LAZARD LTD

(parent company only)

CONDENSED STATEMENTS OF FINANCIAL CONDITION

DECEMBER 31, 2016 AND 2015

(dollars in thousands, except per share data)

	December 31,
	2016			2015
ASSETS
Cash and cash equivalents	$	3,916		$	5,904
Investments in subsidiaries, equity method		(534,642	)		(747,753	)
Due from subsidiaries		1,766,875			2,055,748
Other assets		13			-
Total assets	$	1,236,162		$	1,313,899
LIABILITIES AND STOCKHOLDERS’ EQUITY
Liabilities:
Due to subsidiaries	$	65		$	113
Other liabilities		110			331
Total liabilities		175			444
Commitments and contingencies
STOCKHOLDERS’ EQUITY
Preferred stock, par value $.01 per share; 15,000,000 shares authorized:
Series A—0 and 7,921 shares issued and outstanding at December 31, 2016 and 2015, respectively		-			-
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, 2016 and 2015, including shares held by subsidiaries as indicated below)		1,298			1,298
Additional paid-in-capital		688,231			600,034
Retained earnings		1,134,186			1,123,728
Accumulated other comprehensive loss, net of tax		(314,222	)		(234,356	)
		1,509,493			1,490,704
Class A common stock held by subsidiaries, at cost (7,628,786 and 4,253,381 shares at December 31, 2016 and 2015, respectively)		(273,506	)		(177,249	)
Total stockholders’ equity		1,235,987			1,313,455
Total liabilities and stockholders’ equity	$	1,236,162		$	1,313,899

See notes to condensed financial statements.

LAZARD LTD

(parent company only)

CONDENSED STATEMENTS OF OPERATIONS

FOR THE YEARS ENDED DECEMBER 31, 2016, 2015 AND 2014

(dollars in thousands)

	Year Ended December 31,
	2016		2015		2014
REVENUE
Equity in earnings of subsidiaries	$	326,366	$	931,036	$	373,713
Interest and other income		63,019		57,258		55,303
Total revenue		389,385		988,294		429,016
OPERATING EXPENSES
Professional services		1,580		1,779		1,594
Other		107		142		145
Total operating expenses		1,687		1,921		1,739
NET INCOME	$	387,698	$	986,373	$	427,277

See notes to condensed financial statements.

LAZARD LTD

(parent company only)

CONDENSED STATEMENTS OF COMPREHENSIVE INCOME

FOR THE YEARS ENDED DECEMBER 31, 2016, 2015 AND 2014

(dollars in thousands)

	Year Ended December 31,
	2016			2015			2014
NET INCOME	$	387,698		$	986,373		$	427,277
OTHER COMPREHENSIVE INCOME (LOSS), NET OF TAX:
Currency translation adjustments		(57,919	)		(51,182	)		(49,970	)
Employee benefit plans:
Actuarial gain (loss) (net of tax expense (benefit) of $(5,205), $5,644 and $(9,045) for the years ended December 31, 2016, 2015 and 2014, respectively)		(24,473	)		11,283			(21,983	)
Adjustments for items reclassified to earnings (net of tax expense of $1,757, $1,507 and $1,923 for the years ended December 31, 2016, 2015 and 2014, respectively)		2,526			6,309			4,749
OTHER COMPREHENSIVE LOSS, NET OF TAX		(79,866	)		(33,590	)		(67,204	)
COMPREHENSIVE INCOME	$	307,832		$	952,783		$	360,073

See notes to condensed financial statements.

LAZARD LTD

(parent company only)

CONDENSED STATEMENTS OF CASH FLOWS

FOR THE YEARS ENDED DECEMBER 31, 2016, 2015 AND 2014

(dollars in thousands)

	Year Ended December 31,
	2016			2015			2014
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income	$	387,698		$	986,373		$	427,277
Adjustments to reconcile net income to net cash provided by operating activities:
Equity in earnings of subsidiaries		(326,366	)		(931,036	)		(373,713	)
Changes in due to/from subsidiaries		273,051			233,519			99,477
Changes in other operating assets and liabilities		(233	)		250			(6	)
Net cash provided by operating activities		334,150			289,106			153,035
CASH FLOWS FROM FINANCING ACTIVITIES:
Class A common stock dividends		(336,138	)		(290,684	)		(146,241	)
Net cash used in financing activities		(336,138	)		(290,684	)		(146,241	)
Net (decrease) increase in cash and cash equivalents		(1,988	)		(1,578	)		6,794
Cash and cash equivalents, January 1		5,904			7,482			688
Cash and cash equivalents, December 31	$	3,916		$	5,904		$	7,482

See notes to condensed financial statements.

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, 2016 and 2015, and for each of the three years in the period ended December 31, 2016, 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.