Lehman Brothers Reports Record Net Revenues, Net Income and Earnings Per Share for Fiscal 2007

-Reports Net Income of $886 Million and Net Revenues of $4.4 Billion for

the Fourth Quarter of Fiscal 2007-

    NEW YORK, Dec. 13 /PRNewswire-FirstCall/ -- Lehman Brothers Holdings
 Inc. ( LEH) today reported net income of $886 million, or $1.54 per
 common share (diluted), for the fourth quarter ended November 30, 2007,
 representing decreases of 12% and 10%, respectively, from net income of
 $1.0 billion, or $1.72 per common share (diluted), reported for the fourth
 quarter of fiscal 2006. For the third quarter of fiscal 2007, net income
 was $887 million, or $1.54 per common share (diluted).
 
     For the 2007 full fiscal year, net income and earnings per common share
 (diluted) increased 5% and 7%, respectively, to a record $4.2 billion and
 $7.26, respectively, compared to $4.0 billion and $6.81, respectively, in
 fiscal 2006. The 2006 results include an after-tax gain of $47 million, or
 $0.08 per common share (diluted), from the cumulative effect of a change in
 accounting principle associated with the Firm's adoption of SFAS 123R on
 December 1, 2005.
 
 

                         Full Year Business Highlights
 
     -- Reported record net revenues, net income and earnings per common share
        (diluted) for the fourth consecutive year
     -- Achieved record net revenues across all three business segments
     -- Reported record non-U.S. net revenues, which accounted for 50% of
        overall Firm net revenues for the year, and a record 62% of Firmwide
        net revenues in the fourth quarter
     -- Grew assets under management to a record $282 billion
     -- Ranked #1 "Most Admired Securities Firm" by Fortune
     -- Ranked #1 in both Equity and Fixed Income Research by Institutional
        Investor's "All-America Research" polls for the fifth consecutive year;
        ranked #1 "Most Shareholder-Friendly Company," Brokers and Asset
        Management category by Institutional Investor
     Chairman and Chief Executive Officer Richard S. Fuld, Jr. said,
 "Despite what continues to be a difficult operating environment, the Firm's
 results for the quarter highlight our ability to perform across market
 cycles and deliver value to our shareholders. Our global franchise and
 brand have never been stronger, and our record results for the year reflect
 the continued diversified growth of our businesses. As always, our people
 remain committed to managing risk and providing the best solutions to our
 clients."
 
     Net revenues (total revenues less interest expense) for the fourth
 quarter of fiscal 2007 were $4.4 billion, a decrease of 3% from $4.5
 billion reported in the fourth quarter of fiscal 2006 and an increase of 2%
 from $4.3 billion reported in the third quarter of fiscal 2007. Capital
 Markets net revenues decreased 10% to $2.7 billion in the fourth quarter of
 fiscal 2007 from $3.0 billion in the fourth quarter of fiscal 2006. Fixed
 Income Capital Markets reported net revenues of $860 million, a decrease of
 60% from $2.1 billion in the fourth quarter of fiscal 2006, due to the very
 challenging markets experienced during the period, although strong results
 from client activity were reported in the Foreign Exchange and Commodities
 businesses. Fixed Income Capital Markets recorded negative valuation
 adjustments on trading assets, principally in the Firm's Securitized
 Products and Real Estate businesses. These valuation adjustments were
 offset, in part, by valuation gains on economic hedges and liabilities, as
 well as realized gains from the sale of certain leveraged loan positions,
 resulting in a net revenue reduction in Fixed Income Capital Markets of
 approximately $830 million. Equities Capital Markets reported record net
 revenues of $1.9 billion, more than double the $900 million reported in the
 fourth quarter of fiscal 2006. This performance was driven by solid
 customer flow activities as well as gains from private equity and the
 Firm's investment in GLG Partners. These results represent the fourth
 straight quarter that Equities Capital Markets has surpassed $1 billion in
 net revenues. Investment Banking reported net revenues of $831 million, a
 decrease of 3% from $858 million in the fourth quarter of fiscal 2006,
 driven by declines in debt and equity origination revenues, which decreased
 38% and 6%, respectively, from the prior year's period. Merger and
 acquisition advisory reported its second-highest net revenue quarter, an
 increase of 52% from the fourth quarter of fiscal 2006. Investment
 Management reported record net revenues of $832 million in the fourth
 quarter of fiscal 2007, an increase of 30% from $640 million in the fourth
 quarter of fiscal 2006. This performance was driven by record revenues in
 Asset Management and strong revenues in Private Investment Management.
 Assets under management grew to a record $282 billion.
 
     For the full 2007 fiscal year, net revenues increased 10% to a record
 $19.3 billion, from $17.6 billion for fiscal 2006, with record net revenues
 in each business segment. For fiscal 2007, non-U.S. revenues grew 49% to a
 record $9.6 billion, representing 50% of Firmwide net revenues.
 
     Non-interest expenses for the fourth quarter of fiscal 2007 were $3.2
 billion, compared to $3.0 billion in the fourth quarter of fiscal 2006 and
 $3.1 billion in the third quarter of fiscal 2007. Compensation and benefits
 as a percentage of net revenues was 49.3% during the fourth quarter of
 fiscal 2007, consistent with both the fourth quarter of fiscal 2006 and the
 third quarter of fiscal 2007. For the full 2007 fiscal year, compensation
 and benefits as a percentage of net revenues remained at 49.3% compared to
 fiscal 2006. Non-personnel expenses in the fourth quarter of fiscal 2007
 were $996 million, compared with $979 million in the third quarter of
 fiscal 2007 and $809 million in the fourth quarter of fiscal 2006,
 reflecting continued investments in growing the franchise. Non-personnel
 expenses for the full year of fiscal 2007 were $3.8 billion, compared with
 $3.0 billion in fiscal 2006.
 
     The Firm's pre-tax margin was 28.0% for the fourth quarter of fiscal
 2007 and 31.2% for the full 2007 fiscal year, compared to 32.8% for the
 fourth quarter of fiscal 2006 and 33.6% for the full 2006 fiscal year.
 Return on average common equity was 16.6% for the fourth quarter of fiscal
 2007, compared with 22.3% for the fourth quarter of fiscal 2006. For the
 full 2007 fiscal year, return on average common equity was 20.8%, compared
 with 23.4% for fiscal 2006. Return on average tangible common equity was
 20.6% for the fourth quarter of fiscal 2007, compared with 27.6% for the
 fourth quarter of fiscal 2006. For the full 2007 fiscal year, return on
 average tangible common equity was 25.7%, compared with 29.1% for fiscal
 2006.
 
     As of November 30, 2007, Lehman Brothers' total stockholders' equity
 was $22.5 billion, and total long-term capital (stockholders' equity and
 long-term borrowings, excluding any borrowings with remaining maturities of
 less than twelve months) was approximately $145.7 billion. Book value per
 common share was $39.45.
 
     Lehman Brothers (ticker symbol: LEH), an innovator in global finance,
 serves the financial needs of corporations, governments and municipalities,
 institutional clients, and high net worth individuals worldwide. Founded in
 1850, Lehman Brothers maintains leadership positions in equity and fixed
 income sales, trading and research, investment banking, private investment
 management, asset management and private equity. The Firm is headquartered
 in New York, with regional headquarters in London and Tokyo, and operates
 in a network of offices around the world. For further information about
 Lehman Brothers' services, products and recruitment opportunities, visit
 the Firm's Web site at www.lehman.com. Lehman Brothers Inc. is a member of
 SIPC.
 
     Conference Call
 
     A conference call, to discuss the Firm's financial results and outlook,
 will be held today at 10:00 a.m. ET. The call will be open to the public.
 Members of the public who would like to access the conference call should
 dial, from the U.S., 888-323-4182 or, from outside the U.S., 517-623-4500
 at least ten minutes prior to the start of the conference call. The pass
 code for all callers is LEHMAN. The conference call will also be accessible
 through the "Shareholders" section of the Firm's Web site under the
 subcategory "Webcasts." For those unable to listen to the live broadcast, a
 replay will be available on the Firm's Web site or by dialing 800-685-0230
 (domestic) or 203-369-3628 (international). The replay will be available
 approximately one hour after the event and will remain available on the
 Lehman Brothers Web site and by phone until 11:59 p.m. ET on January 13,
 2008.
 
     Please direct any questions regarding the conference call to Shaun
 Butler at 212-526-8381, sbutler@lehman.com, Ed Grieb at 212-526-0588,
 egrieb@lehman.com, or Elizabeth Besen at 212-526-2733, ebesen@lehman.com.
 
     Cautionary Note Regarding Forward-Looking Statements
 
     This press release may contain forward-looking statements. These
 statements are not historical facts, but instead represent only the Firm's
 expectations, estimates and projections regarding future events. These
 statements are not guarantees of future performance and involve certain
 risks and uncertainties that are difficult to predict, which may include
 risks and uncertainties relating to market fluctuations and volatility,
 industry competition and changes in the competitive environment, investor
 sentiment, liquidity and credit ratings, credit exposures, operational
 risks and legal and regulatory matters. The Firm's actual results and
 financial condition may differ, perhaps materially, from the anticipated
 results and financial condition in any such forward-looking statements and,
 accordingly, readers are cautioned not to place undue reliance on such
 statements. The Firm undertakes no obligation to update any forward-looking
 statements, whether as a result of new information, future events or
 otherwise. For more information concerning the risks and other factors that
 could affect the Firm's future results and financial condition, see "Risk
 Factors" and "Management's Discussion and Analysis of Financial Condition
 and Results of Operations" in the Firm's most recent Annual Report on Form
 10-K and Quarterly Report on Form 10-Q.
 
 

 
 
     LEHMAN BROTHERS HOLDINGS INC.
     SELECTED STATISTICAL INFORMATION
     (Preliminary and Unaudited)
     (Dollars in millions, except share data)
 
                                                           At or for the
                                                             Year Ended
                                                        2007           2006
     Income Statement
     Net Revenues                                     $19,257        $17,583
     Non-Interest Expenses:
       Compensation and Benefits                        9,494          8,669
       Non-personnel Expenses                           3,750          3,009
     Income Before Cumulative Effect of
      Accounting Change                                 4,192          3,960
     Cumulative Effect of Accounting Change                 -             47
     Net Income                                         4,192          4,007
     Net Income Applicable to Common Stock              4,125          3,941
 
     Earnings per Basic Common Share: (a)
       Before Cumulative Effect of Accounting Change    $7.63          $7.17
       Cumulative Effect of Accounting Change               -           0.09
       Earnings per Basic Common Share                  $7.63          $7.26
 
     Earnings per Diluted Common Share: (a)
       Before Cumulative Effect of Accounting Change    $7.26          $6.73
       Cumulative Effect of Accounting Change               -           0.08
       Earnings per Diluted Common Share                $7.26          $6.81
 
     Financial Ratios (%)
     Return on Average Common Stockholders'
      Equity (annualized) (b)                            20.8%          23.4%
     Return on Average Tangible Common Stockholders'
      Equity (annualized) (c)                            25.7%          29.1%
     Pre-tax Margin                                      31.2%          33.6%
     Compensation and Benefits/Net Revenues              49.3%          49.3%
     Effective Tax Rate                                  30.3%          32.9%
 
     Financial Condition
     Total Assets
     Net Assets (d) (j)
     Common Stockholders' Equity (e)
     Total Stockholders' Equity (e)
     Total Stockholders' Equity Plus Junior
      Subordinated Notes (f)
     Tangible Equity Capital (f)
     Total Long-Term Capital (g)
     Book Value per Common Share (h)
     Leverage Ratio (i)
     Net Leverage Ratio (j)
 
     Other Data (#s)
     Employees (k)
     Assets Under Management (in billions)
     Common Stock Outstanding (in millions)
     Weighted Average Shares (in millions):
       Basic                                            540.6          543.0
       Diluted                                          568.3          578.4
 
 
                                      At or for the Quarter Ended
                             Nov 30,   Aug 31,   May 31,     Feb 28,  Nov 30,
                              2007      2007      2007        2007     2006
     Income Statement
     Net Revenues             $4,390    $4,308    $5,512      $5,047   $4,533
     Non-Interest Expenses:
       Compensation and
        Benefits               2,164     2,124     2,718       2,488    2,235
       Non-personnel
        Expenses                 996       979       915         860      809
     Income Before Cumulative
      Effect of Accounting
      Change                     886       887     1,273       1,146    1,004
     Cumulative Effect of
      Accounting Change            -         -         -           -        -
     Net Income                  886       887     1,273       1,146    1,004
     Net Income Applicable to
      Common Stock               870       870     1,256       1,129      987
 
     Earnings per Basic
      Common Share: (a)
       Before Cumulative Effect
        of Accounting Change   $1.60     $1.61     $2.33       $2.09    $1.83
       Cumulative Effect of
        Accounting Change          -         -         -           -        -
       Earnings per Basic
        Common Share           $1.60     $1.61     $2.33       $2.09    $1.83
 
     Earnings per Diluted
      Common Share: (a)
       Before Cumulative Effect
        of Accounting Change   $1.54     $1.54     $2.21       $1.96    $1.72
       Cumulative Effect of
        Accounting Change          -         -         -           -        -
       Earnings per Diluted
        Common Share           $1.54     $1.54     $2.21       $1.96    $1.72
 
     Financial Ratios (%)
     Return on Average Common
      Stockholders' Equity
      (annualized) (b)          16.6%     17.1%     25.8%       24.4%    22.3%
     Return on Average
      Tangible Common
      Stockholders' Equity
      (annualized) (c)          20.6%     21.1%     31.6%       29.9%    27.6%
     Pre-tax Margin             28.0%     28.0%     34.1%       33.7%    32.8%
     Compensation and Benefits
      /Net Revenues             49.3%     49.3%     49.3%       49.3%    49.3%
     Effective Tax Rate         27.9%     26.4%     32.3%       32.5%    32.5%
 
     Financial Condition
     Total Assets           $691,000  $659,216  $605,861    $562,283 $503,545
     Net Assets (d) (j)      372,873   357,102   337,667     300,797  268,936
     Common Stockholders'
      Equity (e)              21,399    20,638    20,034      18,910   18,096
     Total Stockholders'
      Equity (e)              22,494    21,733    21,129      20,005   19,191
     Total Stockholders'
      Equity Plus Junior
      Subordinated Notes (f)  27,471    26,647    25,650      23,018   21,929
     Tangible Equity
      Capital (f)             23,107    22,164    21,881      19,487   18,567
     Total Long-Term
      Capital (g)            145,739   142,064   121,948     110,780  100,369
     Book Value per Common
      Share (h)                39.45     38.29     37.15       35.15    33.87
     Leverage Ratio (i)         30.7x     30.3x     28.7x       28.1x    26.2x
     Net Leverage Ratio (j)     16.1x     16.1x     15.4x       15.4x    14.5x
 
     Other Data (#s)
     Employees (k)            28,556    28,783    28,323      27,090   25,936
     Assets Under Management
      (in billions)             $282      $275      $263        $236     $225
     Common Stock Outstanding
      (in millions)            531.9     529.4     530.2       534.9    533.4
     Weighted Average Shares
      (in millions):
       Basic                   542.6     540.4     538.2       540.9    539.2
       Diluted                 563.7     565.8     568.1       575.4    573.1
 
     See Footnotes to Selected Statistical Information on page 7.
 
 
 
     LEHMAN BROTHERS HOLDINGS INC.
     FOOTNOTES TO SELECTED STATISTICAL INFORMATION
     (Preliminary and Unaudited)
 
     (a) Earnings per share amounts for the year ended November 30, 2006 have
         been restated to reflect the two-for-one stock split on April 28,
         2006.
     (b) Return on average common stockholders' equity is computed by dividing
         annualized net income applicable to common stock for the period by
         average common stockholders' equity. See the reconciliation on page
         11.
     (c) Return on average tangible common stockholders' equity is computed by
         dividing annualized net income applicable to common stock for the
         period by average tangible common stockholders' equity. Average
         tangible common stockholders' equity equals average common
         stockholders' equity less average identifiable intangible assets and
         goodwill. See the reconciliation on page 11. Management believes
         tangible common stockholders' equity is a meaningful measure because
         it reflects the common stockholders' equity deployed in our
         businesses.
     (d) We calculate net assets by excluding from total assets: (i) cash and
         securities segregated and on deposit for regulatory and other
         purposes; (ii) collateralized lending agreements; and (iii)
         identifiable intangible assets and goodwill. See reconciliation on
         page 13. Net assets as presented are not necessarily comparable to
         similarly-titled measures provided by other companies in the
         securities industry because of different methods of presentation.
     (e) Effective December 1, 2006, we adopted both Statement of Financial
         Accounting Standards ("SFAS") No. 157, Fair Value Measurements, and
         SFAS No. 159, The Fair Value Option for Financial Assets and Financial
         Liabilities. The aggregate impact to opening retained earnings from
         the adoption of these standards was an after-tax increase of
         approximately $67 million (approximately $113 million pre-tax).
     (f) We calculate tangible equity capital by including stockholders' equity
         and junior subordinated notes and excluding identifiable intangible
         assets and goodwill. These measures may not be comparable to
         similarly-titled calculations by other companies as a result of
         different calculation methodologies. Our definition for tangible
         equity capital limits the amount of junior subordinated notes and
         preferred stock included in the calculation to 25% of tangible equity
         capital. The amounts excluded were approximately $237 million, $375
         million and $117 million in the fourth, third and second quarters of
         2007, respectively; no amounts were excluded in prior periods. We
         believe tangible equity capital to be a more meaningful measure of our
         equity base as it includes stockholders' equity and junior
         subordinated notes (which we consider to be equity-like instruments
         due to their subordinated and long-term nature) and excludes
         identifiable intangible assets and goodwill (which we do not consider
         available to support our remaining net assets). See the reconciliation
         on page 13.
     (g) Total long-term capital includes long-term borrowings (excluding any
         borrowings with remaining maturities within one year of the financial
         statement date) and total stockholders' equity. We believe total long-
         term capital is useful to investors as a measure of our financial
         strength.
     (h) The book value per common share calculation includes amortized
         restricted stock units granted under employee stock award programs,
         which have been included in total stockholders' equity.
     (i) Leverage ratio is defined as total assets divided by total
         stockholders' equity.
     (j) Net leverage ratio is defined as net assets (see note (d) above)
         divided by tangible equity capital (see note (f) above). We believe
         net leverage based on net assets to be a more useful measure of
         leverage, because it excludes certain low-risk, non-inventory assets
         and utilizes tangible equity capital as a measure of our equity base.
         Net leverage as presented is not necessarily comparable to similarly-
         titled measures provided by other companies in the securities industry
         because of different methods of presentation.
     (k) Headcount at August 31, 2007 reflects reductions related to the
         restructuring of the Firm's global residential mortgage origination
         business announced during the quarter, including the closure of BNC
         Mortgage LLC.
 
 
 
     LEHMAN BROTHERS HOLDINGS INC.
     CONSOLIDATED STATEMENT OF INCOME
     (Preliminary and Unaudited)
     (In millions, except per share data)
 
                                        Quarter Ended           % Change from
                               Nov 30,    Aug 31,     Nov 30,   Aug 31, Nov 30,
                                2007       2007        2006      2007    2006
     Revenues:
       Principal
        transactions           $1,698     $1,612      $2,504
       Investment banking         831      1,071         858
       Commissions                688        674         521
       Interest and
        dividends              11,136     10,910       8,898
       Asset management
        and other                 459        472         379
         Total revenues        14,812     14,739      13,160
       Interest expense        10,422     10,431       8,627
         Net revenues           4,390      4,308       4,533        2%    (3)%
 
     Non-interest expenses:
       Compensation and
        benefits                2,164      2,124       2,235
       Technology and
        communications            311        282         261
       Brokerage, clearance
        and distribution fees     240        224         167
       Occupancy                  173        170         131
       Professional fees          120        128         118
       Business development       103         91          90
       Other (a)                   49         84          42
         Total non-interest
          expenses              3,160      3,103       3,044        2%     4%
     Income before provision
      for income taxes          1,230      1,205       1,489
     Provision for income taxes   344        318         485
     Net income                  $886       $887      $1,004        -    (12)%
     Net income applicable
      to common stock            $870       $870        $987        -    (12)%
 
     Earnings per common share:
       Basic                    $1.60      $1.61       $1.83       (1)%  (13)%
       Diluted                  $1.54      $1.54       $1.72        -    (10)%
 
     (a) For the quarters ended November 30, 2007 and August 31, 2007,
         respectively, approximately $18 million and $44 million, respectively,
         of costs associated with the restructuring of the Firm's global
         residential mortgage origination business have been included in other
         expenses.
 
 
 
     LEHMAN BROTHERS HOLDINGS INC.
     CONSOLIDATED STATEMENT OF INCOME
     (Preliminary and Unaudited)
     (In millions, except per share data)
 
                                            Year Ended Nov 30,    % Change from
                                           2007            2006    Nov 30, 2006
     Revenues:
       Principal transactions             $9,119          $9,802
       Investment banking                  3,903           3,160
       Commissions                         2,471           2,050
       Interest and dividends             41,693          30,284
       Asset management and other          1,739           1,413
         Total revenues                   58,925          46,709
       Interest expense                   39,668          29,126
         Net revenues                     19,257          17,583         10%
 
     Non-interest expenses:
       Compensation and benefits           9,494           8,669
       Technology and communications       1,145             974
       Brokerage, clearance and
        distribution fees                    859             629
       Occupancy                             641             539
       Professional fees                     466             364
       Business development                  378             301
       Other (a)                             261             202
         Total non-interest expenses      13,244          11,678         13%
     Income before taxes and cumulative
      effect of accounting change          6,013           5,905
     Provision for income taxes            1,821           1,945
     Income before cumulative effect
      of accounting change                 4,192           3,960
     Cumulative effect of accounting
      change                                   -              47
     Net income                           $4,192          $4,007          5%
     Net income applicable to
      common stock                        $4,125          $3,941          5%
 
     Earnings per basic common share:
       Before cumulative effect of
        accounting change                  $7.63           $7.17
       Cumulative effect of
        accounting change                      -            0.09
       Earnings per basic common share     $7.63           $7.26          5%
 
     Earnings per diluted common share:
       Before cumulative effect of
        accounting change                  $7.26           $6.73
       Cumulative effect of
        accounting change                      -            0.08
       Earnings per diluted common share   $7.26           $6.81          7%
 
     (a) For the year ended November 30, 2007, approximately $62 million of
         costs associated with the restructuring of the Firm's global
         residential mortgage origination business has been included in other
         expenses.
 
 
 
     LEHMAN BROTHERS HOLDINGS INC.
     SEGMENT NET REVENUE INFORMATION
     (Preliminary and Unaudited)
     (In millions)
 
                                   Quarter Ended              % Change from
                             Nov 30,     Aug 31,   Nov 30,   Aug 31,   Nov 30,
                              2007        2007      2006      2007      2006
 
     Capital Markets:
       Fixed Income           $860      $1,063    $2,135
       Equities              1,867       1,372       900
         Total               2,727       2,435     3,035        12%      (10)%
 
     Investment Banking:
       Global Finance - Debt   233         350       378
       Global Finance - Equity 210         296       224
       Advisory Services       388         425       256
         Total                 831       1,071       858       (22)%      (3)%
 
     Investment Management:
       Asset Management        533         468       368
       Private Investment
        Management             299         334       272
         Total                 832         802       640         4%       30%
 
     Total Net Revenues     $4,390      $4,308    $4,533         2%       (3)%
 
 
 
                                        Year Ended Nov 30,        % Change from
                                       2007            2006        Nov 30, 2006
 
     Capital Markets:
       Fixed Income                   $5,977          $8,447
       Equities                        6,280           3,559
         Total                        12,257          12,006            2%
 
     Investment Banking:
       Global Finance - Debt           1,551           1,424
       Global Finance - Equity         1,015             815
       Advisory Services               1,337             921
         Total                         3,903           3,160           24%
 
     Investment Management:
       Asset Management                1,877           1,432
       Private Investment Management   1,220             985
         Total                         3,097           2,417           28%
 
     Total Net Revenues              $19,257         $17,583           10%
 
 
 
     LEHMAN BROTHERS HOLDINGS INC.
     RECONCILIATION OF AVERAGE STOCKHOLDERS' EQUITY TO
     AVERAGE TANGIBLE COMMON STOCKHOLDERS' EQUITY
     (Preliminary and Unaudited)
     (In millions)
 
                                             Quarter Ended
                        Nov 30,     Aug 31,    May 31,     Feb 28,    Nov 30,
                         2007        2007       2007        2007       2006
     Average
      stockholders'
      equity            $22,114     $21,431    $20,567     $19,632    $18,794
     Less: average
      preferred stock    (1,095)     (1,095)    (1,095)     (1,095)    (1,095)
     Average common
      stockholders'
      equity             21,019      20,336     19,472      18,537     17,699
     Less: average
      identifiable
      intangible assets
      and goodwill       (4,118)     (3,880)    (3,592)     (3,447)    (3,363)
     Average tangible
      common
      stockholders'
      equity            $16,901     $16,456    $15,880     $15,090    $14,336
 
 
                                                         Year Ended Nov 30,
                                                        2007           2006
 
     Average stockholders' equity                     $20,910        $17,971
     Less: average preferred stock                     (1,095)        (1,095)
     Average common stockholders' equity               19,815         16,876
     Less: average identifiable intangible
      assets and goodwill                              (3,756)        (3,312)
     Average tangible common stockholders' equity     $16,059        $13,564
 
 
 
     LEHMAN BROTHERS HOLDINGS INC.
     ASSETS UNDER MANAGEMENT
     (Preliminary and Unaudited)
     (In billions)
 
                                                        At
     Composition of Assets             Nov 30,         Aug 31,       Nov 30,
      Under Management                  2007            2007          2006
 
     Equity                             $107            $104           $95
     Fixed Income                         75              72            61
     Money Markets                        66              69            48
     Alternative Investments              34              30            21
     Assets Under Management            $282            $275         $ 225
 
 
                                                                    Quarter
                                             Year Ended               Ended
     Assets Under Management           Nov 30,         Nov 30,       Nov 30,
      Rollforward                       2007            2006          2007
 
     Opening balance                    $225            $175          $275
     Net additions                        41              35             2
     Net market appreciation              16              15             5
     Total increase                       57              50             7
     Ending balance                     $282            $225          $282
 
 
 
     LEHMAN BROTHERS HOLDINGS INC.
     LEVERAGE and NET LEVERAGE CALCULATIONS
     (Preliminary and Unaudited)
     (In millions)
 
                                                  At
                        Nov 30,      Aug 31,    May 31,    Feb 28,     Nov 30,
                          2007        2007       2007       2007        2006
     Net assets:
       Total assets    $691,000    $659,216   $605,861   $ 562,283  $ 503,545
       Less:
         Cash and
          securities
          segregated
          and on
          deposit for
          regulatory
          and other
          purposes      (13,000)    (10,579)    (7,154)     (6,293)    (6,091)
         Collateralized
          lending
          agreements   (301,000)   (287,427)  (257,388)   (251,662)  (225,156)
         Identifiable
          intangible
          assets and
          goodwill       (4,127)     (4,108)    (3,652)     (3,531)    (3,362)
     Net assets        $372,873    $357,102   $337,667   $ 300,797  $ 268,936
 
     Tangible equity
      capital:
       Total
        stockholders'
        equity          $22,494     $21,733    $21,129     $20,005    $19,191
       Junior
        subordinated
        notes(a)          4,740       4,539      4,404       3,013      2,738
       Less:
        Identifiable
        intangible
        assets and
        goodwill         (4,127)     (4,108)    (3,652)     (3,531)    (3,362)
     Tangible equity
      capital(a)        $23,107     $22,164    $21,881     $19,487    $18,567
 
     Leverage (total
      assets / total
      stockholders'
      equity)              30.7x       30.3x      28.7x       28.1x      26.2x
 
     Net leverage
      (net assets /
      tangible equity
      capital)             16.1x       16.1x      15.4x       15.4x      14.5x
 
     (a) Our definition for tangible equity capital limits the amount of junior
         subordinated notes and preferred stock included in the calculation to
         25% of tangible equity capital. The amounts excluded were
         approximately $237 million, $375 million and $117 million in the
         fourth, third and second quarters of 2007, respectively. No amounts
         were excluded in the prior periods.
 
 
 

SOURCE Lehman Brothers Holdings Inc.