compared to net income of $17 million in the corresponding period in 2008, due to a 23% decline in Financial Advisory net
revenue as a result of a dramatic slowdown in global M&A activity, a 38% decline in Asset Management net revenue as a result of the decline in equity markets and the after-tax impact of the restructuring expense in the first quarter of 2009
which served to increase the net loss attributable to Lazard Ltd by $56 million. These items were partially offset by lower amounts relating to non-compensation expense, income taxes and net income attributable to noncontrolling interests. When
excluding the after-tax impact of the restructuring expense, the net loss attributable to Lazard Ltd in the three month period ended March 31, 2009 was $29 million, a decrease of $46 million as compared to the corresponding period in 2008.



Net revenue decreased $60 million, or 19%, for the three month
period ended March 31, 2009, compared to the corresponding period in 2008, with operating revenue decreasing $67 million, or 20%, compared to 2008. Fees from investment banking and other advisory activities decreased $35 million, or 18%, versus
2008. Our investment banking fees reflect fees from M&A and Strategic Advisory, Restructuring and Corporate Finance assignments encompassing general strategic and transaction-specific advice to public and private companies, governments and other
parties, and includes various corporate finance services. Some of our assignments and, therefore, related revenue, are not reflected in or correlated to publicly available statistical information and, therefore, may not correlate to global industry
statistics. Money management fees, including incentive fees, decreased $59 million, or 37%, as compared to the corresponding period in 2008 due to a $52 billion, or 38%, decline in average AUM for the three month period ended March 31, 2009 versus
the corresponding period in 2008, primarily as the result of market and foreign exchange depreciation, partially offset by higher incentive fees earned in 2009. Interest income decreased $14 million, or 63%, due to lower average cash balances and a
lower interest rate environment. Other revenue increased by $39 million in the three month period ended March 31, 2009 as compared to the 2008 period. Other revenue in the 2008 period was negatively impacted by aggregate investment related
losses of $57 million in our banks corporate debt portfolio (redesignated as available-for-sale effective July 1, 2008) and the Companys net investment in corporate equities to seed Asset Management products. With respect to the latter,
during the 2009 period, the Company had in place a hedging strategy to minimize its risks associated with volatility in the equity markets. Interest expense for the three month period ended March 31, 2009 decreased $10 million, or 26%, primarily
related to the Companys May 2008 repurchase of $437 million aggregate principal amount of its 6.12% senior notes in connection with the remarketing of such notes, the partial repurchases of other senior notes, as well as lower interest paid on
LFBs customer deposits.



Compensation and benefits
expense for the three month period ended March 31, 2009 increased by $10 million, reflecting $27 million of additional amortization of an increased amount of RSUs and deferred cash awards granted, partially offset by lower salaries and benefits
due to the impact of the staff reductions during the 2009 first quarter. Compensation and benefits expense was 74.4% of operating revenue in the three month period ended March 31, 2009, as compared to 56.8% in the 2008 period. As described above,
our compensation ratio for the first quarter of 2009 is not necessarily representative of the ratio for the full year.



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Non-compensation expense for the three month period ended March 31, 2009 decreased by $23 million, or
24%. Factors contributing to the decrease include lower spending on travel and other business development activities, lower consulting and recruiting fees and the strengthening of the U.S. dollar versus foreign currencies. In addition, the 2008
period included a $6 million provision for costs related to leases on abandoned space. The ratio of non-compensation expense to operating revenue was 26.6% for the three month period ended March 31, 2009, as compared to 28.2% of operating
revenue for the 2008 period, with such decreased percentage primarily attributable to the 24% decline in non-compensation expense (coupled with the 20% decline in operating revenue) in the 2009 period.



During the first quarter of 2009, we redeployed our banking professionals
into growth areas and reduced staffing in other areas to further optimize our mix of personnel. As a result, a pre-tax charge of $63 million was recorded in the three month period ended March 31, 2009 in connection with severance and benefit
payments, the acceleration of unrecognized expense pertaining to RSUs previously granted to individuals who were terminated and certain other costs related to the restructuring initiative.



Including the pre-tax impact of the restructuring expense, operating loss for
the three month period ended March 31, 2009 was $91 million, a decrease of $109 million as compared to operating income of $18 million in the 2008 period. As a percentage of net revenue, the operating loss in the 2009 period was (37)% as compared to
6% in the corresponding period in 2008. When excluding the restructuring expense of $63 million in the 2009 period, the operating loss was $28 million, a decrease of $46 million as compared to the corresponding period in 2008, and was (11)% of
net revenue in the 2009 period as compared to 6% in the 2008 period.



The provision for income taxes for the three month period ended March 31, 2009 decreased $9 million, principally due to an operating loss in the 2009 period as compared to operating income in the 2008 period.



Net income attributable to noncontrolling interests for the three month
period ended March 31, 2008 decreased by $2 million, reflecting a $1 million credit related to various LAM GPs held directly by certain of our LAM managing directors (for which there is an offsetting amount included in revenue-other), as
compared to a $3 million credit recorded in the corresponding 2008 period.



Business Segments



The following is a
discussion of net revenue and operating income (loss) for the Companys business segments - Financial Advisory, Asset Management and Corporate. Each segments operating expenses include (i) compensation and benefits expenses that are
incurred directly in support of the segment and (ii) other operating expenses, which include directly incurred expenses for occupancy and equipment, marketing and business development, technology and information services, professional services,
fund administration and outsourcing, and indirect support costs (including compensation and benefits expense and other operating expenses related thereto) for administrative services. Such administrative services include, but are not limited to,
accounting, tax, legal, facilities management and senior management activities. Such support costs are allocated to the relevant segments based on various statistical drivers such as, among other items, headcount, square footage and transactional
volume. For the three month period ended March 31, 2009 restructuring expense was recorded in the Corporate segment.



41



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##### Table of Contents

Financial Advisory



The following table summarizes the operating results of the Financial Advisory segment:



|                                                        |  |                              |         |    |      |   |         |  
|------------------------------------------------------- |  | ---------------------------- | ------- | -- | ---- | - | ------- | -
|                                                        |  | Three Months Ended March 31, |        
|                                                        |  | 2009                         |         |    | 2008 |  
|                                                        |  | ($ in thousands)             |        
|M&A and Strategic Advisory                              |  | $                            | 96,475  |    |      | $ | 165,985 |  
|Financial Restructuring                                 |  |                              | 60,929  |    |      |   | 15,538  |  
|Corporate Finance and Other                             |  |                              | 5,573   |    |      |   | 30,740  |  
|                                                        |  |                              |         |    |      |   |         |  
|Net Revenue                                             |  |                              | 162,977 |    |      |   | 212,263 |  
|Operating Expenses                                      |  |                              | 177,621 |    |      |   | 174,760 |  
|                                                        |  |                              |         |    |      |   |         |  
|Operating Income (Loss)                                 |  | $                            | (14,644 | )  |      | $ | 37,503  |  
|                                                        |  |                              |         |    |      |   |         |  
|Operating Income (Loss), as a Percentage of Net Revenue |  |                              | (9      | )% |      |   | 18      | %
|                                                        |  |                              |         |    |      |   |         |  
|                                                        | 
|                                                        |  | As of March 31,              |        
|                                                        |  | 2009                         |         |    | 2008 |  
|Headcount (a):                                          |  |                              |         |    |      |   |         |  
|Managing Directors                                      |  |                              | 154     |    |      |   | 155     |  
|Limited Managing Directors                              |  |                              | 4       |    |      |   | 3       |  
|Other Employees:                                        |  |                              |         |    |      |   |         |  
|Business segment professionals                          |  |                              | 656     |    |      |   | 649     |  
|All other professionals and support staff               |  |                              | 228     |    |      |   | 265     |  
|                                                        |  |                              |         |    |      |   |         |  
|Total                                                   |  |                              | 1,042   |    |      |   | 1,072   |  
|                                                        |  |                              |         |    |      |   |         |  



|(a) | Excludes headcount related to indirect support functions, with such headcount being included in the Corporate segment.
|--- | ----------------------------------------------------------------------------------------------------------------------



Net revenue trends in Financial Advisory for M&A and Strategic Advisory
and Financial Restructuring are generally correlated to the volume of completed industry-wide M&A transactions and restructurings occurring subsequent to corporate debt defaults, respectively. However, deviations from this relationship can occur
in any given year for a number of reasons. For instance, our results can diverge from industry-wide activity where there are material variances from the level of industry-wide M&A activity in a particular market where Lazard has significant
market share, or regarding the relative number of our advisory engagements with respect to larger- sized transactions, and where we are involved in significant non-public assignments. Certain Lazard client statistics and global industry statistics
are set forth below:



|                                                                   |  |                              |   |  |      |  
|------------------------------------------------------------------ |  | ---------------------------- | - |  | ---- | -
|                                                                   |  | Three Months Ended March 31, |  
|                                                                   |  | 2009                         |   |  | 2008 |  
|Lazard Statistics:                                                 |  |                              |   |  |      |  
|Number of Clients:                                                 |  |                              |   |  |      |  
|Total                                                              |  | 223                          |   |  | 251  |  
|With Fees Greater than $1 million                                  |  | 38                           |   |  | 48   |  
|Percentage of Total Financial Advisory Revenue from Top 10 Clients |  | 22                           | % |  | 36   | %
|Number of M&A Transactions Completed Greater than $1 billion (a)   |  | 8                            |   |  | 12   |  



|(a) | Source: Thomson Financial as of April 13, 2009
|--- | ----------------------------------------------



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The geographical distribution of Financial Advisory net revenue is set forth below in percentage terms.
The offices that generate Financial Advisory net revenue are located in the U.S., Europe (principally in the U.K., France, Italy, Spain and Germany) and the rest of the world (principally in Australia).



|              |  |                              |   |  |      |  
|------------- |  | ---------------------------- | - |  | ---- | -
|              |  | Three Months Ended March 31, |  
|              |  | 2009                         |   |  | 2008 |  
|United States |  | 53                           | % |  | 51   | %
|Europe        |  | 44                           |   |  | 39   |  
|Rest of World |  | 3                            |   |  | 10   |  
|              |  |                              |   |  |      |  
|Total         |  | 100                          | % |  | 100  | %
|              |  |                              |   |  |      |  



The Companys
managing directors and many of its professionals have significant experience, and many of them are able to use this experience to advise on M&A, strategic advisory matters and financial restructuring transactions, depending on clients
needs. This flexibility allows Lazard to better match its professionals with the counter-cyclical business cycles of mergers and acquisitions and financial restructurings. While Lazard measures revenue by practice area, Lazard does not separately
measure the costs or profitability of M&A services as compared to financial restructuring services. Accordingly, Lazard measures performance in its Financial Advisory segment based on overall segment net revenue and operating income margins.



Financial Advisory Results of Operations



Financial Advisorys quarterly revenue and
profits can fluctuate materially depending on the number, size and timing of completed transactions on which it advised, as well as seasonality and other factors. Accordingly, the revenue and profits in any particular quarter or period may not be
indicative of future results. Lazard management believes that annual results are the most meaningful basis for comparison among present, historical and future periods.



Three Months Ended March 31, 2009 versus March 31, 2008



For the three month period ended March 31, 2009, Financial Advisory net revenue decreased $49 million, or 23%, as compared to the corresponding period in
2008. Financial Restructuring revenue increased $45 million, or 292%, offset by M&A and Strategic Advisory revenue decreasing $70 million, or 42%, and Corporate Finance and Other net revenue decreasing $25 million, or 82%.



The decrease in M&A and Strategic Advisory revenue for the three month
period ended March 31, 2009 was principally due to the adverse economic and market conditions described above, which resulted in lower average fees per transaction, and a lower number of M&A transactions completed greater than $1 billion, which
typically generate significant fees. Our major clients, which in the aggregate represented a significant portion of our M&A and Strategic Advisory revenue for the 2009 period, included Actividades de Construccion y Servicios, Air France,
Axiones, Exelon, IBM, OB Inc., Otsuka Pharmaceutical, Ripplewood Holdings, St. Gobain and Société Nationale dInvestissement.



Financial Restructuring revenue is derived from various activities including bankruptcy assignments, global debt and financing restructurings and advice
on complex on- and off-balance sheet assignments, such as retiree health care obligations. Financial Restructuring revenue during the 2009 period increased significantly as compared to the 2008 period due to the significant increases in defaults and
in-court and out-of-court restructurings. Notable assignments completed in the first quarter of 2009 included CIFG Holding, Lee Enterprises, Reliant Energy, LAW and Wellman. Recently announced Financial Restructuring assignments that we are
currently involved with include in-court Chapter 11 bankruptcies and restructuring and debt advisory assignments relating to major industry groups such as Professional and Financial Services, Real Estate and Property Development, Technology and
Media, Gaming, Entertainment and Hospitality, among others.



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The decrease in Corporate Finance and Other net revenue reflected decreases in the value of fund closings
by our Private Fund Advisory Group, private placements by our Capital Markets Group and declines in Equity Capital Markets transactions, all of which have been negatively impacted by the continued deterioration of the financial markets during the
first three months of 2009. Equity Capital Markets transaction assignments in the first quarter of 2009 included advising Mead Johnson on its initial public offering and Geron and Progress Energy on follow-on capital raising transactions. In
addition, we advised CommScope, Pier I and Oscient Pharmaceuticals on various debt restructuring transactions and our Alternative Capital Finance Group served as a placement agent on a Registered Direct (RD) Offering for Ariad
Pharmaceuticals.



Operating expenses for the three month period
ended March 31, 2009 increased $3 million, or 2%, as compared to the 2008 period, primarily due to increases related to the amortization of an increased amount of RSUs and deferred cash awards, which were partially offset by lower non-compensation
expense for travel and other business development expenses and lower recruiting fees and support group charges.



Financial Advisory operating loss for the first three months of 2009 was $15 million, a decrease of $52 million as compared to the 2008 period.
Operating loss represented (9)% of segment net revenues for the 2009 period, as compared to 18% in the 2008 period.



Asset Management



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



|                                        |  |                 |        |                  |   |       
|--------------------------------------- |  | --------------- | ------ | ---------------- | - | ------
|                                        |  | As of          
|                                        |  | March 31,2009   |        | December 31,2008
|                                        |  | ($ in millions)
|AUM:                                    |  |                 |        |                  |   |       
|International Equities                  |  | $               | 20,403 |                  | $ | 25,000
|Global Equities                         |  |                 | 30,041 |                  |   | 31,553
|U.S. Equities                           |  |                 | 11,329 |                  |   | 13,177
|                                        |  |                 |        |                  |   |       
|Total Equities                          |  |                 | 61,773 |                  |   | 69,730
|                                        |  |                 |        |                  |   |       
|European and International Fixed Income |  |                 | 11,481 |                  |   | 12,690
|Global Fixed Income                     |  |                 | 1,297  |                  |   | 1,183 
|U.S. Fixed Income                       |  |                 | 2,040  |                  |   | 1,951 
|                                        |  |                 |        |                  |   |       
|Total Fixed Income                      |  |                 | 14,818 |                  |   | 15,824
|                                        |  |                 |        |                  |   |       
|Alternative Investments                 |  |                 | 2,805  |                  |   | 3,196 
|Private Equity (a)                      |  |                 | 1,512  |                  |   | 1,579 
|Cash Management                         |  |                 | 176    |                  |   | 780   
|                                        |  |                 |        |                  |   |       
|Total AUM                               |  | $               | 81,084 |                  | $ | 91,109
|                                        |  |                 |        |                  |   |       



|(a) | Includes $1.2 billion as of both March 31, 2009 and December 31, 2008 held by an investment company for which Lazard may earn carried interest.
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------



44



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##### Table of Contents

Average AUM for the three month periods ended March 31, 2009 and 2008 is set forth below. Average AUM is
based on an average of quarterly ending balances for the respective periods.



|            |  |                             |        |      |   |        
|----------- |  | --------------------------- | ------ | ---- | - | -------
|            |  | Three Months EndedMarch 31,
|            |  | 2009                        |        | 2008
|            |  | ($ in millions)            
|Average AUM |  | $                           | 86,097 |      | $ | 137,803
|            |  |                             |        |      |   |        



Total AUM at March 31,
2009 decreased $10 billion, or 11%, as compared to that at December 31, 2008, with average AUM for the three month period ended March 31, 2009 decreasing $52 billion, or 38%, as compared to the average AUM for the corresponding 2008 period.
International, Global and U.S. equities represented 25%, 37% and 14% of total AUM at March 31, 2009, respectively, versus 27%, 35% and 14% of total AUM at December 31, 2008, respectively.



As of both March 31, 2009 and 2008, approximately 86% of our AUM was managed on behalf of institutional clients, including
corporations, labor unions, public pension funds, insurance companies and banks, and through sub-advisory relationships, mutual fund sponsors, broker-dealers and registered advisors, and 14% of our AUM was managed on behalf of individual client
relationships, which are principally with family offices and high-net worth individuals.



The following is a summary of changes in AUM for the three month periods ended March 31, 2009, and 2008.



|                                         |  |                             |        |   |      |   |         |  
|---------------------------------------- |  | --------------------------- | ------ | - | ---- | - | ------- | -
|                                         |  | Three Months EndedMarch 31, |       
|                                         |  | 2009                        |        |   | 2008 |  
|                                         |  | ($ in millions)             |       
|AUMBeginning of Period                  |  | $                           | 91,109 |   |      | $ | 141,413 |  
|Net Flows(a)                             |  |                             | (2,447 | ) |      |   | 1,716   |  
|Market and Foreign Exchange Depreciation |  |                             | (7,578 | ) |      |   | (8,936  | )
|                                         |  |                             |        |   |      |   |         |  
|AUMEnd of Period                        |  | $                           | 81,084 |   |      | $ | 134,193 |  
|                                         |  |                             |        |   |      |   |         |  





|(a) | Includes inflows of $3,547 and $7,778 and outflows of $5,994 and $6,062 for the three month periods ended March 31, 2009 and 2008, respectively.
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------



Inflows during the three month period ended March 31, 2009 occurred primarily
in Emerging Markets and Japanese Equity products due to contributions to existing accounts as well as new accounts gained. Outflows occurred most significantly in European and International Fixed Income, European Equity and U.S. Small Cap Equity
products due to withdrawals from existing accounts and accounts lost.



Consistent with the industry as a whole, we experienced continued market depreciation in the first quarter of 2009, including the impact of the strengthening U.S. dollar versus foreign currencies, with these factors being the principal
contributors to the decrease in AUM. As of March 31, 2009, funds denominated in foreign currencies represented approximately 45% of total AUM. Foreign denominated AUM declines in value with the strengthening of the U.S. dollar and increases in value
as the U.S. dollar weakens. Equity products experienced the most significant decrease, which approximated 9%, with such decrease slightly better than the global market indices previously described.



45



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The following table summarizes the operating results of the Asset Management segment for the three month
periods ended March 31, 2009 and 2008.



|                                                                                    |  |                             |         |   |      |   |         |  
|----------------------------------------------------------------------------------- |  | --------------------------- | ------- | - | ---- | - | ------- | -
|                                                                                    |  | Three Months EndedMarch 31, |        
|                                                                                    |  | 2009                        |         |   | 2008 |  
|                                                                                    |  | ($ in thousands)            |        
|Management Fees                                                                     |  | $                           | 93,500  |   |      | $ | 158,009 |  
|Incentive Fees                                                                      |  |                             | 5,435   |   |      |   |        |  
|Other Income                                                                        |  |                             | 3,658   |   |      |   | 10,275  |  
|                                                                                    |  |                             |         |   |      |   |         |  
|Sub-total                                                                           |  |                             | 102,593 |   |      |   | 168,284 |  
|LAM GP-Related Loss                                                                 |  |                             | (1,070  | ) |      |   | (3,253  | )
|                                                                                    |  |                             |         |   |      |   |         |  
|Net Revenue                                                                         |  |                             | 101,523 |   |      |   | 165,031 |  
|Operating Expenses (a)                                                              |  |                             | 90,440  |   |      |   | 114,643 |  
|                                                                                    |  |                             |         |   |      |   |         |  
|Operating Income                                                                    |  |                             | 11,083  |   |      |   | 50,388  |  
|Add (Deduct):                                                                       |  |                             |         |   |      |   |         |  
|LAM GP-Related Loss                                                                 |  |                             | 1,070   |   |      |   | 3,253   |  
|                                                                                    |  |                             |         |   |      |   |         |  
|Operating Income, excluding LAM GP-Related Loss                                     |  | $                           | 12,153  |   |      | $ | 53,641  |  
|                                                                                    |  |                             |         |   |      |   |         |  
|Operating Income, as a Percentage of Net Revenue                                    |  |                             | 11      | % |      |   | 31      | %
|                                                                                    |  |                             |         |   |      |   |         |  
|Operating Income, as a Percentage of Net Revenue, excluding LAM GP-Related Loss (b) |  |                             | 12      | % |      |   | 32      | %
|                                                                                    |  |                             |         |   |      |   |         |  



|(a) | Includes indirect support costs (including compensation and benefits expense and other operating expenses related thereto).
|--- | ---------------------------------------------------------------------------------------------------------------------------

|(b) | Management also evaluates the results of Asset Management based on operating income excluding the LAM GP-related loss since such LAM GP-related amounts are directly offset by a
credit to noncontrolling interests, which is not a credit to operating income.
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|                                                    |  |                 |  |     
|--------------------------------------------------- |  | --------------- |  | ----
|                                                    |  | As of March 31,
|                                                    |  | 2009            |  | 2008
|Headcount(a):                                       |  |                 |  |     
|Managing Directors                                  |  | 56              |  | 55  
|Limited Managing Directors                          |  |                |  | 1   
|Other Employees:                                    |  |                 |  |     
|Business segment professionals                      |  | 300             |  | 337 
|All other professionals and support staff functions |  | 275             |  | 372 
|                                                    |  |                 |  |     
|Total                                               |  | 631             |  | 765 
|                                                    |  |                 |  |     



|(a) | Excludes headcount related to indirect support functions, with such headcount being included in the Corporate segment.
|--- | ----------------------------------------------------------------------------------------------------------------------



The geographical distribution of Asset Management net revenue is set forth
below in percentage terms:



|              |  |                             |   |  |      |  
|------------- |  | --------------------------- | - |  | ---- | -
|              |  | Three Months EndedMarch 31, |  
|              |  | 2009                        |   |  | 2008 |  
|United States |  | 51                          | % |  | 53   | %
|Europe        |  | 37                          |   |  | 36   |  
|Rest of World |  | 12                          |   |  | 11   |  
|              |  |                             |   |  |      |  
|Total         |  | 100                         | % |  | 100  | %
|              |  |                             |   |  |      |  



46



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##### Table of Contents

Asset Management Results of Operations



Asset Managements quarterly revenue and profits in any particular
quarter or period may not be indicative of future results. Lazard management believes that annual results are the most meaningful basis for comparison among present, historical and future periods.



Three Months Ended March 31, 2009 versus March 31, 2008



Asset Management net revenue in the three month period ended March 31, 2009
declined $64 million, or 38%, as compared to the corresponding period in 2008. Management fees for the 2009 period decreased $65 million, or 41%, as compared to the 2008 period driven by a 38% decrease in average AUM due largely to the declining
equity markets as well as the impact of a change in the mix of investment products and levels of management fees on certain products. Incentive fees were $5 million in the 2009 period, all of which are attributed to traditional long-only investment
strategies. There were no incentive fees in the first quarter of 2008. Other income decreased $4 million, or 63%, as compared to 2008, principally as a result of lower interest income.



Operating expenses for the 2009 period decreased by $24 million, or 21%, as compared to the 2008 period, due to decreased
compensation related to lower headcount, and declines in business development expenses for travel and market related data and support group charges.



Asset Management had operating income of $11 million for the three month period ended March 31, 2009, a decline of $39 million, or 78%, as compared the
2008 period. Excluding the impact of LAM GP-related loss, operating income in the 2009 period was $12 million, or 12% of segment net revenue excluding such item, as compared to $54 million, or 32%, for the corresponding period in 2008.



Corporate



The following table summarizes the results of the Corporate segment:



|                                                                                   |  |                             |   |  |          |   |  |  |  |  |  |  |  | 
|---------------------------------------------------------------------------------- |  | --------------------------- | - |  | -------- | - |  |  |  |  |  |  |  | 
|                                                                                   |  | Three Months EndedMarch 31, |  
|                                                                                   |  | 2009                        |   |  | 2008     |  
|                                                                                   |  | ($ in thousands)            |  
|Interest Income                                                                    |  | $6,592                      |   |  | $15,399  |  
|Interest Expense                                                                   |  | (27,935                     | ) |  | (38,528  | )
|                                                                                   |  |                             |   |  |          |   |  |  |  |  |  |  |  | 
|Net Interest (Expense)                                                             |  | (21,343                     | ) |  | (23,129  | )
|Other Revenue                                                                      |  | 4,710                       |   |  | (46,657  | )
|                                                                                   |  |                             |   |  |          |  
|Net Revenue (Expense)                                                              |  | (16,633                     | ) |  | (69,786  | )
|Operating Expenses (including restructuring expense of $62,550 in the 2009 period) |  | 70,714                      |   |  | 308      |  
|                                                                                   |  |                             |   |  |          |  
|Operating Loss                                                                     |  | $(87,347                    | ) |  | $(70,094 | )
|                                                                                   |  |                             |   |  |          |  
|                                                                                   | 
|                                                                                   |  | As of March 31,             |  
|                                                                                   |  | 2009                        |   |  | 2008     |  
|                                                                                   |  |                            
|Headcount (a):                                                                     |  |                             |   |  |          |  
|Managing Directors                                                                 |  | 8                           |   |  | 8        |  
|Limited Managing Directors                                                         |  |                            |   |  |         |  
|Other Employees:                                                                   |  |                             |   |  |          |  
|Business segment professionals                                                     |  | 8                           |   |  | 8        |  
|All other professionals and support staff                                          |  | 618                         |   |  | 637      |  
|                                                                                   |  |                             |   |  |          |  
|Total                                                                              |  | 634                         |   |  | 653      |  
|                                                                                   |  |                             |   |  |          |  



|(a) | Includes headcount related to support functions.
|--- | ------------------------------------------------



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##### Table of Contents

Corporate Results of Operations



Three Months Ended March 31, 2009 versus March 31, 2008



Net interest expense in the three month period ended March 31, 2009
decreased $2 million, or 8%, as compared to the corresponding period in 2008. Lower interest income in the 2009 period of $9 million was due to lower average cash balances and a lower interest rate environment. Average cash decreased as a result of
the share repurchases of Lazard Ltds Class A common stock (Class A common stock) as well as the repurchase of a portion of the Companys outstanding 6.85% and 7.125% senior notes. Interest expense in the 2009 period decreased
$11 million, principally as a result of the reduction in interest expense related to the Companys May 2008 purchase of $437 million aggregate principal amount of its 6.12% senior notes in connection with the remarketing of such notes and by
the above-mentioned repurchases of senior notes, as well as lower interest paid on LFBs customer deposits.



Other revenue in the 2009 period increased by $51 million as compared to the prior year period. Other income in the 2008 period was negatively impacted by
aggregate investment related losses of $57 million in our banks corporate debt portfolio (redesignated as available-for-sale effective July 1, 2008), and the Companys net investment in corporate equities to seed Asset Management
products. With respect to the latter, during the 2009 period, the Company had in place a hedging strategy to minimize its risks associated with volatility in the equity markets.



Operating expenses for the 2009 period increased by $70 million, compared to the 2008 period principally due to the
restructuring expense of $63 million.



Cash Flows



The Companys cash flows are influenced by the timing of the receipt of
Financial Advisory and Asset Management fees, the timing of distributions to members and payments of incentive compensation to managing directors and employees. M&A, Strategic Advisory and Asset Management fees are generally collected within 60
days of billing, while restructuring fee collections may extend beyond 60 days, particularly those that involve bankruptcies with court-ordered holdbacks. Fees from our private fund advisory activities are generally collected over a four-year period
from billing and typically include an interest component.



Lazard Group traditionally pays a significant portion of its incentive compensation during the first four months of each calendar year with respect to the prior years results.



Summary of Cash Flows:



|                                          |  |                             |        |   |      |   |         |  
|----------------------------------------- |  | --------------------------- | ------ | - | ---- | - | ------- | -
|                                          |  | Three MonthsEnded March 31, |       
|                                          |  | 2009                        |        |   | 2008 |  
|                                          |  | ($ in millions)             |       
|Cash Provided By (Used In):               |  |                             |        |   |      |   |         |  
|Operating activities:                     |  |                             |        |   |      |   |         |  
|Net income (loss)                         |  | $                           | (86.4  | ) |      | $ | 13.5    |  
|Noncash charges (a)                       |  |                             | 96.9   |   |      |   | 64.2    |  
|Other operating activities (b)            |  |                             | (17.1  | ) |      |   | (146.0  | )
|                                          |  |                             |        |   |      |   |         |  
|Net cash used by operating activities     |  |                             | (6.6   | ) |      |   | (68.3   | )
|                                          |  |                             |        |   |      |   |         |  
|Investing activities (c)                  |  |                             | (6.2   | ) |      |   | (136.3  | )
|Financing activities (d)                  |  |                             | (93.1  | ) |      |   | (132.3  | )
|Effect of exchange rate changes           |  |                             | (5.5   | ) |      |   | (1.1    | )
|                                          |  |                             |        |   |      |   |         |  
|Net Decrease in Cash and Cash Equivalents |  |                             | (111.4 | ) |      |   | (338.0  | )
|Cash and Cash Equivalents:                |  |                             |        |   |      |   |         |  
|Beginning of Period                       |  |                             | 907.3  |   |      |   | 1,000.6 |  
|                                          |  |                             |        |   |      |   |         |  
|End of Period                             |  |                             | $795.9 |   |      | $ | 662.6   |  
|                                          |  |                             |        |   |      |   |         |  



48



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##### Table of Contents



|(a) | Consists of the following:
|--- | --------------------------



|                                                                       |  |   |      |   |  |   |     
|---------------------------------------------------------------------- |  | - | ---- | - |  | - | ----
|Depreciation and amortization of property and intangibles              |  | $ | 6.0  |   |  | $ | 6.4 
|Amortization of deferred expenses, stock units and interest rate hedge |  |   | 91.2 |   |  |   | 57.8
|Gain on extinguishment of debt                                         |  |   | (0.3 | ) |  |   |    
|                                                                       |  |   |      |   |  |   |     
|                                                                       |  | $ | 96.9 |   |  | $ | 64.2
|                                                                       |  |   |      |   |  |   |     

|(b) | Includes net changes in operating assets and liabilities relating to increases and decreases between periods in both the deposits and other payables and
receivables-net captions on the Statements of Cash Flows and relate primarily to activities of LFB. Included within the receivables-net caption on the Statements of Cash Flows are amounts related to LFBs short-term
inter-bank deposits, which represent substantially all of the separately identified amount recorded as receivables-net: banks on the Companys Statements of Financial Condition. The level of these inter-bank deposits is primarily
driven by the level of LFB customer-related interest-bearing time and demand deposits and short-term inter-bank deposits held at LFB, which can fluctuate significantly on a daily basis. As the amount of deposits change, there is generally a
corresponding, but indirect, impact on the level of short-term inter-bank deposits.
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(c) | Principally relates to the acquisition of our equity method investment in Sapphire Industrials Corp. (Sapphire) (see Note 9 of Notes to Condensed Consolidated Financial
Statements), purchases of available-for-sale securities by LFB and our equity method investment in Merchant Bankers Asociados.
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(d) | Primarily includes distributions to members and noncontrolling interest holders, repurchases of common membership interests from LAZ-MD Holdings and shares of Class A common
stock and activity related to borrowings, including, as well as the repurchase of a portion of the Companys outstanding senior notes.
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



Liquidity and Capital Resources



The Companys liquidity and capital resources are derived from operating activities, financing agreements and equity offerings.



Operating Activities



Net revenue, operating income (loss) and cash receipts fluctuate
significantly between quarters. In the case of Financial Advisory, fee receipts are principally dependent upon the successful completion of client transactions, the occurrence and timing of which is irregular and not subject to Lazards
control. In the case of Asset Management, incentive fees earned on AUM are generally not earned until the end of the applicable measurement period, which is generally the fourth quarter of Lazards fiscal year, with the respective receivable
collected in the first quarter of the following year.



Liquidity is significantly impacted by incentive compensation payments, a significant portion of which historically have been made during the first four months of the year. As a consequence, cash on hand generally declines in the beginning
of the year and gradually builds over the remainder of the year. We also pay certain tax advances during the year on behalf of our managing directors, which serve to reduce their respective incentive compensation payments. We expect this seasonal
pattern of cash flow to continue. In addition, a portion of the February 2009 incentive compensation awards contains a deferred cash component, which is payable over the four-year period ending February 2013, subject to the employee meeting
applicable vesting requirements, with a significant payment due to be made in November 2009. See Notes 10 and 11 of Notes to Condensed Consolidated Financial Statements.



Lazards consolidated financial statements are presented in U.S. dollars. Many of Lazards non-U.S. subsidiaries have a
functional currency (i.e., the currency in which operational activities are primarily conducted) that is other than the U.S. dollar, generally the currency of the country in which such subsidiaries are domiciled. Such subsidiaries
assets and liabilities are translated into U.S. dollars at the respective balance sheet date



49



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exchange rates, while revenue and expenses are translated at average exchange rates during the year based on the daily closing exchange rates. Adjustments
that result from translating amounts from a subsidiarys functional currency are reported as a component of members equity. Foreign currency remeasurement gains and losses on transactions in non-functional currencies are included on the
consolidated statements of operations.



We regularly monitor
our liquidity position, including cash levels, credit lines, principal investment commitments, interest and principal payments on debt, capital expenditures and matters relating to liquidity and to compliance with regulatory net capital
requirements. At March 31, 2009, Lazard had $847 million of cash and liquid securities, including $51 million of temporary seed investments in marketable equity securities and public and private asset management funds. We maintain lines of credit in
excess of anticipated liquidity requirements. As of March 31, 2009, Lazard had approximately $212 million in unused lines of credit available to it, including a $150 million senior revolving credit facility with a group of lenders that expires in
May, 2010 (the Credit Facility) and $41 million of unused lines of credit available to LFB. In addition, LFB has access to the liquidity facilities of the Banque de France.



Financing



Over the past several years, Lazard has entered into several financing
agreements designed to strengthen both its capital base and liquidity. Each of these agreements is discussed in more detail in our consolidated financial statements and related notes included elsewhere in this Form 10-Q and in our Form 10-K. The
table below sets forth our corporate indebtedness as of March 31, 2009 and December 31, 2008.



|                                   |  |              |  |                    |         |                       |   |                    |  |   |      |  
|---------------------------------- |  | ------------ |  | ------------------ | ------- | --------------------- | - | ------------------ |  | - | ---- | -
|                                   |  | MaturityDate |  | As ofMarch 31,2009 |         | As ofDecember 31,2008 |   | Increase(Decrease) | 
|                                   |  |              |  |                   
|                                   |  |              |  | ($ in millions)    |         |                       |  
|Senior Debt:                       |  |              |  |                    |         |                       |   |                    |  |   |      |  
|7.125%(a)                          |  | 2015         |  | $                  | 538.5   |                       | $ | 538.5              |  | $ |     |  
|6.85%(a)                           |  | 2017         |  |                    | 548.4   |                       |   | 549.3              |  |   | (0.9 | )
|Subordinated Debt:                 |  |              |  |                    |         |                       |   |                    |  |   |      |  
|3.25%(b)                           |  | 2016         |  |                    | 150.0   |                       |   | 150.0              |  |   |     |  
|                                   |  |              |  |                    |         |                       |   |                    |  |   |      |  
|Total Senior and Subordinated Debt |  |              |  | $                  | 1,236.9 |                       | $ | 1,237.8            |  | $ | (0.9 | )
|                                   |  |              |  |                    |         |                       |   |                    |  |   |      |  



|(a) | During the first quarter of 2009, the Company repurchased $0.9 million principal amount of its 6.85% senior notes due in 2017, and recognized an aggregate gain of $0.3 million in
revenue-other.
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(b) | Convertible into shares of Class A common stock at an effective conversion price of $57 per share. One third in principal amount became convertible on and after July 1, 2008, and an
additional one third in principal amount will be convertible on and after July 1, 2009 and on and after July 1, 2010, with no principal amounts convertible after June 30, 2011.
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



Lazards annual cash flow generated from operations historically has
been sufficient to enable it to meet its annual obligations. We believe that our cash flows from operating activities, along with the use of our credit lines described above as needed, should be sufficient for us to fund our current obligations for
the next 12 months and beyond.



As long as the lenders
commitments remain in effect, any loan pursuant to the Credit Facility remains outstanding and unpaid or any other amount is owing to the lending bank group, the Credit Facility includes financial condition covenants that require that Lazard Group
not permit (i) its Consolidated Leverage Ratio (as defined in the Credit Facility) for the 12-month period ending on the last day of any fiscal quarter to be greater than 4.00 to 1.00 or (ii) its Consolidated Interest Coverage Ratio (as defined in
the Credit Facility) for the 12-month



50



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period ending on the last day of any fiscal quarter to be less than 3.00 to 1.00. For the 12-month period ended March 31, 2009, Lazard Group was in
compliance with such ratios, with its Consolidated Leverage Ratio being 1.99 to 1.00 and its Consolidated Interest Coverage Ratio being 9.97 to 1.00. Notwithstanding such compliance, no amounts were outstanding under the Credit Facility as of March
31, 2009.



In addition, the Credit Facility, indenture and
supplemental indentures relating to Lazard Groups senior notes, as well as its $150 Million Subordinated Convertible Note, contain certain other covenants (none of which relate to financial condition), events of default and other customary
provisions. At March 31, 2009, the Company was in compliance with all of these provisions. We may, to the extent required and subject to restrictions contained in our financing arrangements, use other financing sources, which may cause us to be
subject to additional restrictions or covenants.



See Note 8 of
Notes to Condensed Consolidated Financial Statements for additional information regarding senior and subordinated debt.



Members Equity



At March 31, 2009, total members equity was $14 million as compared to $126 million at December 31, 2008, including $14 million and $21 million
of noncontrolling interests at the respective dates. The decrease in members equity of $112 million in the three month period ended March 31, 2009 was principally due to a net loss of $86 million, reductions in AOCI of $29 million,
distributions to members and noncontrolling interests of $84 million and purchases of Class A common stock of $6 million, partially offset by the current period amortization of RSUs and deferred stock units amounting to $89 million. The
reductions in AOCI described above are due primarily to (i) net negative foreign currency translation adjustments of $20 million and (ii) net markdowns of $9 million related to securities designated as available-for-sale.



During the first quarter of 2009, the Company repurchased
267,419 shares of Class A common stock for an aggregate cost of approximately $6 million, resulting in its remaining share repurchase authorization at March 31, 2009 being approximately $121 million (see Note 10 of Notes to Condensed
Consolidated Financial Statements for information regarding the share repurchase program).



Regulatory Capital



We
actively monitor our regulatory capital base. Our principal subsidiaries are subject to regulatory requirements in their respective jurisdictions to ensure their general financial soundness and liquidity, which require, among other things, that we
comply with certain minimum capital requirements, record-keeping, reporting procedures, relationships with customers, experience and training requirements for employees and certain other requirements and procedures. These regulatory requirements may
restrict the flow of funds to affiliates. See Note 16 of Notes to Condensed Consolidated Financial Statements for further information. These regulations differ in the U.S., the U.K., France and other countries in which we operate. Our capital
structure is designed to provide each of our subsidiaries with capital and liquidity consistent with its business and regulatory requirements. For a discussion of regulations relating to us, see Item 1-BusinessRegulation included
in the Form 10-K.



51



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Contractual Obligations



The following table sets forth information relating to Lazards contractual obligations as of March 31, 2009:



|                                                               |  |                                               |           |                 |   |           |  |           |         |                  |   |         |  |   |          
|-------------------------------------------------------------- |  | --------------------------------------------- | --------- | --------------- | - | --------- |  | --------- | ------- | ---------------- | - | ------- |  | - | ---------
|                                                               |  | Contractual Obligations Payment Due by Period
|                                                               |  | Total                                         |           | Less than1 Year |   | 1-3 Years |  | 3-5 Years |         | More than5 Years
|                                                               |  | ($ in thousands)                             
|Senior and subordinated debt (including interest) (a)          |  | $                                             | 1,842,082 |                 | $ | 80,805    |  | $         | 161,610 |                  | $ | 161,610 |  | $ | 1,438,057
|Operating leases (exclusive of $42,906 of sublease income) (b) |  |                                               | 426,726   |                 |   | 64,237    |  |           | 106,276 |                  |   | 61,499  |  |   | 194,714  
|LAM Merger cash consideration (c)                              |  |                                               | 90,348    |                 |   |          |  |           | 90,348  |                  |   |        |  |   |         
|Capital leases (including interest)                            |  |                                               | 32,510    |                 |   | 4,420     |  |           | 6,540   |                  |   | 5,715   |  |   | 15,835   
|Private equity funding commitments (b)                         |  |                                               | 20,261    |                 |   | 19,728    |  |           | 533     |                  |   |        |  |   |         
|Deferred cash incentive compensation, including interest (d)   |  |                                               | 161,094   |                 |   | 51,895    |  |           | 77,269  |                  |   | 31,930  |  |   |         
|                                                               |  |                                               |           |                 |   |           |  |           |         |                  |   |         |  |   |          
|Total (e)                                                      |  | $                                             | 2,573,021 |                 | $ | 221,085   |  | $         | 442,576 |                  | $ | 260,754 |  | $ | 1,648,606
|                                                               |  |                                               |           |                 |   |           |  |           |         |                  |   |         |  |   |          



|(a) | See Note 8 of Notes to Condensed Consolidated Financial Statements.
|--- | -------------------------------------------------------------------

|(b) | See Note 9 of Notes to Condensed Consolidated Financial Statements.
|--- | -------------------------------------------------------------------

|(c) | See Note 5 of Notes to Condensed Consolidated Financial Statements.
|--- | -------------------------------------------------------------------

|(d) | See Note 11 of Notes to Condensed Consolidated Financial Statements.
|--- | --------------------------------------------------------------------

|(e) | The table above excludes contingent obligations and any possible payments for uncertain tax positions given the inability to estimate the timing of the latter payments. See Notes 9,
12 and 14 of Notes to Condensed Consolidated Financial Statements regarding information in connection with commitments, employee benefit plans and Lazards uncertain tax positions.
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



Critical Accounting Policies and Estimates



Managements discussion and analysis of our consolidated financial
condition and results of operations are based upon our condensed consolidated financial statements, which have been prepared in conformity with accounting principles generally accepted in the United States of America. The preparation of
Lazards condensed consolidated financial statements requires us to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenue and expenses, and related disclosure of contingent assets and liabilities. On an
ongoing basis, Lazard evaluates its estimates, including those related to revenue recognition, compensation liabilities, income taxes, investing activities and goodwill. Lazard bases these estimates on historical experience and various other
assumptions that it believes to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may
differ from these estimates.



Lazard believes that the critical
accounting policies set forth below comprise the most significant estimates and judgments used in the preparation of its condensed consolidated financial statements.



Revenue Recognition



Lazard generates substantially all of its net revenue from providing financial advisory and asset management services to clients. Lazard recognizes
revenue when the following criteria are met:



| |  |  | there is persuasive evidence of an arrangement with a client,
| | - |  | -------------------------------------------------------------



| |  |  | the agreed-upon services have been provided,
| | - |  | --------------------------------------------



| |  |  | fees are fixed or determinable, and
| | - |  | -----------------------------------



| |  |  | collection is probable.
| | - |  | -----------------------



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The Company also earns performance-based incentive fees on various investment products, including
alternative investment funds such as hedge funds, private equity funds and traditional investment strategies. Incentive fees are calculated based on a specified percentage of a funds net appreciation, in some cases in excess of established
benchmarks. Incentive fees on private equity funds also may be earned in the form of a carried interest if profits from investments exceed a specified threshold. These incentive fees are recorded when realized and are paid at the end of the
measurement period. Incentive fees on hedge funds generally are subject to loss carry-forward provisions in which losses incurred by the funds in any year are applied against certain future period net appreciation before any incentive fees can be
earned.



The Company records incentive fees at the end of the
relevant performance measurement period, when potential uncertainties regarding the ultimate realizable amounts have been determined. The performance fee measurement period is generally an annual period, unless an account terminates during the year.
These incentive fees received at the end of the measurement period are not subject to reversal or payback.



If, in Lazards judgment, collection of a fee is not probable, Lazard will not recognize revenue until the uncertainty is removed. We maintain an
allowance for bad debts to provide coverage for estimated losses from our fee and customer receivables. We determine the adequacy of the allowance by estimating the probability of loss based on managements analysis of the clients
creditworthiness and specifically reserve against exposures where we determine the receivables are impaired, which may include situations where a fee is in dispute or litigation has commenced.



With respect to fees receivable from Financial Advisory activities, such
receivables are generally deemed past due when they are outstanding 60 days from the date of invoice. However, some Financial Advisory transactions include specific contractual payment terms that may vary from one month to four years (as is the case
for our Private Fund Advisory fees) following the invoice date or may be subject to court approval (as is the case with restructuring assignments that include bankruptcy proceedings). In such cases, receivables are deemed past due when payment is
not received by the agreed-upon contractual date or the court approval date, respectively. Financial Advisory fee receivables past due in excess of 180 days are fully provided for unless there is evidence that the balance is collectible. Asset
Management fees are deemed past due and fully provided for when such receivables are outstanding 12 months after the invoice date. Notwithstanding our policy for receivables past due, we specifically reserve against exposures relating to Financial
Advisory and Asset Management fees where we determine receivables are impaired.



At March 31, 2009 and December 31, 2008, the Company had approximately $11 million and $18 million, respectively, of receivables past due, and its allowance for doubtful accounts was $11 million and $16 million,
respectively.



Income Taxes



As part of the process of preparing its consolidated financial statements,
Lazard is required to estimate its income taxes in each of the jurisdictions in which it operates. This process requires Lazard to estimate its actual current tax liability and to assess temporary differences resulting from differing book versus tax
treatment of items, such as deferred revenue, compensation and benefits expense, unrealized gains or losses on investments and depreciation. These temporary differences result in deferred tax assets and liabilities, which are included within
Lazards consolidated statements of financial condition. Significant management judgment is required in determining Lazards provision for income taxes, its deferred tax assets and liabilities and any valuation allowance recorded
against its net deferred tax assets. In assessing the realizability of deferred tax assets, management considers whether it is more likely than not that some portion or all of the deferred tax assets will be realized and, when necessary, valuation
allowances are established. The ultimate realization of the deferred tax assets is dependent upon the generation of future taxable income during the periods in which temporary differences become deductible. Management considers the level of
historical taxable income, scheduled reversals of deferred taxes, projected future taxable income and tax planning strategies that can be implemented by the



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Company in making this assessment. If actual results differ from these estimates or Lazard adjusts these estimates in future periods, Lazard may need to
adjust its valuation allowance, which could materially impact Lazards condensed consolidated financial position and results of operations.



On January 1, 2007, the Company adopted Financial Accounting Standards Board (FASB) Interpretation No. 48, Accounting for Uncertainty
in Income Taxes (FIN No. 48) which clarifies the more likely than not criteria included in FASB Statement No. 109, Accounting for Income Taxes, that must be met prior to recognition of the financial
statement benefit of a tax position taken or expected to be taken in a tax return. FIN No. 48 also requires the recognition of a liability for differences between tax positions taken in a tax return and amounts recognized in the financial
statements. Management applies the more likely than not criteria included in FIN No. 48 when estimating its income taxes in each of the jurisdictions in which it operates.



Tax contingencies can involve complex issues and may require an extended period of time to resolve. Changes in the
geographic mix or estimated level of annual pre-tax income can affect Lazards overall effective tax rate. Significant management judgment is required in determining Lazards provision for income taxes, its deferred tax assets and
liabilities and any valuation allowance recorded against its net deferred tax assets. Furthermore, Lazards interpretation of complex tax laws may impact its recognition and measurement of current and deferred income taxes.



Investments



Investments consist principally of debt securities, equities, interests in
LAM alternative asset management funds and other private equity investments.



These investments are carried at fair value on the condensed consolidated statements of financial condition, with any increases or decreases in fair value reflected (i) in earnings, to the extent held by our
broker-dealer subsidiaries or when designated as trading securities under SFAS No. 115, within our non broker-dealer subsidiaries, and (ii) in AOCI, to the extent designated as available-for-sale securities under SFAS No. 115
until such time they are realized and reclassified to earnings. Any declines in the fair value of available-for-sale securities that are determined to be other than temporary are charged to earnings. As described in Note 6 of Notes to
Consolidated Financial Statements in our Form 10-K, effective July 1, 2008, as permitted under SFAS No. 115, certain debt securities held by LFB, which were previously designated as trading securities, were re-designated as
available-for-sale securities.



Gains and losses on
investment positions held, which arise from sales or changes in the fair value of the investments, are not predictable and can cause periodic fluctuations in net income or AOCI and therefore subject Lazard to market and credit risk.



At March 31, 2009, $380 million, or 79%, of the $481 million of investments
(excluding equity method investments and net of securities sold not yet purchased of $2 million) represented (i) investments in debt securities typically held long-term by LFB as part of its asset-liability management program and (ii) Corporate
investments in equities that principally represent investments in marketable equity securities of large-, mid- and small-cap domestic, international and global companies to seed new Asset Management products, including investments in public and
private asset management funds managed both by LAM and third party asset managers that, in the aggregate, subject Lazard to market or credit risk. These investment portfolios are monitored daily by management.



Included in the amount above was $296 million of debt securities
(representing approximately 78% of investments subject to market risk) that primarily consist of fixed and floating rate European corporate bonds and French government debt securities. At March 31, 2009, of the $296 million of debt securities, 35%,
28%, 15%, 11% and 11% of such debt securities were invested in the financial, industrial, consumer, government and other sectors, respectively. Approximately 92% of the corporate bonds held investment grade ratings at March 31, 2009. At March
31, 2009, there was approximately $77 million of pre-tax unrealized losses included in AOCI related to our banks investments in corporate bonds.



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At March 31, 2009, of the $51 million in equities, 49% represents the Companys investment in
marketable equity securities, of which 17%, 30%, 8%, 7% and 38% were invested in the financial, consumer, industrial, communications and other sectors, respectively. Asset management fund investments represent the remaining 51% of total equities.
The Companys asset management fund investments are diversified and may incorporate particular strategies; however, there are no investments in funds with single sector specific strategies.



The remaining 21% of the $481 million of investments at March 31, 2009
represent private equity investments that are generally not subject to short-term market fluctuations and interests in LAM alternative asset management funds principally representing GP interests in LAM-managed hedge funds which do not subject
Lazard to market or credit risk. The fair value of such interests reflects the pro rata value of the ownership of the underlying securities in the funds. Such funds are broadly diversified and may incorporate particular strategies; however, there
are no investments in funds with a single sector specific strategy. Approximately $14 million at March 31, 2009 of the GP interests represent interests held directly by certain of our LAM managing directors or employees of the Company, and, as such,
are deemed to be controlled by, and therefore consolidated by, the Company. Pursuant to SFAS No. 160, Noncontrolling Interests in Consolidated Financial Statementsan amendment of ARB No. 51 (SFAS No. 160),
the applicable noncontrolling interests are presented within stockholders equity on the condensed consolidated statements of financial condition.



Private Equity investments represent approximately 3.6% of total assets at March 31, 2009 and are comprised of investments
in private equity funds and direct private equity interests. Private equity investments primarily include (i) a mezzanine fund, which invests in small- and mid-cap buy-out funds and small- and mid-cap European companies; (ii) Corporate Partners II
Limited, a private equity fund targeting significant noncontrolling investments in established public and private companies; and (iii) Lazard Senior Housing Partners LP, which acquires companies and assets in the senior housing, extended-stay hotel
and shopping center sectors.



At December 31, 2008, $433
million, or 81%, of the approximate $537 million of investments (excluding equity method investments and net of securities sold, not yet purchased of $7 million) represented (i) investments in debt securities held by LFB, (ii) Corporate investments
in equities that principally represent investments in marketable equity securities of large-, mid- and small-cap domestic, international and global companies to seed new Asset Management products, including investments in public and private asset
management funds managed both by LAM and third party asset managers, that, in the aggregate, subject Lazard to market or credit risk.



Included in the amount above was $333 million of debt securities (representing approximately 77% of investments subject to market risk) that primarily
consist of fixed and floating rate European corporate bonds and French government debt securities. At December 31, 2008, of the $333 million of debt securities, 37%, 26%, 15%, 11% and 11% of such debt securities were invested in the financial,
industrial, consumer, government and other sectors, respectively. Approximately 92% of the corporate bonds held investment grade ratings at December 31, 2008. At December 31, 2008, there was approximately $62 million of pre-tax unrealized losses
included in AOCI related to our banks investments in corporate bonds.



At December 31, 2008, of the $71 million in equities, 53% represents the Companys investment in marketable equity securities, of which 32%, 24%, 10%, 7% and 27% were invested in the consumer, financial,
industrial, communications and other sectors, respectively. Asset management fund investments represent the remaining 47% of total equities. The Companys asset management fund investments are diversified and may incorporate particular
strategies; however, there are no investments in funds with single sector specific strategies.



The remaining 19% of the investments at December 31, 2008 represent private equity investments and interests in LAM alternative asset management funds as discussed above. Approximately $21 million at December 31, 2008
of the GP interests represents interests held directly by certain of our LAM managing directors or employees of the Company. Private Equity investments represent approximately 2.9% of total assets at December 31, 2008 and were comprised of
investments in private equity funds and direct private equity interests as described above.



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Investments in debt, equities and other investments, including equity method investments, at March 31,
2009 and December 31, 2008 aggregated $559 million and $620 million, respectively. The decrease of $61 million in the 2009 period includes net investment losses of $14 million, which is reflected in AOCI. The remaining decrease primarily relates to
net sales of debt and equity securities and foreign currency translation adjustments, partially offset by an increase in our equity method investments.



On January 1, 2008, the Company adopted the required provisions of SFAS No. 157, Fair Value Measurements (SFAS No. 157),
which, among other things, defines fair value, establishes a framework for measuring fair value and enhances disclosure requirements about fair value measurements with respect to its financial assets and financial liabilities. Pursuant to SFAS No.
157, Lazard categorizes its investments and certain other assets and liabilities recorded at fair value into a three-level fair value hierarchy as follows:



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



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



Level 3. Assets and liabilities whose values are based on prices or valuation techniques that require inputs that are both unobservable
and significant to the overall fair value measurement. These inputs reflect managements own assumptions about the assumptions a market participant would use in pricing the asset or liability.



Principally all of the Companys investments in corporate bonds are
considered Level 2 investments with such fair value based on observable data, principally broker quotes as provided by external pricing services.



The fair value of our equities is principally classified as Level 1 or Level 2 as follows: marketable equity securities are classified as Level 1 and are
valued based on the last trade price on the primary exchange for that security; public asset management funds are classified as Level 1 and are valued based on the reported closing price for the fund; and investments in private asset management
funds are classified as Level 2 and are primarily valued based on information provided by fund managers and secondarily, from external pricing services to the extent managed by LAM.



The fair value of our interests in LAM alternative asset management funds is classified as Level 2 and is based on
information provided by external pricing services.



The fair
value of our private equity investments is classified as Level 3 and is based on financial statements provided by fund managers, appraisals and internal valuations.



Where information reported is based on broker quotes, the Company generally obtains one quote/price per instrument. In some
cases, quotes related to corporate bonds obtained through external pricing services represent the average of several broker quotes.



Where information reported is based on data received from fund managers or from external pricing services, the Company reviews such information to
ascertain at which level within the fair value hierarchy to classify the investment.



See Note 4 of Notes to Condensed Consolidated Financial Statements for additional information regarding investments and certain other assets and liabilities measured at fair value, including the levels of fair value
within which such measurements of fair value fall, pursuant to the disclosure requirements of SFAS No. 157.



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Assets Under Management



AUM managed by LAM and LFG, which represents substantially all of the Companys total AUM, principally consist of debt
and equity instruments whose value is readily available based on quoted prices on a recognized exchange or by a broker. Accordingly, significant estimates and judgments are generally not involved in the calculation of the value of our AUM.



Goodwill



In accordance with SFAS No. 142, Goodwill and Other Intangible
Assets, goodwill has an indefinite life and is tested for impairment annually or more frequently if circumstances indicate impairment may have occurred. In this process, Lazard makes estimates and assumptions in order to determine the fair
value of its assets and liabilities and to project future earnings using various valuation techniques. Lazards assumptions and estimates are used in projecting future earnings as part of the valuation, and actual results could differ from
those estimates. See Note 7 of Notes to Condensed Consolidated Financial Statements for additional information regarding goodwill.



Consolidation of VIEs



The consolidated financial statements include the accounts of Lazard Group and all other entities in which it has a controlling interest. Lazard
determines whether it has a controlling interest in an entity by first evaluating whether the entity is a voting interest entity or a variable interest entity (VIE) under U.S. GAAP.



| |  |  | Voting Interest Entities.      Voting interest entities are entities in which (i) the total equity investment at risk is sufficient to
enable the entity to finance itself independently and (ii) the equity holders have the obligation to absorb losses, the right to receive residual returns and the right to make decisions about the entitys activities. Lazard is required to
consolidate a voting interest entity that it maintains an ownership interest in if it holds a majority of the voting interest in such entity.
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Variable Interest Entities.     VIEs are entities that lack one or more of the characteristics of a voting interest entity. If Lazard has
a variable interest, or a combination of variable interests, in a VIE and it will absorb a majority of the VIEs expected losses, receive a majority of the VIEs expected residual returns, or both, it is required to consolidate such VIE.
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



Lazard is involved with various entities in
the normal course of business that are VIEs and holds variable interests in such VIEs. Transactions associated with these entities primarily include investment management, real estate and private equity investments. Those VIEs for which Lazard was
determined to be the primary beneficiary were consolidated in accordance with FASB Interpretation No. 46(R), Consolidation of Variable Interest Entities. Those VIEs included company-sponsored venture capital investment
vehicles established in connection with Lazards compensation plans. In connection with the separation, Lazard Group transferred its general partnership interests in those VIEs to a subsidiary of LFCM Holdings. Lazard Group has determined that
it is no longer the primary beneficiary with respect to those VIEs and, as a result, the Company no longer consolidates such VIEs.



Risk Management



The Company encounters risk in the normal course of business and therefore we have designed risk management processes to help manage and monitor such
risks considering both the nature of our business and our operating model. The Company is subject to varying degrees of credit, market, operational and liquidity risks (see Liquidity and Capital Resources) and monitors these risks
at both an entity and on a consolidated basis. Management within each of Lazards operating locations are principally responsible for managing the risks within its respective businesses on a day-to-day basis.



Market and Credit Risks



Lazard is subject to credit and market risks and therefore has established
procedures to assess such risks, as well as specific interest rate and currency risk, and has established limits related to various positions.



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Lazard enters into interest rate swaps and foreign currency exchange contracts to hedge exposures to
interest rates and currency exchange rates and, beginning in the second quarter of 2008, uses equity swap contracts to hedge a portion of its market exposure with respect to certain equity investments.



At March 31, 2009 and December 31, 2008, derivative contracts related
primarily to interest rate swaps and equity and foreign currency exchange rate contracts and are recorded at fair value. Derivative assets amounted to $3 million and $5 million at March 31, 2009 and December 31, 2008, respectively, with
derivative liabilities amounting to $30 million and $44 million, at such respective dates. The decrease in derivative liabilities at March 31, 2009 as compared to December 31, 2008 related to the Companys equity and foreign currency
exchange contracts, partially offset by an increase in amounts pertaining to interest rate hedging activities.



With respect to LFBs operations, LFB engages in commercial banking activities that primarily include investing in securities, deposit taking and, to
a lesser degree, lending. In addition, LFB may take open foreign exchange positions with a view to profit, but does not sell foreign exchange options in this context, and enters into interest rate swaps, forward foreign exchange contracts and other
derivative contracts to hedge exposures to interest rate and currency fluctuations.



The primary market risks associated with LFBs securities portfolio, foreign currency exchange hedging and lending activities are sensitivity to changes in the general level of credit spreads and interest rate
and foreign exchange risk. The risk management strategies that we employ use various risk sensitivity metrics to measure such risks and to examine behavior under significant adverse market conditions, such as those we are currently experiencing. The
following sensitivity metrics provide the resultant effects on the Companys operating income (loss) for the three month period ended March 31, 2009:



| |  |  | LFBs credit spread risk, as measured by a 100+/ basis point change in credit spreads, totaled $(13) million and $14 million, respectively.
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | LFBs interest rate risk as measured by a 100+/ basis point change in interest rates, totaled approximately $40 thousand.
| | - |  | --------------------------------------------------------------------------------------------------------------------------



| |  |  | Foreign currency risk associated with LFBs open positions, in the aggregate, as measured by a 200+/ basis point change against the U.S. dollar,
totaled approximately $8 thousand.
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



LFB fully
secures its collateralized financing transactions with fixed income securities.



Risks Related to Receivables



We maintain an allowance for bad debts to provide coverage for probable losses from our fee and customer receivables. We determine the adequacy of the allowance by estimating the probability of loss based on
managements analysis of the clients creditworthiness and specifically reserve against exposures where we determine the receivables are impaired. At March 31, 2009, total receivables amounted to $457 million, net of an allowance for bad
debts of $11 million. As of that date, inter-bank deposits, financial advisory and asset management fee, customer and related party receivables comprised 4%, 63%, 19% and 14% of total receivables, respectively. At December 31, 2008, total
receivables amounted to $769 million, net of an allowance for bad debts of $16 million. As of that date, inter-bank deposits, financial advisory and asset management fee, customer and related party receivables comprised 30%, 51%, 10% and 9% of total
receivables, respectively. See also Revenue Recognition above and Note 3 of Notes to Condensed Consolidated Financial Statements for additional information regarding receivables.



Receivables from banks represent those related to LFBs short-term
inter-bank deposits. The level of these inter-bank deposits is primarily driven by the level of LFB customer-related interest-bearing time and demand deposits and short-term inter-bank deposits from banks held at LFB, which can fluctuate
significantly on a daily basis. As the amount of deposits held at LFB changes, there is generally a corresponding, but indirect, impact on the level of short-term inter-bank deposits with banks. While historically the risk of loss associated with
such inter-bank deposits was extremely low, with the unprecedented disruption and volatility in the financial markets beginning during 2008, a number of financial institutions have disclosed liquidity and credit quality



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issues. LFB executes such deposit agreements with leading French financial institutions and the Company closely monitors the creditworthiness of such
counterparties to minimize its exposure to loss in such market conditions. Based on its review of its receivables from banks at March 31, 2009 and December 31, 2008, LFB has determined that an allowance for doubtful accounts related to such
receivables from banks was not required.



Customers and other
receivables at March 31, 2009 and December 31, 2008 include a $11.3 million and $16.4 million receivable, respectively, pertaining to a receivable from the Reserve Primary Fund (the Primary Fund), a money market fund based in
New York that is engaged in the liquidation of its assets for distribution to investors under the supervision of the SEC. In September 2008, the Primary Fund, which held certain securities issued by Lehman Brothers Holdings, Inc., temporarily
suspended the payment of redemption proceeds to investors. Through March 31, 2009, the Company had recovered partial distributions from the Primary Fund aggregating $66.4 million of its $77.7 million investments in the Primary Fund as
of September 15, 2008, and, in April 2009, the Company received additional payments from the Primary Fund aggregating approximately $3.5 million. Following the events of September 2008, various investors in the Primary Fund commenced
litigations against the Primary Fund, certain officers and trustees of the Primary Fund and certain related entities. On February 26, 2009, the Primary Fund announced that it would set aside a special reserve of $3.5 billion of its
assets to cover damages and expenses claimed in actual and potential litigations against it by Primary Fund investors. The Company expects to receive an amount approximating the carrying value of its receivable relating to its investment in the
Primary Fund, but it is possible that the process of liquidating the Primary Fund may ultimately result in some diminution in value of the Companys investment position. The Company is closely monitoring the situation and reserving all of its
rights.



Credit Concentration



To reduce the exposure to concentrations of credit from banking activities
within LFB, the Company has established limits for corporate counterparties and monitors the exposure against such limits. At March 31, 2009, LFB had no exposure to an individual counterparty that exceeded $32 million, in the aggregate, excluding
deposits with inter-bank counterparties.



With respect to
activities outside LFB, as of March 31, 2009, the Companys largest individual counterparty exposure was a Financial Advisory-related fee receivable of $9 million.



Risks Related to Short-Term Investments and Corporate Indebtedness



A significant portion of the Companys liabilities has fixed interest
rates, while its cash and short-term investments generally have floating interest rates. Based on account balances as of March 31, 2009, Lazard estimates that operating income (loss) relating to cash and short-term investments and corporate
indebtedness would change by approximately $8 million, on an annual basis, in the event interest rates were to increase or decrease by 1%.



As of March 31, 2009, the Companys cash and cash equivalents totaled $796 million. Approximately 30% of this was invested in short-term interest
earning accounts at a number of leading banks throughout the world, or short-term certificates of deposit from such banks. The remaining cash and cash equivalents were invested in highly liquid institutional money market funds, a significant
majority of which were invested solely in U.S. government or agency securities, or in institutional money market funds that have announced that they are participating in the U.S. Treasury Departments Temporary Guarantee Program for Money
Market Funds. On a regular basis, management reviews and updates its list of approved depositor banks as well as deposit and investment thresholds.



Operational Risks



Operational risk is inherent in all our business and may, for example, manifest itself in the form of errors, breaches in the system of internal controls,
business interruptions, fraud or legal actions due to operating



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deficiencies or noncompliance. The Company maintains a framework including policies and a system of internal controls designed to monitor and manage
operational risk and provide management with timely and accurate information. Management within each of the operating companies is primarily responsible for its operational risk programs. The Company has in place business continuity and disaster
recovery programs that manage its capabilities to provide services in the case of a disruption. We purchase insurance programs designed to protect the Company against accidental loss and losses, which may significantly affect our financial
objectives, personnel, property or our ability to continue to meet our responsibilities to our various stakeholder groups.



Recent Accounting Developments



On January 1, 2009, the Company adopted SFAS No. 141 (revised 2007), Business Combinations (SFAS
No. 141(R)), the provisions of which are applicable on a prospective basis. SFAS No. 141(R) replaces SFAS No. 141, Business Combinations (SFAS No. 141), and supersedes or amends other related
authoritative literature although it retains the fundamental requirements in SFAS No. 141 that the acquisition method of accounting (which SFAS No. 141 called the purchase method) be used for all business combinations and for an
acquirer to be identified for each business combination. SFAS No. 141(R) also establishes principles and requirements for how the acquirer (a) recognizes and measures in its financial statements the identifiable assets acquired, the
liabilities assumed and any noncontrolling interest in an acquiree; (b) recognizes and measures the goodwill acquired in a business combination or a gain from a bargain purchase; and (c) determines what information to disclose to enable
users of the financial statements to evaluate the nature and financial effects of a business combination. SFAS No. 141(R) also requires the acquirer to expense, as incurred, costs relating to any acquisitions. The adoption of SFAS No. 141(R) on
January 1, 2009 did not have any impact on the Companys consolidated financial statements but may have an impact in the future to the extent the Company enters into a business combination.



On January 1, 2008, the Company adopted, on a prospective basis, the
required provisions of SFAS No. 157, which, among other things, defined fair value, established a framework for measuring fair value and enhanced disclosure requirements about fair value measurements with respect to its financial assets
and financial liabilities. On January 1, 2009, the Company adopted the remaining provisions of SFAS No. 157, as permitted by FASB Staff Position (FSP) Financial Accounting Standard (FAS) 157-2,
Effective Date of FASB Statement No. 157(FSP 157-2), which delayed the effective date of SFAS No. 157 for all nonfinancial assets and nonfinancial liabilities, except those that are recognized
or disclosed at fair value in the financial statements on a recurring basis (at least annually). These nonfinancial items include, for example, reporting units required to be measured at fair value for annual goodwill impairment testing purposes and
nonfinancial assets acquired and liabilities assumed in a business combination. Neither the partial adoption of the required provisions of SFAS No. 157 on January 1, 2008, nor the adoption of the remaining provisions of SFAS No. 157
on January 1, 2009, as permitted by FSP 157-2, had a material impact on the Companys consolidated financial statements.



On January 1, 2009, the Company adopted SFAS No. 160, the presentation and disclosure requirements of which were required to be applied
retrospectively. SFAS No. 160 amends Accounting Research Bulletin No. 51, Consolidated Financial Statements, to establish accounting and reporting standards for the noncontrolling (minority) interest in a subsidiary and
for the deconsolidation of a subsidiary. It clarifies that a noncontrolling interest in a subsidiary is an ownership interest in the consolidated entity that should be reported as equity in the consolidated financial statements. In addition, it also
changes the way the consolidated income statement is presented by requiring consolidated net income to include amounts attributable to both the parent and the noncontrolling interest with separate disclosure of each component on the face of the
consolidated income statement. It does not, however, impact the calculation of net income per share, as such calculation will continue to be based on amounts attributable to the parent.



On January 1, 2009, the Company adopted SFAS No. 161, Disclosures about Derivative Instruments and
Hedging Activitiesan amendment of SFAS No. 133 (SFAS No. 161), on a prospective basis. SFAS No. 161 amends SFAS No. 133, Accounting for Derivative Investments and Hedging Activities,
as amended (SFAS No. 133) to enhance the current disclosure framework in SFAS No. 133 for derivative instruments and hedging activities, including how and why an entity uses derivative instruments, how derivative
instruments



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and related hedged items are accounted for under SFAS No. 133 and its related interpretations and how derivative instruments and related hedged items
affect an entitys financial position, financial performance and cash flows. See Note 4 of Notes to Condensed Consolidated Financial Statements for the additional disclosures provided pursuant to SFAS No. 161. The adoption of SFAS No. 161 did
not materially impact the Companys consolidated financial statements.



In December 2008, the FASB issued FSP FAS 132(R)-1, Employers Disclosures about Postretirement Benefit Plan Assets (FSP 132(R)-1), which amends SFAS No. 132 (revised 2003),
Employers Disclosures about Pensions and Other Postretirement Benefitsan amendment of FASB Statements No. 87, 88, and 106, to require more detailed disclosures about an employers plan assets, including an
employers investment strategies, major categories of plan assets, concentrations of risk within plan assets and valuation techniques used to measure the fair value of plan assets. The disclosures about plan assets required by FSP 132(R)-1 are
required to be provided for fiscal years ending after December 15, 2009. Upon initial application, the provisions of FSP 132(R)-1 are not required for earlier periods that are presented for comparative purposes. Earlier application of the
provisions of FSP 132(R)-1 is permitted. The adoption of FSP 132(R)-1 in 2009 will not materially impact the Companys consolidated financial statements.



On April 1, 2009, the FASB issued FSP FAS 141(R)-1, Accounting for Assets Acquired and Liabilities Assumed in a Business Combination That
Arise from Contingencies (FSP 141(R)-1), which amends and clarifies SFAS No. 141(R), to amend the initial recognition and measurement, subsequent measurement and accounting, and disclosure of assets and liabilities arising from
contingencies in a business combination. FSP 141(R)-1 is effective for assets or liabilities arising from contingencies in business combinations for which the acquisition date is on or after the beginning of the first annual reporting period
beginning on or after December 15, 2008. The adoption of FSP 141(R)-1 did not impact the Companys consolidated financial statements but may have an impact in the future to the extent the Company enters into a business combination.



In April 2009, the FASB issued several FSPs intended to
provide additional application guidance and enhance disclosures regarding fair value measurements and impairments of debt securities. FSP FAS 157-4, Determining Fair Value When the Volume and Level of Activity for the Asset or Liability
Have Significantly Decreased and Identifying Transactions That Are Not Orderly, provides additional guidance to determining fair values when there is no active market or when observable transactions or quoted prices represent distressed
sales, and reaffirms that the objective of fair value measurement is to reflect the price at which an asset or liability would be sold or transferred in an orderly transaction (as opposed to a distressed or forced transaction) at market conditions
prevailing at the date of the financial statements.



FSP FAS
107-1 and FSP APB 28-1, Interim Disclosures about Fair Value of Financial Instruments (FSP 107-1 and FSP APB 28-1, respectively), relate to fair value disclosures for any financial instruments that are not
currently reflected on the balance sheet of companies at fair value. Prior to issuing these FSPs, fair values for these assets and liabilities were only disclosed once a year. FSP 107-1 and FSP APB 28-1 now require these disclosures on a quarterly
basis, providing qualitative and quantitative information about fair value estimates for all those financial instruments not measured on the balance sheet at fair value.



FSP FAS 115-2 and FSP FAS 124-2, Recognition and Presentation of Other-Than-Temporary Impairments, are intended to bring
greater consistency to the timing of impairment recognition and provide greater clarity about the credit and noncredit components of debt securities whose fair value is below amortized cost and that are not expected to be sold, and also require
increased disclosures regarding expected cash flows, credit losses and an aging of securities with unrealized losses.



The pronouncements described in the three paragraphs above are effective for interim and annual periods ending after June 15, 2009. The Company is
currently assessing the impact of these FSPs on its consolidated financial statements.



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|Item 3. | Quantitative and Qualitative Disclosures About Market Risk
|------- | ----------------------------------------------------------



Risk Management



Quantitative and qualitative disclosures about market risk are included under the caption Managements Discussion and Analysis of Financial
Condition and Results of OperationsRisk Management.



|Item 4. | Controls and Procedures
|------- | -----------------------



Our management, including our Chief Executive Officer and Chief Financial Officer, evaluated the effectiveness of our disclosure controls and procedures
pursuant to Rule 13a-15 under the Exchange Act as of the end of the period covered by this quarterly report. Based on that evaluation, our Chief Executive Officer and Chief Financial Officer have concluded that, as of the end of the period covered
by this quarterly report, our disclosure controls and procedures (as defined in Rule 13a-15(e) under the Exchange Act) are effective to ensure that information we are required to disclose in reports that we file or submit under the Exchange Act is
recorded, processed, summarized and reported within the time periods specified in Securities and Exchange Commission rules and forms, and that such information is accumulated and communicated to our management, including our Chief Executive Officer
and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure.



In addition, no change in our internal control over financial reporting (as defined in Rule 13a-15(f) under the Exchange Act) occurred during our most
recent fiscal quarter that has materially affected, or is likely to materially affect, our internal control over financial reporting.



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##### Table of Contents

PART II. OTHER INFORMATION



|Item 1. | Legal Proceedings
|------- | -----------------



The Companys businesses, as well as the financial services industry generally, are subject to extensive regulation throughout the world. The Company
is involved from time to time in a number of judicial, regulatory and arbitration proceedings and inquiries concerning matters arising in connection with the conduct of our businesses, including proceedings initiated by former employees alleging
wrongful termination. The Company reviews such matters on a case-by-case basis and establishes any required reserves in accordance with Statement of Financial Accounting Standards No. 5, Accounting For Contingencies.
Management believes, based on currently available information, that the results of such matters, in the aggregate, will not have a material adverse effect on the Companys financial condition but might be material to the Companys
operating results or cash flows for any particular period, depending upon the operating results for such period.



|Item 1A. | Risk Factors
|-------- | ------------



There were no material changes from the risk factors previously disclosed in the Companys Form 10-K.



|Item 2. | Unregistered Sales of Equity Securities and Use of Proceeds
|------- | -----------------------------------------------------------



Not applicable.



|Item 3. | Defaults Upon Senior Securities
|------- | -------------------------------



None.



|Item 4. | Submission of Matters to a Vote of Security Holders
|------- | ---------------------------------------------------



None.



|Item 5. | Other Information
|------- | -----------------



None.



|Item 6. | Exhibits
|------- | --------



|    |  |                                                                                                                                                                                                                                                                                 
|--- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|3.1 |  | Lazard Group LLCs Certificate of Formation (incorporated by reference to Exhibit 3.1 to Lazard Group LLCs Registration Statement (File No. 333-126751) on Form S-4 filed on
July 21, 2005).                                                                                   
|    | 
|3.2 |  | Lazard Group LLCs Certificate of Amendment of Certificate of Formation of Lazard Group LLC, changing name to Lazard Group LLC (incorporated by reference to Exhibit 3.2 to Lazard Group
LLCs Registration Statement (File No. 333-126751) on Form S-4 filed on July 21, 2005).
|    | 
|3.3 |  | Operating Agreement of Lazard Group LLC, dated as of May 10, 2005 (incorporated by reference to Exhibit 10.2 to Lazard Ltds Quarterly Report (File No. 001-32492) on Form 10-Q filed on
June 16, 2005).                                                                        
|    | 
|3.4 |  | Amendment No. 1 to the Operating Agreement of Lazard Group LLC, dated as of December 19, 2005 (incorporated by reference to Exhibit 3.01 to
Lazard Group LLCs Current Report on Form 8-K (File No. 333-126751) filed on December 19, 2005).                                    
|    | 
|3.5 |  | Amendment No. 2 dated as of May 7, 2008, to the Operating Agreement of Lazard Group LLC dated as of May 10, 2005 (incorporated by reference to
Exhibit 3.1 to the Registrants Current Report on Form 8-K (File No. 333-126751) filed on May 8, 2008).                          



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|     |  |                                                                                                                                                                                                                                                                                                                                  
|---- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|4.1  |  | Indenture, dated as of May 10, 2005, by and between Lazard Group LLC and The Bank of New York, as Trustee (incorporated by reference to Exhibit 4.1 to Lazard Group LLCs Registration
Statement (File No. 333-126751) on Form S-4 filed on July 21, 2005).                                                                      
|     | 
|4.2  |  | First Supplemental Indenture, dated as of May 10, 2005, by and between Lazard Group LLC and The Bank of New York, as Trustee (incorporated by reference to Exhibit 4.2 to Lazard Group LLCs
Registration Statement (File No. 333-126751) on Form S-4 filed on July 21, 2005).                                                   
|     | 
|4.3  |  | Second Supplemental Indenture, dated as of May 10, 2005, by and between Lazard Group LLC and The Bank of New York, as Trustee (incorporated by reference to Exhibit 10.37 to Lazard Group
LLCs Registration Statement (File No. 333-126751) on Form S-4 filed on July 21, 2005).                                                
|     | 
|4.4  |  | Amended and Restated Third Supplemental Indenture, dated as of May 15, 2008, by and among Lazard Group LLC and The Bank of New York, as trustee
(incorporated by reference to Exhibit 4.01 to Lazard Group LLCs Current Report on Form 8-K (Commission File No. 333-126751) filed on May 16, 2008).                             
|     | 
|4.5  |  | Form of Senior Note (included in Exhibit 4.4).                                                                                                                                                                                                                                                                                   
|     | 
|4.6  |  | $546 million 7.125% Senior Notes Due 2015, issued by Lazard Group LLC (incorporated by reference to Exhibit 4.5 to Lazard Group LLCs Quarterly Report (File No. 333-126751) on Form 10-Q
filed on November 10, 2005).                                                                                                           
|     | 
|4.7  |  | Fourth Supplemental Indenture, dated as of June 21, 2007, between Lazard Group LLC and The Bank of New York, as trustee (incorporated by reference to Exhibit 4.1 to the Registrants Current
Report on Form 8-K (File No. 333-126751) filed on June 22, 2007).                                                                  
|     | 
|10.1 |  | Master Separation Agreement, dated as of May 10, 2005, by and among Lazard Ltd, Lazard Group LLC, LAZ-MD Holdings LLC and LFCM Holdings LLC (incorporated by reference to Exhibit 2.1 to Lazard
Ltds Quarterly Report (File No. 001-32492) on Form 10-Q filed on June 16, 2005).                                                
|     | 
|10.2 |  | Amendment No. 1, dated as of November 6, 2006, to the Master Separation Agreement, dated as of May 10, 2005, by and among the Lazard Ltd, Lazard Group LLC and LAZ-MD Holdings LLC (incorporated
by reference to Exhibit 10.2 to the Registrants Quarterly Report (File No. 333-126751) on Form 10-Q filed on November 7, 2006).
|     | 
|10.3 |  | Second Amendment dated as of May 7, 2008, to the Master Separation Agreement dated as of May 10, 2005, as amended, by and among Lazard Ltd, Lazard
Group LLC and LAZ-MD Holdings LLC (incorporated by reference to Exhibit 2.1 to the Registrants Current Report on Form 8-K (File No. 333-126751) filed
on May 8, 2008).       
|     | 
|10.4 |  | Class B-1 and Class C Members Transaction Agreement (incorporated by reference to Exhibit 2.2 to Lazard Ltds Registration Statement (File No. 333-121407) on Form S-1 filed on December 17,
2004).                                                                                                                              
|     | 
|10.5 |  | Amended and Restated Stockholders Agreement, dated as of November 6, 2006, by and among LAZ-MD Holdings LLC, Lazard Ltd and certain members of LAZ-MD Holdings LLC (incorporated by
reference to Exhibit 10.4 to the Registrants Quarterly Report (File No. 333-126751) on Form 10-Q filed on November 7, 2006).               
|     | 
|10.6 |  | First Amendment dated as of May 7, 2008, to the Amended and Restated Stockholders Agreement dated as of November 6, 2006, between LAZ- MD Holdings LLC and Lazard Ltd (incorporated by
reference to Exhibit 10.6 to the Registrants Quarterly Report (File No. 333-126751) on Form 10-Q filed on May 9, 2008).                 
|     | 
|10.7 |  | Employee Benefits Agreement, dated as of May 10, 2005, by and among Lazard Ltd, Lazard Group LLC, LAZ-MD Holdings LLC and LFCM Holdings LLC (incorporated by reference to Exhibit 10.4 to Lazard
Ltds Quarterly Report (File No. 001-32492) on Form 10-Q filed on June 16, 2005).                                               



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|       |  |                                                                                                                                                                                                                                                                                                                                                 
|------ |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|10.8   |  | Insurance Matters Agreement, dated as of May 10, 2005, by and between Lazard Group LLC and LFCM Holdings LLC (incorporated by reference to Exhibit 10.5 to Lazard Ltds Quarterly Report
(File No. 001-32492) on Form 10-Q filed on June 16, 2005).                                                                                             
|       | 
|10.9   |  | License Agreement, dated as of May 10, 2005, by and among Lazard Strategic Coordination Company, LLC, Lazard Frères & Co. LLC, Lazard Frères S.A.S., Lazard & Co. Holdings
Limited and LFCM Holdings LLC (incorporated by reference to Exhibit 10.6 to Lazard Ltds Quarterly Report (File No. 001-32492) on Form 10-Q filed on June 16, 2005). 
|       | 
|10.10  |  | Administrative Services Agreement, dated as of May 10, 2005, by and among LAZ-MD Holdings LLC, LFCM Holdings LLC and Lazard Group LLC (incorporated by reference to Exhibit 10.7 to Lazard
Ltds Quarterly Report (File No. 001-32492) on Form 10-Q filed on June 16, 2005).                                                                    
|       | 
|10.11  |  | Business Alliance Agreement, dated as of May 10, 2005, by and between Lazard Group LLC and LFCM Holdings LLC (incorporated by reference to Exhibit 10.8 to Lazard Ltds Quarterly Report
(File No. 001-32492) on Form 10-Q filed on June 16, 2005).                                                                                             
|       | 
|10.12  |  | Amendment and Consent, dated February 9, 2009, to the Business Alliance Agreement, dated as of May 10, 2005, by and between Lazard Group LLC and LFCM Holdings LLC (incorporated by reference to
Exhibit 10.12 to Registrants Annual Report (File No. 333-126751) on Form 10-K filed on March 2, 2009).                                        
|       | 
|10.13  |  | Amended and Restated Operating Agreement of Lazard Strategic Coordination Company LLC, dated as of January 1, 2002 (incorporated by reference to Exhibit 10.16 to Lazard Ltds Registration
Statement (File No. 333-121407) on Form S-1/A filed on February 11, 2005).                                                                          
|       | 
|10.14  |  | Lease, dated as of January 27, 1994, by and between Rockefeller Center Properties and Lazard Frères & Co. LLC (incorporated by reference to Exhibit 10.19 to Lazard Ltds
Registration Statement (File No. 333-121407) on Form S-1/A filed on February 11, 2005).                                                                               
|       | 
|10.15  |  | Lease with an Option to Purchase, dated as of July 11, 1990, by and between Sicomibail and Finabail and SCI du 121 Boulevard Hausmann (English translation) (incorporated by reference to Exhibit
10.20 to Lazard Ltds Registration Statement (File No. 333-121407) on Form S-1/A filed on February 11, 2005).                                 
|       | 
|10.16  |  | Occupational Lease, dated as of August 9, 2002, Burford (Stratton) Nominee 1 Limited, Burford (Stratton) Nominee 2 Limited, Burford (Stratton) Limited, Lazard & Co., Limited and Lazard LLC
(incorporated by reference to Exhibit 10.21 to Lazard Ltds Registration Statement (File No. 333-121407) on Form S-1/A filed on February 11, 2005).
|       | 
|10.17* |  | Lazard Ltds 2005 Equity Incentive Plan (incorporated by reference to Exhibit 10.21 to Lazard Ltds Registration Statement (File No. 333-121407) on Form S-1/A filed on May 2, 2005).                                                                                                                                                           
|       | 
|10.18* |  | Lazard Ltds 2008 Incentive Compensation Plan (incorporated by reference to Annex B to Lazard Ltds Definitive Proxy Statement on Schedule 14A (File No. 001-32492) filed
on March 24, 2008).                                                                                                                                                   
|       | 
|10.19* |  | Lazard Ltds 2005 Bonus Plan (incorporated by reference to Exhibit 10.23 to Lazard Ltds Registration Statement (File No. 333-121407) on Form S-1/A filed on March 21,
2005).                                                                                                                                                                   
|       | 
|10.20* |  | Amended and Restated Agreement Relating to Retention and Noncompetition and Other Covenants, dated as of January 29, 2008, by and among Lazard Ltd, Lazard Group LLC and Bruce Wasserstein
(incorporated by reference to Exhibit 10.1 to Lazard Group LLCs Current Report on Form 8-K (File No. 333-126751) filed on February 1, 2008).        
|       | 
|10.21* |  | Agreement Relating to Reorganization of Lazard, dated as of May 10, 2005, by and among Lazard LLC and Bruce Wasserstein (incorporated by reference to Exhibit 10.24 to Lazard Ltds Quarterly
Report (File No. 001-32492) on Form 10-Q filed on June 16, 2005).                                                                                 



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|       |  |                                                                                                                                                                                                                                                                                                                                                                                                                                 
|------ |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|10.22* |  | Amended and Restated Agreement Relating to Retention and Noncompetition and Other Covenants, dated as of May 7, 2008, by and among Lazard Ltd, Lazard Group LLC and Steven J. Golub (incorporated
by reference to Exhibit 10.1 to the Registrants Current Report (File No. 333-126751) on Form 8-K filed on May 8, 2008).                                                                                                      
|       | 
|10.23* |  | Amendment No. 1, dated as of February 26, 2009, to the Amended and Restated Agreement Relating to Retention and Noncompetition and Other Covenants, dated as of May 7, 2008, by and among Lazard
Ltd, Lazard Group LLC and Steven J. Golub (incorporated by reference to Exhibit 10.23 to Registrants Annual Report (File No. 333-126751) on Form 10-K filed on March 2, 2009).                                                
|       | 
|10.24* |  | Form of Agreement Relating to Retention and Noncompetition and Other Covenants, dated as of May 4, 2005, applicable to, and related Schedule I for, each of Michael J. Castellano, Scott D.
Hoffman and Charles G. Ward III (incorporated by reference to Exhibit 10.26 to Lazard Ltds Quarterly Report (File No. 001-32492) on Form 10-Q filed on June 16, 2005).                                                             
|       | 
|10.25* |  | Form of First Amendment dated as of May 7, 2008, to Agreement Relating to Retention and Noncompetition and Other Covenants dated as of May 4, 2005, for each of Michael J. Castellano,
Scott D. Hoffman and Charles G. Ward, III (incorporated by reference to Exhibit 10.2 to the Registrants Current Report on Form 8-K (File No. 333-126751) filed on May 8, 2008).                                                         
|       | 
|10.26* |  | Second Amendment, dated as of February 26, 2009, to Agreement Relating to Retention and Noncompetition and Other Covenants dated as of May 4, 2005
(as amended from time to time), for Michael J. Castellano (incorporated by reference to Exhibit 10.26 to Registrants Annual Report (File No.
333-126751) on Form 10-K filed on March 2, 2009).                                                                              
|       | 
|10.27* |  | Form of Agreements Relating to Retention and Noncompetition and Other Covenants (incorporated by reference to Exhibit 10.27 to Lazard Ltds
Registration Statement (File No. 333-121407) on Form S-1/A filed on April 11, 2005).                                                                                                                                                                                                
|       | 
|10.28* |  | Agreement Relating to Retention and Noncompetition and Other Covenants, dated as of October 4, 2004 by and between Lazard Group LLC and Alexander F. Stern (incorporated by reference to Exhibit
10.28 to Registrants Annual Report (File No. 333-126751) on Form 10-K filed on March 2, 2009).                                                                                                                                
|       | 
|10.29* |  | Amended and Restated Letter Agreement, effective as of January 1, 2004, between Vernon E. Jordan, Jr. and Lazard Frères & Co. LLC (incorporated by reference to Exhibit 10.28
to Lazard Ltds Quarterly Report (File No. 001-32492) on Form 10-Q filed on June 16, 2005).                                                                                                                                                       
|       | 
|10.30* |  | Acknowledgement Letter, dated as of November 6, 2006, from Lazard Group LLC to certain managing directors of Lazard Group LLC modifying the terms of the retention agreements of persons party to
the Amended and Restated Stockholders Agreement, dated as of November 6, 2006 (incorporated by reference to Exhibit 10.23 to the Registrants Quarterly Report (File No. 333-126751) on Form 10-Q filed on November 7, 2006).
|       | 
|10.31  |  | Letter Agreement, dated as of March 15, 2005, from IXIS Corporate and Investment Bank to Lazard LLC and Lazard Ltd (incorporated by reference to Exhibit 10.27 to Lazard Ltds Registration
Statement (File No. 333-121407) on Form S-1/A filed on March 21, 2005).                                                                                                                                                             
|       | 
|10.32  |  | Registration Rights Agreement, dated as of May 10, 2005 by and among Lazard Group Finance LLC, the Registrant, Lazard Group LLC and IXIS Corporate and Investment Bank (incorporated by reference
to Exhibit 10.30 to Lazard Ltds Quarterly Report (File No. 001-32492) on Form 10-Q filed on June 16, 2005).                                                                                                                  
|       | 
|10.33  |  | Letter Agreement, dated as of May 10, 2005, with Bruce Wasserstein family trusts (incorporated by reference to Exhibit 10.31 to Lazard Ltds Quarterly Report (File No. 001-32492) on
Form 10-Q filed on June 16, 2005).                                                                                                                                                                                                        



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|       |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|------ |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|10.34  |  | Senior Revolving Credit Agreement, dated as of May 10, 2005, among Lazard Group LLC, the Banks from time to time parties thereto, Citibank, N.A., The Bank of New York, New York Branch, JP
Morgan Chase Bank, N.A. and JP Morgan Chase Bank, N.A., as Administrative Agent (incorporated by reference to Exhibit 10.32 to Lazard Ltds Quarterly Report (File No. 001-32492) on Form 10-Q filed on June 16, 2005).                                                        
|       | 
|10.35  |  | First Amendment, dated as of March 28, 2006, to the Senior Revolving Credit Agreement, dated as of May 10, 2005, among Lazard Group LLC, the Banks from time to time parties thereto, Citibank,
N.A., The Bank of New York, New York Branch, JP Morgan Chase Bank, N.A. and JP Morgan Chase Bank, N.A., as Administrative Agent (incorporated by reference to Exhibit 10.38 to the Registrants Quarterly Report on Form 10-Q (File No. 333-126751)
filed on May 11, 2006).
|       | 
|10.36  |  | Second Amendment, dated as of May 17, 2006, to the Senior Revolving Credit Agreement, dated as of May 10, 2005, among Lazard Group LLC, the Banks from time to time parties thereto, Citibank,
N.A., The Bank of New York, New York Branch, JP Morgan Chase Bank, N.A. and JP Morgan Chase Bank, N.A., as Administrative Agent (incorporated by reference to Exhibit 10.1 to the Registrants Current Report on Form 8-K (File No. 333-126751)
filed on May 17, 2006).     
|       | 
|10.37  |  | Third Amendment, dated as of June 18, 2007, to the Senior Revolving Credit Agreement, dated as of May 10, 2005, among Lazard Group LLC, the Banks from time to time parties thereto, Citibank,
N.A., The Bank of New York, New York Branch, JP Morgan Chase Bank, N.A. and JP Morgan Chase Bank, N.A., as Administrative Agent (incorporated by reference to Exhibit 10.1 to the Registrants Current Report on Form 8-K (File No. 333-126751)
filed on June 22, 2007).    
|       | 
|10.38* |  | Description of Non-Executive Director Compensation (incorporated by reference to Exhibit 10.33 to Lazard Ltds Quarterly Report (File No. 001-32492) on Form 10-Q for the quarter ended
June 30, 2005).                                                                                                                                                                                                                                                                    
|       | 
|10.39* |  | Form of Award Letter for Annual Grant of Deferred Stock Units to Non-Executive Directors (incorporated by reference to Exhibit 99.1 to Lazard Ltds Current Report on Form 8-K (File
No. 001-32492) filed on September 8, 2005).                                                                                                                                                                                                                                           
|       | 
|10.40* |  | Form of Agreement evidencing a grant of Restricted Stock Units to Executive Officers under the Lazard Equity Incentive Plan (incorporated by reference to Exhibit 10.1 to Lazard Ltds
Current Report on Form 8-K (File No. 001-32492) filed on January 26, 2006).                                                                                                                                                                                                         
|       | 
|10.41* |  | Form of Agreement evidencing a grant of Restricted Stock Units to Executive Officers under the 2008 Incentive Compensation Plan (incorporated by reference to Exhibit 10.41 to Registrants
Annual Report (File No. 333-126751) on Form 10-K filed on March 2, 2009).                                                                                                                                                                                                      
|       | 
|10.42* |  | Form of Agreement evidencing a grant of Deferred Cash Awards to Executive Officers under the 2008 Incentive Compensation Plan (incorporated by reference to Exhibit 10.42 to Registrants
Annual Report (File No. 333-126751) on Form 10-K filed on March 2, 2009).                                                                                                                                                                                                        
|       | 
|10.43  |  | Termination Agreement, dated as of March 31, 2006, by and among Banca Intesa S.p.A., Lazard Group LLC, and Lazard & Co. S.r.l. (incorporated by reference to Exhibit 10.1 to the
Registrants Current Report on Form 8-K (File No. 333-126751) filed on April 4, 2006).                                                                                                                                                                                                    
|       | 
|10.44  |  | Amended and Restated $150 Million Subordinated Convertible Promissory Note due 2018, issued by Lazard Funding LLC to Banca Intesa S.p.A. (incorporated by reference to Exhibit 10.3 to the
Registrants Current Report on Form 8-K (File No. 333-126751) filed on May 17, 2006).                                                                                                                                                                                           
|       | 
|10.45  |  | Amended and Restated Guaranty of Lazard Group LLC to Banca Intesa S.p.A., dated as of May 15, 2006 (incorporated by reference to Exhibit 10.4 to the Registrants Current Report on Form 8-K
(File No. 333-126751) filed on May 17, 2006).                                                                                                                                                                                                                                 
|       | 
|10.46* |  | Directors Fee Deferral Unit Plan (incorporated by reference to Exhibit 10.37 to the Registrants Quarterly Report on Form 10-Q (File No. 333-126751) filed on May 11,
2006).                                                                                                                                                                                                                                                                                              



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|       |  |                                                                                                                                                                                                                                                                                                     
|------ |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|10.47* |  | First Amended Form of Agreement evidencing a grant of Restricted Stock Units to Executive Officers under the Lazard 2005 Equity Incentive Plan (incorporated by reference to Exhibit 10.40 to
the Registrants Annual Report on Form 10-K (File No. 333-126751) filed on March 1, 2007).            
|       | 
|10.48  |  | Agreement and Plan of Merger, dated as of August 14, 2008, by and among Lazard Ltd, LAZ Sub I, Lazard Asset Management LLC, and Lazard Asset Management Limited (incorporated by reference to
Exhibit 2.1 to Lazard Ltds Current Report on Form 8-K (file No. 001-32492) filed on August 15, 2008).
|       | 
|12.1   |  | Computation of Ratio of Earnings to Fixed Charges.                                                                                                                                                                                                                                                  
|       | 
|31.1   |  | Rule 13a-14(a) Certification of Bruce Wasserstein.                                                                                                                                                                                                                                                  
|       | 
|31.2   |  | Rule 13a-14(a) Certification of Michael J. Castellano.                                                                                                                                                                                                                                              
|       | 
|32.1   |  | Section 1350 Certification for Bruce Wasserstein.                                                                                                                                                                                                                                                   
|       | 
|32.2   |  | Section 1350 Certification for Michael J. Castellano.                                                                                                                                                                                                                                               



|* | Management contract or compensatory plan or arrangement
|- | -------------------------------------------------------



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SIGNATURES



Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed
on its behalf by the undersigned thereunto duly authorized.



Date: May 1,
2009



LAZARD GROUP LLCBy:

/s/    Bruce WassersteinName: Bruce Wasserstein Title:   Chairman
and Chief Executive OfficerBy:

/s/    Michael J. CastellanoName: Michael J. Castellano Title:   Chief
Financial Officer




69