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 Lazard Ltd Reports Full-Year and Fourth-Quarter 2017 Results
   Thursday, February 01, 2018 6:49:07 AM ET

Lazard Ltd (LAZ ):

      Record annual            Record annual operating      Entering 2018 with record
    operating revenue                                                 revenue in both Asset                                              assets under management
of $2.65 billion, up 13%                                             Management, up 20%, and                                                and a vibrant M&A
     from prior year                                                Financial Advisory, up 7%                                                  environment
                                                                                                                                        


Lazard Ltd (LAZ ) today reported record annual operating revenue(1) of $2,655 million for the year ended December 31, 2017. Net income, as adjusted(1) and excluding one-time charges(2), was $501 million, or $3.78 per share (diluted) for the year. Annual net income on a U.S. GAAP basis for the year was $254 million, or $1.91 per share (diluted).

For the fourth quarter of 2017, net income, as adjusted(1) and excluding one-time charges(2), was $148 million, or $1.12 per share (diluted). On a U.S. GAAP basis, net loss for the fourth quarter was $84 million, or $0.70 per share (diluted).

"Our record operating performance in 2017 underscores the strength of our business model, the power of our franchise, and the results we are achieving for clients," said Kenneth M. Jacobs, Chairman and Chief Executive Officer of Lazard. "We have momentum in an improving global macroeconomic environment, and we continue to invest in our business to serve clients, capitalize on growth opportunities and build shareholder value."

                                                                                                                
----------------------- -------------------- ------------------------------------------------------------------------------------------------------------------------------------------- -------------------- -----------------------------------------------------------------------------------------------------------------------
($ in millions, except                                                          Year Ended                                                                                                                Quarter Ended
per share data and AUM)                                                                             Dec. 31,                                                                                                                                                         Dec. 31,
                                              2017     2016    %’17-’16                                             2017     2016   %’17-’16
                                             ------                      ------                      --------------------------------------------------------------                                           -------                      -----                      --------------------------------------------------------------
Net Income (loss)
-----------------------
US GAAP                                        $254                        $388                                                                               (35)%                                             $(84)                       $128                                                                                  NM
     Per share, diluted                       $1.91                       $2.92                                                                               (35)%                                           $(0.70)                      $0.96                                                                                  NM
Adjusted(1,2)                                  $501                        $410                                                                                 22%                                              $148                       $150                                                                                (1)%
     Per share, diluted                       $3.78                       $3.09                                                                                 22%                                             $1.12                      $1.13                                                                                (1)%
Operating Revenue(1)
-----------------------
Total operating revenue                      $2,655                      $2,344                                                                                 13%                                              $683                       $685                                                                                (0)%
     Financial Advisory                      $1,388                      $1,301                                                                                  7%                                              $335                       $405                                                                               (17)%
     Asset Management                        $1,240                      $1,031                                                                                 20%                                              $339                       $275                                                                                 23%
AUM ($ in billions)
-----------------------
Period End                                     $249                        $198                                                                                 26%
Average                     $227     $195                                                              16%        $244    $200                                                              22%
----------------------- -------------------- ------ -------------------- ------ -------------------- -------------------------------------------------------------- -------------------- -------------------- ------- -------------------- ----- -------------------- --------------------------------------------------------------

Note: Endnotes are on page 7 of this release. A reconciliation to U.S. GAAP is on page 19.

OPERATING REVENUE

Operating revenue(1) was a record $2,655 million for 2017, 13% higher than 2016. Fourth-quarter 2017 operating revenue was $683 million, approximately even with the record fourth quarter of 2016.

Financial Advisory

In the text portion of this press release, we present our Financial Advisory results as 1) Strategic Advisory (M&A Advisory, Capital Advisory, Sovereign Advisory, Shareholder Advisory, Capital Raising, and other advisory work for clients), and 2) Restructuring.

Full Year

Financial Advisory operating revenue was a record $1,388 million for 2017, 7% higher than 2016.

Strategic Advisory operating revenue was $1,126 million for 2017, 2% higher than 2016.

Lazard advised or continues to advise on a number of the largest global M&A transactions announced in 2017, including (clients are in italics): Aetna’s $77 billion sale to CVS Health; Johnson & Johnson’s $30 billion acquisition of Actelion, with spin-out of Idorsia; Unibail-Rodamco’s $24.7 billion acquisition of Westfield; Sempra Energy’s acquisition of an 80% ownership interest in Oncor, valuing Oncor at $18.8 billion; and Calpine’s $17.1 billion sale to a consortium led by Energy Capital Partners.

Our Capital and Shareholder Advisory practices remained active globally in 2017, advising on a breadth of public and private assignments. Our Sovereign Advisory practice also remained active, advising governments, sovereign and sub-sovereign entities across developed and emerging markets.

Restructuring operating revenue was $262 million for 2017, up 30% from 2016. During or since 2017, we have been engaged in a broad range of highly visible and complex restructuring and debt advisory assignments, including publicly announced roles for: CGG; J.Crew; Takata; Toshiba; and Toys "R" Us.

Fourth Quarter

Financial Advisory operating revenue was $335 million for the fourth quarter of 2017, 17% lower than the record fourth quarter of 2016.

Strategic Advisory operating revenue was $302 million for the fourth quarter of 2017, 18% lower than the fourth quarter of 2016.

Restructuring operating revenue was $33 million for the fourth quarter of 2017, 8% lower than the fourth quarter of 2016.

Please see M&A transactions on which Lazard advised in the fourth quarter, or continued to advise or completed since December 31, 2017, as well as Capital Advisory, Sovereign Advisory and Restructuring assignments, on pages 8 -11 of this release.

Asset Management

In the text portion of this press release, we present our Asset Management results as 1) Management fees and other revenue, and 2) Incentive fees.

Full Year

Asset Management operating revenue was a record $1,240 million for 2017, 20% higher than 2016.

Management fees and other revenue was a record $1,194 million for 2017, 18% higher than 2016. Incentive fees were $46 million for 2017, compared to $16 million for 2016.

Average assets under management (AUM) for 2017 was a record $227 billion, 16% higher than 2016.

AUM as of December 31, 2017 was a record $249 billion, up 26% from December 31, 2016. Net inflows for 2017 were $3.1 billion.

Fourth Quarter

Asset Management operating revenue was a record $339 million for the fourth quarter of 2017, 23% higher than the fourth quarter of 2016.

Management fees and other revenue was a record $320 million for the fourth quarter of 2017, 22% higher than the fourth quarter of 2016, and 3% higher than the third quarter of 2017. Incentive fees were $19 million for the fourth quarter of 2017, compared to $12 million for the fourth quarter of 2016.

Average AUM for the fourth quarter of 2017 was a record $244 billion, 22% higher than the fourth quarter of 2016, and 4% higher than the third quarter of 2017.

AUM as of December 31, 2017, increased 5% from September 30, 2017. The sequential increase was primarily driven by market appreciation, foreign exchange movement, and net inflows of $137 million.

OPERATING EXPENSES

Compensation and Benefits

In managing compensation and benefits expense, we focus on annual awarded compensation (cash compensation and benefits plus deferred incentive compensation with respect to the applicable year, net of estimated future forfeitures and excluding charges). We believe annual awarded compensation reflects the actual annual compensation cost more accurately than the GAAP measure of compensation cost, which includes applicable-year cash compensation and the amortization of deferred incentive compensation principally attributable to previous years’ deferred compensation. We believe that by managing our business using awarded compensation with a consistent deferral policy, we can better manage our compensation costs, increase our flexibility in the future and build shareholder value over time.

Adjusted compensation and benefits expense(1) for 2017 was $1,481 million, 12% higher than 2016, with a consistent deferral policy. The corresponding adjusted compensation ratio(1) was 55.8% for 2017, compared to 56.5% for 2016.

Awarded compensation expense(1) for 2017 was $1,476 million, 12% higher than 2016. The corresponding awarded compensation ratio(1) was 55.6% for 2017, compared to 56.2% for 2016.

We take a disciplined approach to compensation, and our goal is to maintain a compensation-to-operating revenue ratio over the cycle in the mid- to high-50s percentage range on both an awarded and adjusted basis, with consistent deferral policies.

Non-Compensation Expense

Adjusted non-compensation expense(1) for 2017 was $461 million, 6% higher than 2016. The ratio of non-compensation expense to operating revenue(1) was 17.4% for 2017, compared to 18.5% for 2016.

Adjusted non-compensation expense(1) for the fourth quarter of 2017 was $127 million, 10% higher than the fourth quarter of 2016, primarily reflecting increased marketing costs and investments in the business. The ratio of non-compensation expense to operating revenue(1) was 18.5% for the fourth quarter of 2017, compared to 16.8% for the fourth quarter of 2016.

Our goal remains to achieve an adjusted non-compensation expense-to-operating revenue ratio over the cycle of 16% to 20%.

TAXES

The provision for taxes, on an adjusted basis(1), was $159 million for full-year 2017 and $28 million for the fourth quarter of 2017. The effective tax rate on the same basis was 24.1% for full-year 2017, compared to 23.7% for full-year 2016.

In the fourth quarter of 2017, as a result of the 2017 U.S. Tax Cuts and Jobs Act, our U.S. GAAP provision for income taxes included a charge of approximately $420 million, primarily relating to the reduction in certain deferred tax assets, with an offsetting benefit of approximately $203 million relating to the reduction in our Tax Receivable Agreement (TRA) obligation.

CAPITAL MANAGEMENT AND BALANCE SHEET

Our primary capital management goals include managing debt and returning capital to shareholders through dividends and share repurchases.

In 2017, Lazard returned $716 million to shareholders, which included: $341 million in dividends; $307 million in share repurchases of our Class A common stock; and $68 million in satisfaction of employee tax obligations in lieu of share issuances upon vesting of equity grants.

During 2017, we repurchased 7.0 million shares of our Class A common stock for an average price of $44.10 per share. In line with our objectives, these repurchases more than offset the potential dilution from our 2016 year-end equity-based compensation awards (net of estimated forfeitures and tax withholding to be paid in cash in lieu of share issuances), which were granted at an average price of $43.42 per share. As of January 30, 2018, our remaining share repurchase authorization was $220 million.

On January 31, 2018, Lazard declared dividends totaling $1.71 per share, comprised of a quarterly dividend of $0.41 per share and an extra cash dividend of $1.30 per share, on Lazard’s outstanding Class A common stock. The dividends are payable on February 23, 2018, to stockholders of record on February 12, 2018.

Lazard’s financial position remains strong. As of December 31, 2017, our cash and cash equivalents were $1,484 million, and stockholders’ equity related to Lazard’s interests was $1,201 million.

***

CONFERENCE CALL

Lazard will host a conference call at 8:00 a.m. EST on February 1, 2018, to discuss the company’s financial results for the full year and fourth quarter of 2017. The conference call can be accessed via a live audio webcast available through Lazard’s Investor Relations website at www.lazard.com, or by dialing 1 (888) 394-8218 (U.S. and Canada) or +1 (323) 701-0225 (outside of the U.S. and Canada), 15 minutes prior to the start of the call.

A replay of the conference call will be available by 10:00 a.m. EST on February 1, 2018, via the Lazard Investor Relations website, or by dialing 1 (888) 203-1112 (U.S. and Canada) or +1 (719) 457-0820 (outside of the U.S. and Canada). The replay access code is 5950635.

ABOUT LAZARD

Lazard, one of the world’s preeminent financial advisory and asset management firms, operates from 43 cities across 27 countries in North America, Europe, Asia, Australia, Central and South America. With origins dating to 1848, the firm provides advice on mergers and acquisitions, strategic matters, restructuring and capital structure, capital raising and corporate finance, as well as asset management services to corporations, partnerships, institutions, governments and individuals. For more information on Lazard, please visit www.lazard.com. Follow Lazard at @Lazard.

***

Cautionary Note Regarding Forward-Looking Statements:

This press release contains forward-looking statements. In some cases, you can identify these statements by forward-looking words such as "may", "might", "will", "should", "could", "would", "expect", "plan", "anticipate", "believe", "estimate", "predict", "potential", "target," "goal", or "continue", and the negative of these terms and other comparable terminology. These forward-looking statements, which are subject to known and unknown risks, uncertainties and assumptions about us, may include projections of our future financial performance based on our growth strategies, business plans and initiatives and anticipated trends in our business. These statements are only predictions based on our current expectations and projections about future events. There are important factors that could cause our actual results, level of activity, performance or achievements to differ materially from the results, level of activity, performance or achievements expressed or implied by these forward-looking statements.

These factors include, but are not limited to, those discussed in our Annual Report on Form 10-K under Item 1A "Risk Factors," and also discussed from time to time in our reports on Forms 10-Q and 8-K, including the following:

-- A decline in general economic conditions or the global or regional financial markets;

-- A decline in our revenues, for example due to a decline in overall mergers and acquisitions (M&A) activity, our share of the M&A market or our assets under management (AUM);

-- Losses caused by financial or other problems experienced by third parties;

-- Losses due to unidentified or unanticipated risks;

-- A lack of liquidity, i.e., ready access to funds, for use in our businesses; and

-- Competitive pressure on our businesses and on our ability to retain and attract employees at current compensation levels.

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

Lazard Ltd is committed to providing timely and accurate information to the investing public, consistent with our legal and regulatory obligations. To that end, Lazard and its operating companies use their websites, Lazard’s Twitter account (twitter.com/Lazard) and other social media sites to convey information about their businesses, including the anticipated release of quarterly financial results, quarterly financial, statistical and business-related information, and the posting of updates of assets under management in various mutual funds, hedge funds and other investment products managed by Lazard Asset Management LLC and Lazard Freres Gestion SAS. Investors can link to Lazard and its operating company websites through www.lazard.com.

***

ENDNOTES

(1) A non-U.S. GAAP measure. See attached financial schedules and related notes for a detailed explanation of adjustments to corresponding U.S. GAAP results. We believe that presenting our results on an adjusted basis, in addition to U.S. GAAP results, is the most meaningful and useful way to compare our operating results across periods.

(2) Fourth-quarter and full-year results for 2017 were affected primarily by the following charges:

-- In the fourth quarter of 2017, as a result of the 2017 U.S. Tax Cuts and Jobs Act, our U.S. GAAP provision for income taxes included a charge of approximately $420 million primarily relating to the reduction in certain deferred tax assets, with an offsetting benefit of approximately $203 million relating to the reduction in our Tax Receivable Agreement (TRA) obligation. On a U.S. GAAP basis, these items resulted in a net charge of $1.81 (diluted) per share in the quarter, and $1.64 (diluted) per share for full-year 2017.

-- Fourth-quarter and full-year 2017 adjusted results exclude pre-tax charges of (i) $9.9 million and $25.3 million, respectively, of costs associated with the implementation of a new Enterprise Resource Planning (ERP) system, and (ii) $6.8 million and $11.4 million, respectively, of office space reorganization costs primarily relating to incremental rent expense, lease abandonment costs and an onerous lease provision. On a U.S. GAAP basis, these items collectively resulted in a net charge of $10.6 million, or $0.09 (diluted) per share, in the fourth quarter and a net charge of $23.4 million, or $0.18 (diluted) per share, for full-year 2017.

-- Full-year 2017 adjusted results also exclude post-tax charges of $6.6 million of acquisition-related items, primarily reflecting changes in fair value of contingent consideration associated with certain business acquisitions. On a U.S. GAAP basis, this resulted in a charge of $0.05 (diluted) per share for full-year 2017.

LAZ-EPE

FINANCIAL ADVISORY ASSIGNMENTS

Mergers and Acquisitions (Completed in the fourth quarter of 2017)

Among the large, publicly announced M&A Advisory transactions or assignments completed during the fourth quarter of 2017 on which Lazard advised were the following:

-- Level 3 Communications on its $34 billion sale to CenturyLink

-- Gilead’s $11.9 billion acquisition of Kite Pharma

-- Paysafe’s ?3.0 billion recommended sale to a consortium of funds managed or advised by Blackstone and CVC

-- Express Scripts’ $3.6 billion acquisition of eviCore healthcare

-- Anheuser-Busch InBev’s $3.2 billion transition of its 54.5% stake in Coca-Cola Beverages Africa to The Coca-Cola Company

-- Blackstone and Alliance Industries Group on the $2.0 billion sale of Alliance Automotive Group to Genuine Parts

-- Blackstone in CF Corporation’s $1.8 billion consortium acquisition of Fidelity & Guaranty Life

-- Special Committee of the Board of Phillips Edison Grocery Center REIT I in the company’s $1.0 billion acquisition of real estate assets and the third party asset management business from Phillips Edison Limited Partnership

-- Landauer’s $770 million sale to Fortive

-- Hotel Investment Partners EUR631 million sale to Blackstone

-- Investcorp’s EUR605 million sale of Esmalglass to Lone Star Funds

-- Accella Performance Materials’ $670 million sale to Carlisle Companies

-- SciClone Pharmaceuticals’ $605 million sale to a consortium led by GL Capital

-- Ontario Teachers’ Pension Plan’s sale of a minority stake in Busy Bees to Temasek

-- IPFS’s acquisition of Premium Assignment Corporation from SunTrust

-- The Ferrero Group’s acquisition of Ferrara Candy Company

-- The Carlyle Group’s acquisition of ADB SAFEGATE

-- IK Investment Partners’ sale of Schenck Process to Blackstone

-- KKR Credit’s sale of its shareholding in URSA to Xella International

-- ITS ConGlobal on its sale to AMP Capital

Mergers and Acquisitions (Announced)

Among the ongoing, large, publicly announced M&A transactions and assignments on which Lazard advised during or since the 2017 fourth quarter, or completed since December 31, 2017, are the following:

-- Aetna’s $77 billion sale to CVS Health

-- Altice on its $40 billion group reorganization, including the spin-off of Altice USA and new Altice Europe structure

-- Unibail-Rodamco’s $24.7 billion acquisition of Westfield

-- Sempra Energy’s acquisition of an 80% ownership interest in Oncor, valuing Oncor at $18.8 billion

-- Calpine’s $17.1 billion sale to a consortium led by Energy Capital Partners

-- Great Plains Energy’s $14 billion merger of equals with Westar Energy

-- Sanofi’s $11.6 billion acquisition of Bioverativ

-- Safran’s EUR8.7 billion acquisition of Zodiac Aerospace

-- Thales’ EUR5.6 billion acquisition of Gemalto through a recommended all-cash offer

-- WGL Holdings’ $6.4 billion sale to AltaGas

-- Bacardi’s $5.1 billion acquisition of Patron Tequila

-- WestRock’s $4.9 billion acquisition of KapStone

-- Sanofi’s EUR3.9 billion acquisition of Ablynx

-- Hammerson’s ?3.4 billion recommended all-share offer for Intu Properties

-- AVEVA’s $4.7 billion combination with Schneider Electric’s industrial software business

-- NJJ Capital in the EUR3.5 billion consortium acquisition of eir

-- Clayton, Dubilier & Rice on their acquisition of a 40% stake in Belron, valuing Belron at EUR3.0 billion

-- The Ferrero Group’s $2.8 billion acquisition of Nestle’s U.S. confectionary business

-- Genworth Financial’s $2.7 billion sale to China Oceanwide

-- Special Committee of the Board of Directors of General Communication, Inc. ("GCI") in the $2.7 billion sale of GCI to Liberty Interactive

-- Scotiabank’s $2.2 billion acquisition of BBVA’s 68% interest in BBVA Chile

-- BASF’s EUR1.6 billion acquisition of Solvay’s global polyamide business

-- Aldermore on the ?1.1 billion recommended offer by FirstRand

-- China Southern Power Grid’s $1.3 billion acquisition of a 27.8% stake in a Chilean regulated transmission business from Brookfield Infrastructure

-- APG Group on the consortium acquisition of a EUR1.0 billion portfolio of infrastructure assets from Ardian

-- Lone Star Funds’ EUR1.0 billion acquisition of Stark Group from Ferguson

-- Cardinal Health’s $1.2 billion sale of its China business to Shanghai Pharma

-- Owens Corning’s EUR900 million acquisition of Paroc

-- Google’s $1.1 billion cooperation agreement with HTC*

-- VEON on the $940 million sale of its tower business in Pakistan

-- AviAlliance in the EUR600 million 20-year extension of the Athens International Airport Concession Agreement

-- Owens & Minor’s $710 million acquisition of Halyard Health’s S&IP business

-- NYX Gaming Group’s CAD 775 million sale to Scientific Games*

-- Republic of Serbia and Belgrade Nikola Tesla Airport in the awarding of a 25-year concession to Vinci Airports, including a EUR501 million upfront payment

-- Abengoa’s $607 million sale of a 25% stake in Atlantica Yield to Algonquin Power & Utilities

-- Liberty House Group’s $500 million binding conditional offer to acquire Aluminium Dunkerque from Rio Tinto

-- Areva on its reorganization and recapitalization plan

-- AkzoNobel on the separation of its Specialty Chemicals business

-- Dover on the spin-off of its Wellsite business

-- Anheuser-Busch InBev’s combination of its Russia and Ukraine businesses with those of Anadolu Efes

-- Montagu Private Equity and Astorg on the sale of Sebia

-- Sun Capital Partners’ sale of Albea to PAI Partners

-- PAI Partners and Sagard on the sale of Kiloutou to HLDI and HLD Europe

-- Carrefour on the potential investment by Tencent and Yonghui in Carrefour China and a strategic cooperation agreement with Tencent in China

-- Quala’s sale of its personal care and home care brands to Unilever

-- CDPQ and Ardian’s acquisition of a significant interest in Alvest*

-- 99 Taxis on its sale to Didi Chuxing*

-- Alinta Energy, and its owner Chow Tai Fook Enterprises, on the acquisition of Loy Yang B power station*

-- Rhone’s strategic partnership with, and sale of a 30% interest to, Eurazeo

-- The Rockefeller Family Trust on Rockefeller Financial Services’ formation of Rockefeller Capital Management, in partnership with Viking Global and Gregory J. Fleming

*Transaction completed since December 31, 2017

Capital Advisory

Among the publicly announced Capital Advisory transactions or assignments on which Lazard advised during or since the fourth quarter of 2017 were the following:

-- Banca Monte dei Paschi di Siena’s precautionary recapitalization through an EUR8.1 billion capital increase and EUR5.5 billion disposal of a bad loan portfolio with a total GBV of EUR26 billion

-- Pirelli on its EUR2.4 billion initial public offering

-- DomusVi on the syndication of a EUR1.0 billion term loan and EUR130 million revolving credit facility

-- Tritax Big Box REIT on its ?850 million debt refinancing

-- Terveystalo on its EUR876 million initial public offering

-- TI Fluid Systems on its ?407 million initial public offering

-- Via Transportation in its fund raise and strategic investment from Daimler

-- Congruex on its alliance with Crestview Partners

-- Almaviva Sante on its refinancing

-- Keys Group on its debt refinancing

Sovereign Advisory

Among the publicly announced Sovereign Advisory assignments on which Lazard advised during or since the fourth quarter of 2017 were the following:

-- The OJSC International Bank of Azerbaijan

-- Southern Gas Corridor CJSC of Azerbaijan

-- Altiplano (Bolivia)

-- The Democratic Republic of the Congo

-- The Republic of the Congo

-- The Republic of Croatia

-- Compania Nacional de Telecomunicacion (The Republic of Ecuador)

-- Refineria del Pacifico (The Republic of Ecuador)

-- The Federal Democratic Republic of Ethiopia

-- The Gabonese Republic

-- Sotrader (joint venture between the government of Gabon and Olam International)

-- The Hellenic Republic

-- The Hashemite Kingdom of Jordan

-- airBaltic (majority owned by the government of Latvia)

-- SNIM (The Islamic Republic of Mauritania)

-- The Republic of Mozambique

-- Nama Holding (Oman)

-- Oman Oil

-- The Republic of Serbia

-- Ukraine and certain sub-sovereign entities

-- NJSC Naftogaz of Ukraine

-- The Republic of Zimbabwe

Restructuring and Debt Advisory Assignments

Restructuring and debtor or creditor advisory assignments completed during the fourth quarter of 2017 on which Lazard advised include: SunEdison in connection with its Chapter 11 bankruptcy restructuring; and Sorgenia and Odebrecht Oil & Gas in connection with their debt restructurings.

Notable ongoing restructuring and debtor or creditor advisory assignments on which Lazard advised during or since the fourth quarter of 2017 include: Breitburn Energy Partners, CGG, Expro Group, GST Autoleather, Seadrill, Takata, and Toys "R" Us in connection with their Chapter 11 or similar bankruptcy restructurings; Nine West in connection with its debt restructuring; lenders to Danaos on the company’s restructuring; Toshiba in connection with the restructuring of its Westinghouse subsidiary; Quality Care Properties on strategic options in relation to HCR ManorCare; and Claire’s Stores on capital structure alternatives.

***

 
                                                                                                                         LAZARD LTD
                                                                                                  UNAUDITED CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
                                                                                                                         (U.S. GAAP)
                                                                                                                     
                                                                                                         Three Months Ended                                                                                                % Change From
                                                                         ----------------------------------------------------------------------------------                                          --------------------------------------------------------
                                                                         December 31,                       September 30,                     December 31,                                            September 30,                         December 31,
($ in thousands, except per share data)                                      2017                               2017                              2016                                                    2017                                  2016
                                                                         ------------                      -------------                      ------------                                           -------------                      --------------------
                                                                                                                                                                                                                                         
Total revenue                                                                $692,332                           $638,131                          $705,803                                                 8%                                   (2%)
Interest expense                                                            ($13,524)                           (13,272)                          (14,238)
                                                                         ------------                      -------------                      ------------
  Net revenue                                                                 678,808                            624,859                           691,565                                                 9%                                   (2%)
Operating expenses:
  Compensation and benefits                                                   374,673                            361,787                           381,267                                                 4%                                   (2%)
                                                                                                                                                                                                                                         
  Occupancy and equipment                                                      37,374                             29,156                            28,162
  Marketing and business development                                           25,628                             19,798                            22,710
  Technology and information services                                          34,242                             31,373                            26,055
  Professional services                                                        14,231                             11,005                            13,635
  Fund administration and outsourced services                                  18,729                             18,325                            16,994
  Amortization and other acquisition-related costs                              4,511                                172                            33,410
  Other                                                                        13,430                              9,031                            12,476
                                                                         ------------                      -------------                      ------------
Subtotal                                                                      148,145                            118,860                           153,442                                                 25%                                  (3%)
                                                                         ------------                      -------------                      ------------
  Benefit pursuant to tax receivable agreement                              (202,546)                                  -                                 -
                                                                         ------------                      -------------                      ------------
Operating expenses                                                            320,272                            480,647                           534,709                                                (33%)                                 (40%)
                                                                         ------------                      -------------                      ------------
                                                                                                                                                                                                                                         
Operating income                                                              358,536                            144,212                           156,856                                                 NM                                    NM
                                                                                                                                                                                                                                         
Provision for income taxes                                                    441,490                             32,742                            27,869                                                 NM                                    NM
                                                                         ------------                      -------------                      ------------
Net income (loss)                                                            (82,954)                            111,470                           128,987                                                 NM                                    NM
Net income attributable to noncontrolling interests                               604                              2,260                             1,005
                                                                         ------------                      -------------                      ------------
Net income (loss) attributable to Lazard Ltd                                ($83,558)                           $109,210                          $127,982                                                 NM                                    NM
                                                                         ============                      =============                      ============
                                                                                                                                                                                                                                         
Attributable to Lazard Ltd Common Stockholders:
Weighted average shares outstanding:
         Basic                                                            119,866,860                        121,243,598                       123,170,333                                                (1%)                                  (3%)
         Diluted                                                          119,866,860                        132,393,664                       132,980,861                                                (9%)                                  (10%)
                                                                                                                                                                                                                                         
Net income (loss) per share:
         Basic                                                                ($0.70)                              $0.90                             $1.04                                                 NM                                    NM
         Diluted                                                              ($0.70)                              $0.82                             $0.96                                                 NM                                    NM
                                                                                                                                                                                                                                         
 
                                                                                      LAZARD LTD
                                                               UNAUDITED CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
                                                                                      (U.S. GAAP)
                                                                                     
                                                                                                                           Year Ended
                                                                         --------------------------------------------------------------------------------------------------------------
                                                                         December 31,                      December 31,
($ in thousands, except per share data)                                      2017                              2016                                                     % Change
                                                                         ------------                      ------------                                           --------------------
                                                                                                                                                                   
Total revenue                                                              $2,697,829                        $2,383,663                                                    13%
Interest expense                                                             (53,518)                          (50,292)
                                                                         ------------                      ------------
  Net revenue                                                               2,644,311                         2,333,371                                                    13%
Operating expenses:
  Compensation and benefits                                                 1,512,873                         1,340,543                                                    13%
                                                                                                                                                                   
  Occupancy and equipment                                                     124,842                           109,305
  Marketing and business development                                           89,205                            83,202
  Technology and information services                                         121,671                            97,461
  Professional services                                                        47,932                            45,512
  Fund administration and outsourced services                                  71,305                            63,421
  Amortization and other acquisition-related costs                              9,514                            35,247
  Other                                                                        44,069                            41,219
                                                                         ------------                      ------------
Subtotal                                                                      508,538                           475,367                                                    7%
                                                                         ------------                      ------------
  Benefit pursuant to tax receivable agreement                              (202,546)                                 -
                                                                         ------------                      ------------
Operating expenses                                                          1,818,865                         1,815,910                                                    0%
                                                                         ------------                      ------------
                                                                                                                                                                   
Operating income                                                              825,446                           517,461                                                    60%
                                                                                                                                                                   
Provision for income taxes                                                    565,599                           123,769                                                    NM
                                                                         ------------                      ------------
Net income                                                                    259,847                           393,692                                                   (34%)
Net income attributable to noncontrolling interests                             6,264                             5,994
                                                                         ------------                      ------------
Net income attributable to Lazard Ltd                                        $253,583                          $387,698                                                   (35%)
                                                                         ============                      ============
                                                                                                                                                                   
Attributable to Lazard Ltd Common Stockholders:
Weighted average shares outstanding:
         Basic                                                            121,573,442                       124,770,401                                                   (3%)
         Diluted                                                          132,479,728                       132,633,630                                                   (0%)
                                                                                                                                                                   
Net income per share:
         Basic                                                                  $2.09                             $3.11                                                   (33%)
         Diluted                                                                $1.91                             $2.92                                                   (35%)
                                                                                                                                                                   
 
                                                                   LAZARD LTD
                                                        UNAUDITED CONDENSED CONSOLIDATED
                                                        STATEMENT OF FINANCIAL CONDITION
                                                                   (U.S. GAAP)
 
                                                                       December 31,       December 31,
($ in thousands)                                                                              2017                                  2016
                                                                                          ------------                      --------------------
                                                                                                                             
                                                                     ASSETS
--------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                                             
Cash and cash equivalents                                                                   $1,483,836                                $1,158,785
Deposits with banks and short-term investments                                                 935,431                                   419,668
Cash deposited with clearing organizations and other segregated cash                            35,539                                    29,030
Receivables                                                                                    571,616                                   638,282
Investments                                                                                    427,186                                   459,422
Goodwill and other intangible assets                                                           391,364                                   382,024
Deferred tax assets                                                                            648,293                                 1,075,777
Other assets                                                                                   433,444                                   393,520
                                                                                          ------------                      --------------------
                                                                                                                             
      Total Assets                                                                          $4,926,709                                $4,556,508
                                                                                          ============                      ====================
                                                                                                                             
                                                       LIABILITIES & STOCKHOLDERS’ EQUITY
--------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                                             
Liabilities
Deposits and other customer payables                                                          $992,338                                  $472,283
Accrued compensation and benefits                                                              593,781                                   541,588
Senior debt                                                                                  1,190,383                                 1,188,600
Tax receivable agreement obligation                                                            310,275                                   513,610
Other liabilities                                                                              579,759                                   546,614
                                                                                          ------------                      --------------------
      Total liabilities                                                                      3,666,536                                 3,262,695
                                                                                                                             
Commitments and contingencies
                                                                                                                             
Stockholders’ equity
Preferred stock, par value $.01 per share                                                            -                                         -
Common stock, par value $.01 per share                                                           1,298                                     1,298
Additional paid-in capital                                                                     789,452                                   688,231
Retained earnings                                                                            1,080,413                                 1,134,186
Accumulated other comprehensive loss, net of tax                                             (232,562)                                 (314,222)
                                                                                          ------------                      --------------------
Subtotal                                                                                     1,638,601                                 1,509,493
Class A common stock held by subsidiaries, at cost                                           (437,530)                                 (273,506)
                                                                                          ------------                      --------------------
      Total Lazard Ltd stockholders’ equity                                                  1,201,071                                 1,235,987
Noncontrolling interests                                                                        59,102                                    57,826
                                                                                          ------------                      --------------------
Total stockholders’ equity                                                                   1,260,173                                 1,293,813
                                                                                          ------------                      --------------------
                                                                                                                             
Total liabilities and stockholders’ equity                                                  $4,926,709                                $4,556,508
                                                                                          ============                      ====================
                                                                                                                             
 
                                                                                                                                        LAZARD LTD
                                                                                                                        SELECTED SUMMARY FINANCIAL INFORMATION (a)
                                                                                                                                  (Non-GAAP - unaudited)
 
                                                                                                 Three Months Ended                                                                         % Change From
                                                                         ---------------------------------------------------------------------------------------------------------                                          ---------------------------------------------------------------
                                                                             December 31,           September 30,          December 31,                                                   September 30,          December 31,
($ in thousands, except per share data)                                          2017                                      2017                                      2016                                                           2017                                      2016
                                                                         --------------------                      --------------------                      --------------------                                           --------------------                      --------------------
                                                                                                                                                                                                                                                                       
Revenues:
                                                                                                                                                                                                                                                                       
Financial Advisory                                                                   $335,098                                  $305,890                                  $404,577                                                    10%                                      (17%)
Asset Management                                                                      338,967                                   315,470                                   275,365                                                    7%                                        23%
Corporate                                                                               8,555                                     5,965                                     5,256                                                    43%                                       63%
                                                                         --------------------                      --------------------                      --------------------
                                                                                                                                                                                                                                                                       
Operating revenue (b)                                                                $682,620                                  $627,325                                  $685,198                                                    9%                                       (0%)
                                                                         ====================                      ====================                      ====================
                                                      
--------------------------------------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- --------------------
Expenses:
                                                                                                                                                                                                                                                                       
Adjusted compensation and benefits expense (c)                                       $366,927                                  $354,439                                  $375,865                                                    4%                                       (2%)
                                                                         ====================                      ====================                      ====================
Ratio of adjusted compensation to operating revenue                                     53.8%                                     56.5%                                     54.9%
                                                                                                                                                                                                                                                                       
Non-compensation expense (d)                                                         $126,590                                  $110,507                                  $115,125                                                    15%                                       10%
                                                                         ====================                      ====================                      ====================
Ratio of non-compensation to operating revenue                                          18.5%                                     17.6%                                     16.8%
                                                      
--------------------------------------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- --------------------
Earnings:
                                                                                                                                                                                                                                                                       
Earnings from operations (e)                                                         $189,103                                  $162,379                                  $194,208                                                    16%                                      (3%)
                                                                         ====================                      ====================                      ====================
Operating margin (f)                                                                    27.7%                                     25.9%                                     28.3%
                                                                                                                                                                                                                                                                       
Adjusted net income (g)                                                              $148,107                                  $112,433                                  $149,981                                                    32%                                      (1%)
                                                                         ====================                      ====================                      ====================
                                                                                                                                                                                                                                                                       
Diluted adjusted net income per share                                                   $1.12                                     $0.85                                     $1.13                                                    32%                                      (1%)
                                                                         ====================                      ====================                      ====================
                                                                                                                                                                                                                                                                       
Diluted weighted average shares                                                   132,696,257                               132,393,664                               132,980,861                                                    0%                                       (0%)
                                                                                                                                                                                                                                                                       
Effective tax rate (h)                                                                  15.9%                                     24.6%                                     17.1%
                                                                                                                                                                                                                                                                       
This presentation includes non-U.S. GAAP ("non-GAAP") measures. Our
non-GAAP measures are not meant to be considered in isolation or as
a substitute for the corresponding U.S. GAAP measures, and should be
read only in conjunction with our consolidated financial statements
prepared in accordance with U.S. GAAP. For a detailed explanation of
the adjustments made to the corresponding U.S. GAAP measures, see
Reconciliation of U.S. GAAP to Selected Summary Financial
Information and Notes to Financial Schedules.
 
 
                                                                                              LAZARD LTD
                                                                              SELECTED SUMMARY FINANCIAL INFORMATION (a)
                                                                                        (Non-GAAP - unaudited)
 
                                                                                                                Year Ended
                                                                         ------------------------------------------------------------------------------------------------------------------------------
                                                                             December 31,           December 31,        
($ in thousands, except per share data)                                          2017                                      2016                                                         % Change
                                                                         --------------------                      --------------------                                           --------------------
                                                                                                                                                                                   
Revenues:
                                                                                                                                                                                   
Financial Advisory                                                                  1,387,682                                 1,301,048                                                    7%
Asset Management                                                                    1,239,661                                 1,030,711                                                    20%
Corporate                                                                              27,197                                    12,580                                                    NM
                                                                         --------------------                      --------------------
                                                                                                                                                                                   
Operating revenue (b)                                                              $2,654,540                                $2,344,339                                                    13%
                                                                         ====================                      ====================
                                              
--------------------------------------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- --------------------
Expenses:
                                                                                                                                                                                   
Adjusted compensation and benefits expense (c)                                     $1,481,062                                $1,325,325                                                    12%
                                                                         ====================                      ====================
Ratio of adjusted compensation to operating revenue                                     55.8%                                     56.5%
                                                                                                                                                                                   
Non-compensation expense (d)                                                         $460,678                                  $433,713                                                    6%
                                                                         ====================                      ====================
Ratio of non-compensation to operating revenue                                          17.4%                                     18.5%
                                              
--------------------------------------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- --------------------
Earnings:
                                                                                                                                                                                   
Earnings from operations (e)                                                         $712,800                                  $585,301                                                    22%
                                                                         ====================                      ====================
Operating margin (f)                                                                    26.8%                                     25.0%
                                                                                                                                                                                   
Adjusted net income (g)                                                              $500,521                                  $409,697                                                    22%
                                                                         ====================                      ====================
                                                                                                                                                                                   
Diluted adjusted net income per share                                                   $3.78                                     $3.09                                                    22%
                                                                         ====================                      ====================
                                                                                                                                                                                   
Diluted weighted average shares                                                   132,479,728                               132,633,630                                                   (0%)
                                                                                                                                                                                   
Effective tax rate (h)                                                                  24.1%                                     23.7%
                                                                                                                                                                                   
This presentation includes non-U.S. GAAP ("non-GAAP") measures. Our
non-GAAP measures are not meant to be considered in isolation or as
a substitute for the corresponding U.S. GAAP measures, and should be
read only in conjunction with our consolidated financial statements
prepared in accordance with U.S. GAAP. For a detailed explanation of
the adjustments made to the corresponding U.S. GAAP measures, see
Reconciliation of U.S. GAAP to Selected Summary Financial
Information and Notes to Financial Schedules.
 
                                                                                                                                                                                                                       LAZARD LTD
                                                                                                                                                                                                          COMPENSATION AND BENEFITS - ANALYSIS
                                                                                                                                                                                                                       (unaudited)
                                                                                                                                                                                                           ($ in millions except share price)
                                                                                                                                                                                                                  
                                                                                                                                                                                                                                                                                                                                                                                                                                     
                                                                                                                                      2010                                      2011                                      2012                                      2013                                      2014                                      2015                                      2016                                      2017
                                                                                                                              --------------------                      --------------------                      --------------------                      --------------------                      --------------------                      --------------------                      --------------------                      --------------------
                                         
-------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- --------------------
                                                                                                                                                                                                              ADJUSTED U.S. GAAP BASIS (c)
                                                                                                                                                                                                                                                                                                                                                                                                                                     
                     Base salary                                                                                                            $303.4                                    $344.2                                    $353.2                                    $339.3                                    $354.0                                    $355.8                                    $372.7                                    $404.9
                     Benefits and other                                                                                                      149.5                                     162.2                                     162.6                                     191.2                                     215.6                                     228.3                                     201.9                                     243.4
                     Cash incentive compensation                                                                                             472.8                                     372.4                                     367.2                                     368.5                                     432.9                                     413.9                                     398.3                                     465.5
                                                                                                                              --------------------                      --------------------                      --------------------                      --------------------                      --------------------                      --------------------                      --------------------                      --------------------
                     Total cash compensation, benefits and other                                                                             925.7                                     878.8                                     883.0                                     899.0                                   1,002.5                                     998.0                                     972.9                                   1,113.8
                     Amortization of deferred incentive awards                                                                               240.5                                     289.4                                     334.8                                     297.6                                     299.2                                     320.8                                     352.4                                     367.3
                                                                                                                              --------------------                      --------------------                      --------------------                      --------------------                      --------------------                      --------------------                      --------------------                      --------------------
                     Compensation and benefits - Adjusted U.S. GAAP basis (i)                                                             $1,166.2                                  $1,168.2                                  $1,217.8                                  $1,196.6                                  $1,301.7                                  $1,318.8                                  $1,325.3                                  $1,481.1
                                                                                                                              ====================                      ====================                      ====================                      ====================                      ====================                      ====================                      ====================                      ====================
                                                                                                                                                                                                                                                                                                                                                                                                                                     
                     % of Operating Revenue                                                                                                  58.9%                                     62.0%                                     61.8%                                     58.8%                                     55.6%                                     55.4%                                     56.5%                                     55.8%
                                                                                                                                                                                                                                                                                                                                                                                                                                     
                                         
-------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- --------------------
                                         
-------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- --------------------
                                                                                                                                                                                                                      AWARDED BASIS
                                                                                                                                                                                                                                                                                                                                                                                                                                     
                     Total cash compensation and benefits (per above)                                                                       $925.7                                    $878.8                                    $883.0                                    $899.0                                  $1,002.5                                    $998.0                                    $972.9                                  $1,113.8
                     Deferred year-end incentive awards                                                                                      292.7                                     282.4                                     272.4                                     291.0                                     325.2                                     336.1                                     342.4                                     351.0
                                                                                                                              --------------------                      --------------------                      --------------------                      --------------------                      --------------------                      --------------------                      --------------------                      --------------------
                     Compensation and benefits before sign-on and other
                          special deferred incentive awards                                                                                1,218.4                                   1,161.2                                   1,155.4                                   1,190.0                                   1,327.7                                   1,334.1                                   1,315.3                                   1,464.8
                     Sign-on and other special deferred incentive awards (j)                                                                  27.3                                      40.0                                      42.1                                      22.1                                      14.2                                      26.4                                      29.9                                      36.2
                                                                                                                              --------------------                      --------------------                      --------------------                      --------------------                      --------------------                      --------------------                      --------------------                      --------------------
                     Total Compensation and benefits - Notional                                                                            1,245.7                                   1,201.2                                   1,197.5                                   1,212.1                                   1,341.9                                   1,360.5                                   1,345.2                                   1,501.0
                     Adjustment for actual/estimated forfeitures (k)                                                                        (27.8)                                    (28.0)                                    (27.4)                                    (27.3)                                    (25.4)                                    (27.2)                                    (27.9)                                    (25.3)
                                                                                                                              --------------------                      --------------------                      --------------------                      --------------------                      --------------------                      --------------------                      --------------------                      --------------------
                     Compensation and benefits - Awarded (l)                                                                              $1,217.9                                  $1,173.2                                  $1,170.1                                  $1,184.8                                  $1,316.5                                  $1,333.3                                  $1,317.3                                  $1,475.7
                                                                                                                              ====================                      ====================                      ====================                      ====================                      ====================                      ====================                      ====================                      ====================
                                                                                                                                                                                                                                                                                                                                                                                                                                     
                     % of Operating Revenue - Awarded Basis(l)                                                                               61.6%                                     62.3%                                     59.4%                                     58.2%                                     56.3%                                     56.0%                                     56.2%                                     55.6%
                                                                                                                                                                                                                                                                                                                                                                                                                                     
                                         
-------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- --------------------
                                                                                                                                                                                                                                                                                                                                                                                                                                     
                     Memo:
                                          Total value of deferred equity-based year end
                                               incentive awards                                                                             $261.4                                    $192.7                                    $183.3                                    $180.9                                    $219.0                                    $267.7                                    $234.8                               TBD
                                                                                                                                                                                                                                                                                                                                                                                                                                     
                                          Equity-based year end awards - share equivalents (’000)                                            5,775                                     6,932                                     4,929                                     4,146                                     4,329                                     7,778                                     5,395                               TBD
                                          Price at issuance                                                                                 $45.26                                    $27.80                                    $37.19                                    $43.62                                    $50.60                                    $34.42                                    $43.43                               TBD
                                                                                                                                                                                                                                                                                                                                                                                                                                     
                                          Deferred compensation awards ratio (m)                                                             24.0%                                     24.3%                                     23.6%                                     24.5%                                     24.5%                                     25.2%                                     26.0%                                     24.0%
                                                                                                                              ====================                      ====================                      ====================                      ====================                      ====================                      ====================                      ====================                      ====================
                                                                                                                                                                                                                                                                                                                                                                                                                                     
                                          Operating revenue                                                                               $1,978.5                                  $1,883.9                                  $1,970.8                                  $2,034.3                                  $2,340.2                                  $2,380.1                                  $2,344.3                                  $2,654.5
                                                                                                                              ====================                      ====================                      ====================                      ====================                      ====================                      ====================                      ====================                      ====================
                                                                                                                                                                                                                                                                                                                                                                                                                                     
This presentation includes non-U.S. GAAP ("non-GAAP") measures. Our
non-GAAP measures are not meant to be considered in isolation or as
a substitute for comparable U.S. GAAP measures, and should be read
only in conjunction with our consolidated financial statements
prepared in accordance with U.S. GAAP. For a detailed explanation of
the adjustments made to comparable U.S. GAAP measures, see
Reconciliation of U.S. GAAP to Adjusted Statement of Operations and
Notes to Financial Schedules.
 
 
                                                                                                              LAZARD LTD
                                                                                                    ASSETS UNDER MANAGEMENT ("AUM")
                                                                                                              (unaudited)
                                                                                                            ($ in millions)
                                                                                              
                                                                                            As of                                                                                                      Variance
                                                     ----------------------------------------------------------------------------------                                          -----------------------------------------------------
                                                     December 31,                       September 30,                     December 31,
                                                         2017                               2017                              2016                                               Qtr to Qtr                               YTD
                                                     ------------                      -------------                      ------------                                           ----------                      --------------------
                                                                                                                                                                                                                  
Equity:
  Emerging Markets                                        $52,349                            $49,548                           $41,363                                              5.7%                                 26.6%
  Global                                                   43,663                             40,505                            30,567                                              7.8%                                 42.8%
  Local                                                    42,650                             40,761                            36,243                                              4.6%                                 17.7%
  Multi-Regional                                           70,696                             67,707                            54,668                                              4.4%                                 29.3%
                                                     ------------                      -------------                      ------------
    Total Equity                                          209,358                            198,521                           162,841                                              5.5%                                 28.6%
Fixed Income:
  Emerging Markets                                         17,320                             17,243                            15,580                                              0.4%                                 11.2%
  Global                                                    4,109                              4,213                             3,483                                             (2.5%)                                18.0%
  Local                                                     4,497                              4,447                             4,245                                              1.1%                                 5.9%
  Multi-Regional                                            9,154                              9,134                             7,847                                              0.2%                                 16.7%
                                                     ------------                      -------------                      ------------
    Total Fixed Income                                     35,080                             35,037                            31,155                                              0.1%                                 12.6%
Alternative Investments                                     2,846                              2,668                             2,422                                              6.7%                                 17.5%
Private Equity                                              1,478                              1,475                             1,253                                              0.2%                                 18.0%
Cash Management                                               697                                424                               239                                              64.4%                               191.6%
                                                     ------------                      -------------                      ------------
    Total AUM                                            $249,459                           $238,125                          $197,910                                              4.8%                                 26.0%
                                                     ============                      =============                      ============
                                                                                                                                                                                                                  
                                                                                                                                                                                                                  
                                                                                                                                                                                                                  
                                                              Three Months Ended December 31,                                                                                                   Year Ended December 31,
                                                     ------------------------------------------------                                                                            -----------------------------------------------------
                                                         2017                               2016                                                                                    2017                                 2016
                                                     ------------                      -------------                                                                             ----------                      --------------------
                                                                                                                                                                                                                  
AUM - Beginning of Period                                $238,125                           $205,440                                                                               $197,910                                  $186,380
                                                                                                                                                                                                                  
Net Flows                                                     137                            (2,705)                                                                                  3,090                                       160
Market and foreign exchange
                                                           11,197                            (4,825)                                                                                 48,459                                    11,370
    appreciation (depreciation)
                                                     ------------                      -------------                                                                             ----------                      --------------------
                                                                                                                                                                                                                  
AUM - End of Period                                      $249,459                           $197,910                                                                               $249,459                                  $197,910
                                                     ============                      =============                                                                             ==========                      ====================
                                                                                                                                                                                                                  
Average AUM                                              $243,815                           $200,454                                                                               $226,525                                  $194,808
                                                     ============                      =============                                                                             ==========                      ====================
                                                                                                                                                                                                                  
  % Change in average AUM                                   21.6%                                                                                                                     16.3%
                                                     ============                                                                                                                ==========
                                                                                                                                                                                                                  
Note: Average AUM generally represents the average of the monthly
ending AUM balances for the period.
 
 
                                                                                                                                 LAZARD LTD
                                                                                                          RECONCILIATION OF U.S. GAAP TO SELECTED SUMMARY FINANCIAL
                                                                                                                               INFORMATION (a)
                                                                                                                                 (unaudited)
 
                                                                                                       Three Months Ended                                                          Year Ended
                                                                                          ----------------------------------------------------------------------------------                                          -------------------------------------------------------
                                                                                          December 31,    September 30,  December 31,                                           December 31,       December 31,
($ in thousands, except per share data)                                                       2017                               2017                              2016                                                   2017                                  2016
                                                                                          ------------                      -------------                      ------------                                           ------------                      --------------------
                                                                                                                                                                                                                                                         
                                                                                                                              Operating Revenue
Net revenue - U.S. GAAP Basis                                                                 $678,808                           $624,859                          $691,565                                             $2,644,311                                $2,333,371
                                                                                                                                                                                                                                                         
Adjustments:
  Revenue related to noncontrolling interests (n)                                              (3,149)                            (5,039)                           (8,343)                                               (16,228)                                  (20,614)
  (Gains) losses related to Lazard Fund Interests ("LFI") and other                            (5,545)                            (4,875)                             1,389                                               (23,526)                                   (3,318)
  similar arrangements
  MBA Lazard acquisition adjustment (o)                                                              -                                  -                          (12,668)                                                      -                                  (12,668)
  Interest expense                                                                              12,506                             12,380                            13,255                                                 49,983                                    47,568
                                                                                          ------------                      -------------                      ------------                                           ------------                      --------------------
                                                                                                                                                                                                                                                         
Operating revenue, as adjusted (b)                                                            $682,620                           $627,325                          $685,198                                             $2,654,540                                $2,344,339
                                                                                          ============                      =============                      ============                                           ============                      ====================
                                                                                                                                                                                                                                                         
                                                                                                                      Compensation and Benefits Expense
Compensation and benefits expense - U.S. GAAP Basis                                           $374,673                           $361,787                          $381,267                                             $1,512,873                                $1,340,543
                                                                                                                                                                                                                                                         
Adjustments:
  (Charges) credits pertaining to LFI and other similar arrangements                           (5,545)                            (4,875)                             1,389                                               (23,526)                                   (3,318)
  Compensation related to noncontrolling interests (n)                                         (2,201)                            (2,473)                           (6,791)                                                (8,285)                                  (11,900)
                                                                                          ------------                      -------------                      ------------                                           ------------                      --------------------
                                                                                                                                                                                                                                                         
Compensation and benefits expense, as adjusted (c)                                            $366,927                           $354,439                          $375,865                                             $1,481,062                                $1,325,325
                                                                                          ============                      =============                      ============                                           ============                      ====================
                                                                                                                                                                                                                                                         
                                                                                                                          Non-Compensation Expense
Non-compensation expense - Subtotal - U.S. GAAP Basis                                         $148,145                           $118,860                          $153,442                                               $508,538                                  $475,367
                                                                                                                                                                                                                                                         
Adjustments:
  Expenses associated with ERP system implementation (p)                                       (9,917)                            (6,530)                                 -                                               (25,308)                                         -
  Expenses related to office space reorganization (q)                                          (6,781)                            (1,412)                                 -                                               (11,354)                                         -
  Charges pertaining to Senior Debt refinancing (r)                                                  -                                  -                           (3,148)                                                      -                                   (3,148)
  Amortization and other acquisition-related costs (s)                                         (4,511)                              (172)                          (34,777)                                                (9,514)                                  (36,614)
  Non-compensation expense related to noncontrolling interests (n)                               (346)                              (239)                             (392)                                                (1,684)                                   (1,892)
                                                                                          ------------                      -------------                      ------------                                           ------------                      --------------------
                                                                                                                                                                                                                                                         
Non-compensation expense, as adjusted (d)                                                     $126,590                           $110,507                          $115,125                                               $460,678                                  $433,713
                                                                                          ============                      =============                      ============                                           ============                      ====================
                                                                                                                                                                                                                                                         
                                                                                                                 Pre-Tax Income and Earnings From Operations
Operating Income - U.S. GAAP Basis                                                            $358,536                           $144,212                          $156,856                                               $825,446                                  $517,461
                                                                                                                                                                                                                                                         
Adjustments:
  Reduction of tax receivable agreement obligation ("TRA") (t)                               (202,546)                                  -                                 -                                              (202,546)                                         -
  Expenses associated with ERP system implementation (p)                                         9,917                              6,530                                 -                                                 25,308                                         -
  Expenses related to office space reorganization (q)                                            6,781                              1,412                                 -                                                 11,354                                         -
  Charges pertaining to Senior Debt refinancing (r)                                                  -                                  -                             3,747                                                      -                                     3,747
  MBA Lazard acquisition adjustment (o)                                                              -                                  -                          (12,668)                                                      -                                  (12,668)
  Acquisition-related costs (benefits) (s)                                                       4,012                              (612)                            34,092                                                  6,580                                    34,092
  Net income related to noncontrolling interests (n)                                             (603)                            (2,330)                           (1,005)                                                (6,264)                                   (5,994)
                                                                                          ------------                      -------------                      ------------                                           ------------                      --------------------
Pre-tax income, as adjusted                                                                    176,097                            149,212                           181,022                                                659,878                                   536,638
  Interest expense                                                                              12,506                             12,380                            12,501                                                 49,983                                    46,796
  Amortization (LAZ only)                                                                          500                                787                               685                                                  2,939                                     1,867
                                                                                          ------------                      -------------                      ------------                                           ------------                      --------------------
Earnings from operations, as adjusted (e)                                                     $189,103                           $162,379                          $194,208                                               $712,800                                  $585,301
                                                                                          ============                      =============                      ============                                           ============                      ====================
                                                                                                                                                                                                                                                         
                                                                                                                Net Income (loss) attributable to Lazard Ltd
Net income (loss) attributable to Lazard Ltd - U.S. GAAP Basis                               ($83,558)                           $109,210                          $127,982                                               $253,583                                  $387,698
Adjustments:
  Reduction of deferred tax assets (net of TRA reduction) (t)                                  216,928                                  -                                 -                                                216,928                                         -
  Expenses associated with ERP system implementation (p)                                         9,917                              6,530                                 -                                                 25,308                                         -
  Expenses related to office space reorganization (q)                                            6,781                              1,412                                 -                                                 11,354                                         -
  Charges pertaining to Senior Debt refinancing (r)                                                  -                                  -                             3,747                                                      -                                     3,747
  MBA Lazard acquisition adjustment (o)                                                              -                                  -                          (12,668)                                                      -                                  (12,668)
  Acquisition-related costs (benefits) (s)                                                       4,012                              (612)                            34,092                                                  6,580                                    34,092
  Valuation Allowance for changed tax laws (u)                                                       -                                  -                            12,347                                                      -                                    12,347
  Tax benefit allocated to adjustments                                                         (5,973)                            (4,107)                          (15,519)                                               (13,232)                                  (15,519)
                                                                                          ------------                      -------------                      ------------                                           ------------                      --------------------
                                                                                                                                                                                                                                                         
Net income, as adjusted (g)                                                                   $148,107                           $112,433                          $149,981                                               $500,521                                  $409,697
                                                                                          ============                      =============                      ============                                           ============                      ====================
                                                                                                                                                                                                                                                         
Diluted net income (loss) per share:
  U.S. GAAP Basis                                                                              ($0.70)                              $0.82                             $0.96                                                  $1.91                                     $2.92
  Non-GAAP Basis, as adjusted                                                                    $1.12                              $0.85                             $1.13                                                  $3.78                                     $3.09
                                                                                                                                                                                                                                                         
This presentation includes non-U.S. GAAP ("non-GAAP") measures. Our
non-GAAP measures are not meant to be considered in isolation or as
a substitute for comparable U.S. GAAP measures, and should be read
only in conjunction with our consolidated financial statements
prepared in accordance with U.S. GAAP. For a detailed explanation of
the adjustments made to comparable U.S. GAAP measures, see Notes to
Financial Schedules.
 
 
                                                                                                                                                                               LAZARD LTD
                                                                                                                                                                        
                                                                                                                                                                      Notes to Financial Schedules
                                                                                                                                                                                                                                                                                                                                                     
 (a)                     Selected Summary Financial Information are non-U.S. GAAP
                         ("non-GAAP") measures. Lazard believes that presenting results and
                         measures on an adjusted basis in conjunction with U.S. GAAP measures
                         provides the most meaningful basis for comparison of its operating
                         results across periods.
                          
 (b)                     A non-GAAP measure which excludes (i) revenue related to
                         non-controlling interests (see (n) below), (ii) (gains)/losses
                         related to the changes in the fair value of investments held in
                         connection with Lazard Fund Interests and other similar deferred
                         compensation arrangements for which a corresponding equal amount is
                         excluded from compensation & benefits expense, (iii) for the three
                         and twelve month periods ended December 31, 2016, a gain relating to
                         the Company’s acquisition of MBA Lazard (see (o) below), (iv)
                         interest expense primarily related to corporate financing
                         activities, and (v) for the three and twelve month periods ended
                         December 31, 2016, excess interest expense pertaining to Senior Debt
                         refinancing (see (r) below).
                          
 (c)                     A non-GAAP measure which excludes (i) (charges)/credits related to
                         the changes in the fair value of the compensation liability recorded
                         in connection with Lazard Fund Interests and other similar deferred
                         compensation arrangements, and (ii) compensation and benefits
                         related to noncontrolling interests (see (n) below).
                          
 (d)                     A non-GAAP measure which excludes (i) for the three and twelve month
                         periods ended December 31, 2017 and for the three month period ended
                         September 30, 2017, expenses associated with ERP system
                         implementation (see (p) below), (ii) for the three and twelve month
                         periods ended December 31, 2017 and for the three month period ended
                         September 30, 2017, expenses related to office space reorganization
                         (see (q) below), (iii) for the three and twelve month periods ended
                         December 31, 2016, charges pertaining to Senior Debt refinancing
                         (see (r) below), (iv) amortization and other acquisition-related
                         costs (see (s) below), and (v) expenses related to noncontrolling
                         interests (see (n) below).
                          
 (e)                     A non-GAAP measure which excludes (i) for the three and twelve month
                         periods ended December 31, 2017, a benefit relating to the reduction
                         in our Tax Receivable Agreement obligation (see (t) below), (ii) for
                         the three and twelve month periods ended December 31, 2017 and for
                         the three month period ended September 30, 2017, expenses associated
                         with ERP system implementation (see (p) below), (iii) for the three
                         and twelve month periods ended December 31, 2017 and for the three
                         month period ended September 30, 2017, expenses related to office
                         space reorganization (see (q) below), (iv) for the three and twelve
                         month periods ending December 31, 2016, charges pertaining to Senior
                         Debt refinancing (see (r) below), (v) for the three and twelve month
                         periods ended December 31, 2016, a gain relating to the Company’s
                         acquisition of MBA Lazard (see (o) below), (vi) amortization and
                         other acquisition-related costs (benefits) (see (s) below), (vii)
                         net revenue and expenses related to noncontrolling interests (see
                         (n) below), and (viii) interest expense primarily related to
                         corporate financing activities.
                          
 (f)                     Represents earnings from operations as a percentage of operating
                         revenue, and is a non-GAAP measure.
                          
 (g)                     A non-GAAP measure which excludes (i) for the three and twelve month
                         periods ended December 31, 2017, a charge primarily relating to the
                         reduction in certain deferred tax assets with an offsetting benefit
                         relating to the reduction in our Tax Receivable Agreement obligation
                         (see (t) below), (ii) for the three and twelve month periods ended
                         December 31, 2017 and for the three month period ended September 30,
                         2017, expenses associated with ERP system implementation (see (p)
                         below), (iii) for the three and twelve month periods ended December
                         31, 2017 and for the three month period ended September 30, 2017,
                         expenses related to office space reorganization (see (q) below),
                         (iv) for the three and twelve month periods ended December 31, 2016,
                         charges pertaining ot Senior Debt refinanicng, net of tax benefits
                         (see (r) below), (v) for the three and twelve month periods ended
                         December 31, 2016, a gain relating to the Company’s acquisition of
                         MBA Lazard (see (o) below), (vi) amortization and other
                         acquisition-related costs, net of tax benefits (see (s) below), and
                         (vii) for the three and twelve month periods ended December 31,
                         2016, valuation allowance on state UBT credit (see (u) below).
                          
 (h)                     Effective tax rate is a non-GAAP measure based upon the U.S. GAAP
                         rate with adjustments for the tax applicable to the non-GAAP
                         adjustments to operating income, generally based upon the effective
                         marginal tax rate in the applicable jurisdiction of the adjustments.
                         The computation is based on a quotient, the numerator of which is
                         the provision for income taxes of $27,990, $36,779 and $31,041 for
                         the three month periods ended December 31, 2017, September 30, 2017,
                         and December 31, 2016, respectively, $159,357 and $126,941 for the
                         twelve month periods ended December 31, 2017 and 2016, respectively,
                         and the denominator of which is pre-tax income of $176,097, $149,212
                         and $181,022 for the three month periods ended December 31, 2017,
                         September 30, 2017 and December 31, 2016, respectively, $659,878 and
                         $536,638 for the twelve month periods ended December 31, 2017 and
                         2016, respectively. The three and twelve month periods ended
                         December 31, 2017, exclude a charge relating to the reduction of
                         deferred tax assets (see (t) below). The three and twelve month
                         periods ended December 31, 2016, excludes valuation allowance for
                         changed tax laws (see (u) below).
                          
 (i)                     A reconciliation of U.S. GAAP compensation and benefits expense to
                         compensation and benefits expense, as adjusted:
                                                                                                                                                                                                                                   Year Ended December 31,
                                                                                                                    ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
                         ($ in thousands)                                                                              2010                            2011                            2012                            2013                            2014                            2015                            2016                                 2017
                                                                                                                    ----------                      ----------                      ----------                      ----------                      ----------                      ----------                      ----------                      --------------------
                                                                                                                                                                                                                                                                                                                                                     
                         Compensation & benefits expense - U.S. GAAP Basis                                          $1,194,168                      $1,168,945                      $1,351,129                      $1,278,534                      $1,313,606                      $1,319,746                      $1,340,543                                $1,512,873
                                                                                                                                                                                                                                                                                                                                                     
                         Adjustments:
                           Charges pertaining to cost saving initiatives                                                     -                               -                        (99,987)                        (51,399)                               -                               -                               -                                         -
                           Charges pertaining to staff reductions                                                            -                               -                        (21,754)                               -                               -                               -                               -                                         -
                           (Charges) credits pertaining to LFI and other similar arrangements                                -                           3,024                         (7,557)                        (14,099)                         (7,326)                           3,827                         (3,318)                                  (23,526)
                           comp. liability
                           Charges pertaining to Private Equity incentive compensation                                       -                               -                               -                        (12,203)                               -                               -                               -                                         -
                           Acceleration of restricted stock unit vesting related to retirement                        (24,860)                               -                               -                               -                               -                               -                               -                                         -
                           policy change
                           Compensation related to noncontrolling interests (n)                                        (3,098)                         (3,740)                         (4,040)                         (4,232)                         (4,567)                         (4,776)                        (11,900)                                   (8,285)
                                                                                                                    ----------                      ----------                      ----------                      ----------                      ----------                      ----------                      ----------                      --------------------
                                                                                                                                                                                                                                                                                                                                                     
                         Compensation & benefits expense, as adjusted                                               $1,166,210                      $1,168,229                      $1,217,791                      $1,196,601                      $1,301,713                      $1,318,797                      $1,325,325                                $1,481,062
                                                                                                                    ==========                      ==========                      ==========                      ==========                      ==========                      ==========                      ==========                      ====================
                                                                                                                                                                                                                                                                                                                                                     
 (j)                     Special deferred incentive awards are granted outside the year end
                         compensation process and include grants to new hires, retention
                         awards, and performance units earned under PRSU grants.
                          
 (k)                     Under U.S. GAAP, an estimate is made for future forfeitures of the
                         deferred portion of such awards. This estimate is based on both
                         historical experience and future expectations. The result reflects
                         the cost associated with awards that are expected to vest. This
                         calculation is undertaken in order to present awarded compensation
                         on a similar basis to GAAP compensation. Amounts for 2010-2013
                         represent actual forfeiture experience. The 2014-2017 amounts
                         represent estimated forfeitures.
                          
 (l)                     Awarded Compensation and Benefits has been restated to eliminate the
                         year-end foreign exchange adjustment to better align awarded
                         compensation with revenue. The impact of the change is not material.
                          
(m)                      Deferred compensation awards ratio is deferred year-end incentive
                         awards, divided by total awarded compensation excluding sign-on and
                         other special deferred incentive awards and actual/estimated
                         forfeitures.
                          
 (n)                     Noncontrolling interests include revenue and expenses principally
                         related to Edgewater, and is a non-GAAP measure.
                          
 (o)                     In 2016 the Company incurred a gain relating to the acquisition of
                         MBA Lazard resulting from the increase in fair value of the
                         Company’s investment in an acquiree.
                          
(p)                      Represents expenses associated with Enterprise Resource Planning
                         (ERP) system implementation.
                          
 (q)                     Represents incremental rent expense and lease abandonment costs
                         related to office space reorganization and an onerous lease
                         provision.
                          
 (r)                     In 2016 The Company incurred charges related to the extinguishment
                         of $98 million of the 6.85% Senior Notes maturing in June 2017 and
                         the issuance of $300 million of 3.625% notes maturing in March 2027.
                         The charges include a pre-tax loss on the extinguishment of $3.1
                         million and excess interest expense of $0.6 million (due to the
                         delay between the issuance of the 2027 notes and the settlement of
                         the 2017 notes).
                          
 (s)                     Represents the change in fair value of the contingent consideration
                         associated with certain business acquisitions.
                          
 (t)                     In 2017, as a result of the 2017 US Tax Cuts and Jobs Act, the
                         Company incurred a charge of approximately $420 million primarily
                         relating to the reduction in certain deferred tax assets, with an
                         offsetting benefit of approximately $203 million relating to the
                         reduction in our Tax Receivable Agreement obligation.
                          
 (u)                     Represents valuation allowance associated with a change in NYC UBT
                         tax laws.
                          
 NM                      Not meaningful
                          
 TBD                     To be determined
                          

http://cts.businesswire.com/ct/CT?id=bwnews&sty=20180201005350r1&sid=cmtx6&distro=nx&lang=en

View source version on businesswire.com: http://www.businesswire.com/news/home/20180201005350/en/

SOURCE: Lazard Ltd

Lazard Ltd 
Media: 
Judi Frost Mackey, +1-212-632-1428 
judi.mackey@lazard.com 
or 
Investors: 
Alexandra Deignan, +1-212-632-6886 
alexandra.deignan@lazard.com


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