First Quarter 2005
Lehman Brothers Reports Record Quarterly Results

Reports Record Net Revenues, Net Income and Earnings Per Share for First Quarter

NEW YORK, March 15, 2005 —
Lehman Brothers Holdings Inc. (ticker symbol: LEH) today reported net income of $875 million, or $2.91 per common share (diluted), for the first quarter ended February 28, 2005, representing increases of 31% and 32%, respectively, from net income of $670 million, or $2.21 per common share (diluted), reported for the first quarter of fiscal 2004, and increases of 50% and 48%, respectively, from net income of $585 million, or $1.96 per common share (diluted) for the fourth quarter of fiscal 2004.

First Quarter Business Highlights

•	Achieved record revenues in Investment Banking, Capital Markets, Europe and Asia
•	Advising on four of the top ten M&A transactions announced in the first fiscal quarter
•	Grew assets under management to $148 billion from $137 billion at the end of last quarter

Richard S. Fuld, Jr., chairman and chief executive officer, said, "This was truly a great quarter. These record results reflect an outstanding performance from all of our businesses and regions and the earnings power of the Firm. We have never been stronger than we are today and are very well-positioned for the future. Our performance and momentum are clearly the result of how well we are working together as one Firm to deliver on our client-focused strategy."

The Firm reported record net revenues (total revenues less interest expense) for the first quarter of fiscal 2005 of $3.8 billion, a 21% increase from $3.1 billion in the first quarter of fiscal 2004, and a 32% increase from $2.9 billion in the fourth quarter of fiscal 2004.

Investment Banking revenues increased 34% to a record $683 million for the first quarter of fiscal 2005, from $508 million for the same period a year ago, reflecting improved performance across all products, including record results in debt origination and continued strength in M&A activity. Record Capital Markets net revenues, which increased 21% to $2.7 billion from $2.2 billion in the first quarter of fiscal 2004, were driven by record results in Fixed Income Capital Markets and strong results in Equities Capital Markets. The record results in Fixed Income Capital Markets reflect a strong performance across all major businesses, and in particular mortgages and interest rate products. Improved global equity markets and increased secondary activity contributed to another quarter of solid performance in Equities Capital Markets. Investment Management, formerly Client Services, net revenues increased 5% to $437 million for the first quarter of fiscal 2005, from $416 million in the same period a year ago. Net revenues in Asset Management reflected a continued increase in Assets Under Management from strong net inflows as well as market appreciation. A slight decline in Private Investment Management net revenues was largely attributable to a decline in fixed income production as investors allocated a larger proportion of investments into cash.

Non-interest expenses were $2.5 billion in the first quarter of fiscal 2005, compared to $2.1 billion in the first quarter of fiscal 2004, and $2.0 billion in the fourth quarter of fiscal 2004. Compensation and benefits as a percentage of net revenues were 49.5% during the first quarter of fiscal 2005, consistent with the Firm's full year 2004 ratio. Non-personnel expenses in the first quarter of fiscal 2005 were $618 million, compared with $527 million (excluding the $19 million real estate reconfiguration charge) in the previous fiscal year's first quarter, and $603 million in the previous fiscal year's fourth quarter.

For the quarter ended February 28, 2005, the Firm's pre-tax margin was 34.3% versus 32.8% in the first quarter of fiscal 2004, and 30.5% in the fourth quarter of fiscal 2004. Return on average common equity was 24.5% for the first quarter of fiscal 2005, compared to 21.1% for the first quarter of fiscal 2004, and 17.0% for the fourth quarter of fiscal 2004. Return on average tangible common equity was 32.0% for the first quarter of fiscal 2005, compared with 29.7% for the first quarter of fiscal 2004, and 23.0% for the fourth quarter of fiscal 2004.

As of February 28, 2005, Lehman Brothers total stockholders' equity was $15.8 billion, and long-term debt was $59.3 billion (including junior subordinated debentures of $1.2 billion), for total capital of $75.1 billion. Book value per common share was $51.75.

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, 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 15, 2005. 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., 888-456-0338 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 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 866-443-1209 (domestic) or 203-369-1089 (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 15, 2005, and by phone until 11:59 p.m. EDT on April 15, 2005. 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, 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 "Management's Discussion and Analysis of Financial Condition and Results of Operations" in the Firm's most recent Annual Report on Form 10-K.

Selected Statistical and Financial Information Attached (56k)

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