LAZARD LTD

(parent company only)

CONDENSED STATEMENTS OF FINANCIAL CONDITION

DECEMBER 31, 2017 AND 2016

(dollars in thousands, except per share data)

	December 31,
	2017			2016
ASSETS
Cash and cash equivalents	$	3,921		$	3,916
Investments in subsidiaries, equity method		(1,061,259	)		(534,642	)
Due from subsidiaries		2,259,112			1,766,875
Other assets		-			13
Total assets	$	1,201,774		$	1,236,162
LIABILITIES AND STOCKHOLDERS’ EQUITY
Liabilities:
Due to subsidiaries	$	1,847		$	65
Other liabilities		124			110
Total liabilities		1,971			175
Commitments and contingencies
STOCKHOLDERS’ EQUITY
Preferred stock, par value $.01 per share; 15,000,000 shares authorized:
Series A—no shares issued and outstanding					-
Series B—no shares issued and outstanding					-
Common stock:
Class A, par value $.01 per share (500,000,000 shares authorized; 129,766,091 shares issued at December 31, 2017 and 2016, including shares held by subsidiaries as indicated below)		1,298			1,298
Additional paid-in-capital		788,140			688,231
Retained earnings		1,080,413			1,134,186
Accumulated other comprehensive loss, net of tax		(232,518	)		(314,222	)
		1,637,333			1,509,493
Class A common stock held by subsidiaries, at cost (10,747,142 and 7,628,786 shares at December 31, 2017 and 2016, respectively)		(437,530	)		(273,506	)
Total stockholders’ equity		1,199,803			1,235,987
Total liabilities and stockholders’ equity	$	1,201,774		$	1,236,162

LAZARD LTD

(parent company only)

CONDENSED STATEMENTS OF OPERATIONS

FOR THE YEARS ENDED DECEMBER 31, 2017, 2016 AND 2015

(dollars in thousands)

	Year Ended December 31,
	2017		2016		2015
REVENUE
Equity in earnings of subsidiaries	$	145,008	$	326,366	$	931,036
Interest and other income		110,381		63,019		57,258
Total revenue		255,389		389,385		988,294
OPERATING EXPENSES
Professional services		1,692		1,580		1,779
Other		114		107		142
Total operating expenses		1,806		1,687		1,921
NET INCOME	$	253,583	$	387,698	$	986,373

LAZARD LTD

(parent company only)

CONDENSED STATEMENTS OF COMPREHENSIVE INCOME

FOR THE YEARS ENDED DECEMBER 31, 2017, 2016 AND 2015

(dollars in thousands)

	Year Ended December 31,
	2017		2016			2015
NET INCOME	$	253,583	$	387,698		$	986,373
OTHER COMPREHENSIVE INCOME (LOSS), NET OF TAX:
Currency translation adjustments		71,668		(57,919	)		(51,182	)
Employee benefit plans:
Actuarial gain (loss) (net of tax expense (benefit) of $(3,507), $(5,205) and $5,644 for the years ended December 31, 2017, 2016 and 2015, respectively)		2,085		(24,473	)		11,283
Adjustments for items reclassified to earnings (net of tax expense of $2,220, $1,757 and $1,507 for the years ended December 31, 2017, 2016 and 2015, respectively)		7,951		2,526			6,309
OTHER COMPREHENSIVE INCOME (LOSS), NET OF TAX		81,704		(79,866	)		(33,590	)
COMPREHENSIVE INCOME	$	335,287	$	307,832		$	952,783

LAZARD LTD

(parent company only)

CONDENSED STATEMENTS OF CASH FLOWS

FOR THE YEARS ENDED DECEMBER 31, 2017, 2016 AND 2015

(dollars in thousands)

	Year Ended December 31,
	2017			2016			2015
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income	$	253,583		$	387,698		$	986,373
Adjustments to reconcile net income to net cash provided by operating activities:
Equity in earnings of subsidiaries		(145,008	)		(326,366	)		(931,036	)
Dividends received from subsidiaries		63,822			-			-
Changes in due to/from subsidiaries		169,056			273,051			233,519
Changes in other operating assets and liabilities		27			(233	)		250
Net cash provided by operating activities		341,480			334,150			289,106
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital contribution to subsidiaries		(25	)		-			-
Net cash used in investing activities		(25	)		-			-
CASH FLOWS FROM FINANCING ACTIVITIES:
Class A common stock dividends		(341,450	)		(336,138	)		(290,684	)
Net cash used in financing activities		(341,450	)		(336,138	)		(290,684	)
Net increase (decrease) in cash and cash equivalents		5			(1,988	)		(1,578	)
Cash and cash equivalents, January 1		3,916			5,904			7,482
Cash and cash equivalents, December 31	$	3,921		$	3,916		$	5,904

LAZARD LTD

(parent company only)

NOTES TO CONDENSED FINANCIAL STATEMENTS

1.	BASIS OF PRESENTATION

The accompanying Lazard Ltd condensed financial statements (the “Parent Company Financial Statements”), including the notes thereto, should be read in conjunction with the consolidated financial statements of Lazard Ltd and its subsidiaries (the “Company”) and the notes thereto.

The Parent Company Financial Statements as of December 31, 2017 and 2016, and for each of the three years in the period ended December 31, 2017, are prepared in conformity with accounting principles generally accepted in the United States of America (“U.S. GAAP”), which require management to make estimates and assumptions that affect the reported amounts of assets and liabilities, revenue and expenses, and the disclosures in the condensed financial statements. Management believes that the estimates utilized in the preparation of the condensed financial statements are reasonable. Actual results could differ materially from these estimates.

The Parent Company Financial Statements include investments in subsidiaries, accounted for under the equity method.

For the period ended December 31, 2016, equity in earnings of subsidiaries also includes a gain of $12,668 related to the portion of a business acquired in the fourth quarter of 2016 that was previously owned by one of the Company’s subsidiaries.

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