Second Quarter 2004
Lehman Brothers Reports Second Quarter Results

Net Income of $609 Million and EPS of $2.01

Second Highest Levels Ever

NEW YORK, June 15, 2004 —
Lehman Brothers Holdings Inc. (ticker symbol: LEH) today reported net income of $609 million, or $2.01 per common share (diluted), for the second quarter ended May 31, 2004, a significant increase from $437 million, or $1.67 per common share (diluted), reported for the second quarter of fiscal 2003, and the second highest level of net income ever, after the $670 million, or $2.21 per common share (diluted), reported in the first quarter of fiscal 2004 ended February 29, 2004. (Included in the second quarter 2003 and the first quarter 2004 results are real estate-related charges of $77 million pretax ($45 million after tax) and $19 million pretax ($11 million after tax), respectively.)

For the first six months of fiscal 2004, net income was $1.3 billion, or $4.23 per common share (diluted), increases of 73% and 51%, respectively, from $738 million, or $2.81 per common share (diluted), reported in the first half of fiscal 2003.

Second Quarter Business Highlights

•	Named Joseph M. Gregory President and Chief Operating Officer
•	Elected Marsha Johnson Evans, president and chief executive officer of the American Red Cross, to Lehman Brothers' Board of Directors
•	Earned record revenues in the Client Services segment for second consecutive quarter; the integration with Neuberger Berman continues to progress smoothly
•	Received 40 "Best in Class" awards in the 2004 Prime Brokerage survey by Global Custodian, a clear recognition of the Firm's continued progress in its Prime Brokerage business

Richard S. Fuld, Jr., chairman and chief executive officer, said, "We achieved another quarter of excellent results, again demonstrating the strength and global reach of our franchise. All of our businesses and regions contributed strongly to our performance, making the most recent six month period our best ever. This quarter is further evidence that the strategy we've set for the Firm and our consistent focus on our clients are helping us drive more value to our shareholders. "

Net revenues (total revenues less interest expense) for the second quarter were $2.9 billion, up significantly, 28%, from $2.3 billion for the same period in fiscal 2003, and down slightly, 7%, from the record $3.1 billion in the first quarter of 2004. A strong Firmwide financial performance contributed to the second highest quarterly revenues ever. Investment Banking revenues increased for the fifth consecutive quarter. In debt underwriting, industry-wide softness in U.S. investment grade issuance was more than offset by an increase in leveraged finance and asset-backed transactions, in addition to heightened investment grade origination activity in Europe. M&A and equity underwriting levels were significantly higher compared to the second quarter of 2003 and stable compared to the first quarter of 2004. The Firm's Capital Markets segment had revenues of approximately $2.0 billion, a 19% increase from the prior year's quarter, and a 12% decrease from the record level achieved in the first quarter of 2004. Within Capital Markets, the Fixed Income business posted a 21% revenue increase over the prior year, driven by continued growth in customer flow activity across most products, including derivatives and mortgages, partially offset by lower results in credit products. A 16% increase in Equities revenues reflected strong results in equity derivatives, as clients continued to hedge downside risk or reduce concentrations. The Client Services segment achieved record revenues for the quarter with total assets under management growing to $125 billion. The Private Client business reported its second consecutive record quarter, with increased distribution of both fixed income and equity products to high-net-worth clients.

For the first six months of fiscal 2004, net revenues were $6.1 billion, a 52% increase from $4.0 billion for the first half of fiscal 2003.

Non-interest expenses for the quarter were $2.0 billion, compared to $1.7 billion for the second quarter of fiscal 2003. Compensation and benefits as a percentage of net revenues was 49.8% during the second quarter of fiscal 2004, compared to 51.0% for the second quarter of fiscal 2003. Nonpersonnel expenses in the fiscal 2004 second quarter were $585 million, compared to $495 million in the same period a year ago (which included a $77 million real estate-related charge), with the increase due largely to incremental expenses associated with a number of acquisitions completed subsequent to the second quarter of 2003.

For the quarter ended May 31, 2004, the Firm's pretax margin was 30.2%, compared to 27.4% in the fiscal 2003 second quarter, and 32.8% in the first quarter of 2004. For the fiscal 2004 second quarter, the Firm's return on average common equity was 18.6%, compared to 19.6% in the fiscal 2003 second quarter, and 21.1% in the trailing quarter ended February 29, 2004. Return on average tangible common equity was 26.0% for the second quarter of fiscal 2004, compared with 20.1% in the second quarter of fiscal 2003, and 29.7% in the trailing quarter ended February 29, 2004.

As of May 31, 2004, Lehman Brothers stockholders' equity totaled $14.0 billion, and total capital (stockholders' equity and long-term debt) was approximately $66.6 billion. Book value per common share was $47.05.

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 and wealth and asset management 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., EDT on Tuesday, June 15, 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 passcode 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 800-873-4054 (within the U.S.) or 402-220-4773 (from outside the U.S.). The replay will be available beginning approximately one hour after the event and will remain available on the Firm's Web site until 5:00 p.m., EDT, on July 16, 2004, and by phone until 5:00 p.m., EDT, on June 30, 2004.

Please direct any questions regarding the conference call to Shaun Butler at 212-526-8381, or sbutler@lehman.com, or Elizabeth Besen at 212-526-2733, or 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 risks, credit ratings changes, credit exposures and legal and regulatory changes and proceedings. 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 and Quarterly Report on Form 10-Q.

Selected Statistical and Financial Information Attached (185k)

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