First Quarter 2004
Lehman Brothers Reports Record First Quarter Earnings of $670 Million

Reports Record Revenues and Earnings Per Share

NEW YORK, March 16, 2004 —
Lehman Brothers Holdings Inc. (ticker symbol: LEH) today reported net income of $670 million, or $2.21 per common share (diluted), for the first quarter ended February 29, 2004, a 123% increase from $301 million, or $1.15 per common share (diluted), reported for the first quarter of fiscal 2003, and a 39% increase from $481 million, or $1.71 per common share (diluted), for the fourth quarter of fiscal 2003.

First Quarter Business Highlights

•	Reported record performances in the Capital Markets and Client Services segments
•	Reported 57% revenue growth from Europe and Asia
•	Posted fourth consecutive quarter of increased revenues in Investment Banking, reaching the highest level in three years, and reflecting market share gains in strategic advisory and equity origination activities
•	Named four new members to the Executive Committee to reflect the continued growth and expansion of the Firm's global businesses: Jesse Bhattal, chief executive officer of Lehman Brothers Asia; Ted Janulis, head of Client Services/Wealth & Asset Management; Skip McGee, global head of Investment Banking; and Roger Nagioff, chief operating officer of Lehman Brothers Europe
•	Assets Under Management increased to a record $124 billion at February 29, 2004, from $116 billion at November 30, 2003, driven by the continued growth and successful integration of Neuberger Berman
•	Successfully completed the moves into the Firm's new, state-of-the-art European and Asian headquarters in London and Tokyo, respectively, reflecting the growth in scale and geographic reach of the Firm's global franchise

Richard S. Fuld, Jr., chairman and chief executive officer, said, "Our record results for the first quarter continue to demonstrate the earnings and growth potential of our global franchise. The outstanding performance of our Investment Banking, Capital Markets and Client Services businesses during the quarter underscores our ability to deliver the best solutions to our corporate, institutional and individual clients worldwide. We look forward to building on this terrific momentum and continuing to drive shareholder value."

The Firm reported record net revenues (total revenues less interest expense) for the first quarter of $3.1 billion, an 84% increase from $1.7 billion in the first quarter of fiscal 2003, and a 37% increase from $2.3 billion in the fiscal 2003 fourth quarter. Robust customer flow activity across most Capital Markets products resulted in record revenues in this segment. In Fixed Income Capital Markets, the Firm had solid performance across all products, particularly in high yield, foreign exchange, mortgage-related and interest rate products, which drove an 80% revenue increase over the first quarter of fiscal 2003. A 124% increase in the Equities Capital Markets business was characterized by heightened customer flow activity in both the Americas and Europe cash businesses, with other significant global contributions from the convertibles, derivatives and prime broker businesses. Investment Banking revenues reached their highest level in three years, increasing 39%, compared with the first quarter of fiscal 2003. Renewed confidence in the economy and increased corporate profitability resulted in an improved equity market environment, which led to substantially higher strategic M&A and equity origination volumes. The record results in the Firm's Client Services segment were attributable to record revenues in the Private Client component and the inclusion of Neuberger Berman for a full quarter.

Non-interest expenses for the quarter were $2.1 billion, compared to $1.3 billion in the fiscal 2003 first quarter, and $1.6 billion in the fourth quarter of fiscal 2003. Compensation and benefits as a percentage of net revenues was 49.8% during the first quarter of fiscal 2004. Nonpersonnel expenses in the fiscal 2004 first quarter were $546 million (including a $19 million real estate related charge), compared with $401 million in the previous fiscal year's first quarter, and $473 million in the previous fiscal year's fourth quarter. The increase from the fourth quarter of fiscal 2003 was primarily driven by the inclusion of Neuberger Berman for a full quarter, as well as increased brokerage and clearance costs from a higher volume of capital market activities.

For the quarter ended February 29, 2004, the Firm's pre-tax margin was 33% versus 26% in the fiscal 2003 first quarter, and 31% in the fiscal 2003 fourth quarter. Return on average common equity was 21% for the first quarter of fiscal 2004, compared to 14% for the first quarter of fiscal 2003, and 19% for the fourth quarter of fiscal 2003. Return on average tangible common equity was 30% for the first quarter of fiscal 2004, compared with 14% for the first quarter of fiscal 2003, and 21% for the fourth quarter of fiscal 2003.

As of February 29, 2004, Lehman Brothers stockholders' equity totaled $13.8 billion, and long-term debt (including junior subordinated debt of $1.3 billion) was $51.0 billion, for total capital of $64.8 billion. Book value per common share was $45.45.

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 equity, asset management and private client services. The Firm is headquartered in New York, 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 our Web site at www.lehman.com.

Conference Call
A conference call, to discuss the Firm's financial results and outlook, will be held at 9:30 a.m., EST on March 16, 2004. Members of the public who would like to access the conference call should dial, from the U.S., 888-456-0338 or from outside the U.S., 212-547-0182. 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, www.lehman.com, 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 800-337-4108 (domestic) or 402-220-9640 (international). The replay will be available approximately one hour after the event and will remain available on the Lehman Brothers Web site until 5:00 p.m., EDT on April 16, 2004, and by phone until 5:00 p.m., EST on March 31, 2004. Please direct any questions regarding the conference call to Shaun Butler at 212-526-8381, sbutler@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 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 "Management's Discussion and Analysis of Financial Condition and Results of Operations" in the Firm's most recent Annual Report to Shareholders.

Selected Statistical and Financial Information Attached (53k)

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