Second Quarter 2006
Lehman Brothers Reports Second Quarter Earnings

Reports 47% Increase in Net Income and 35% Increase in Net Revenues from Second Quarter of 2005

NEW YORK, June 12, 2006 —
Lehman Brothers Holdings Inc. (ticker symbol: LEH) today reported net income of $1.0 billion, or $1.69 per common share (diluted), for the second quarter ended May 31, 2006, representing an increase of 47% and 50%, respectively, from net income of $683 million, or $1.13 per common share (diluted), reported for the second quarter of fiscal 2005. The second quarter results represented a decrease of 8% from record net income and earnings per common share (diluted) in the first quarter of fiscal 2006 of $1.1 billion and $1.83, respectively.

For the first half of fiscal 2006, the Firm reported record net income of $2.1 billion, or $3.52 per common share (diluted), up 34% and 36%, respectively, from the first half of fiscal 2005.

Second Quarter Business Highlights

Richard S. Fuld, Jr., chairman and chief executive officer, said, "Our strong results for the second quarter continue to demonstrate that Lehman Brothers has the breadth, balance and scale necessary to help our clients around the world take advantage of opportunities in a changing and challenging market environment. As we remain focused on delivering the best solutions to our clients, we are equally committed to maintaining a strict discipline around risk, liquidity and expense management to drive shareholder value."

The Firm reported net revenues (total revenues less interest expense) for the second quarter of fiscal 2006 of $4.4 billion, a 35% increase from $3.3 billion in the second quarter of fiscal 2005 and a decrease of 1% from the record $4.5 billion in the first quarter of fiscal 2006. For the first six months of fiscal 2006, the Firm reported record net revenues of $8.9 billion, an increase of 25% from $7.1 billion for the first half of fiscal 2005.

Investment Banking revenues increased 28% to $741 million for the second quarter of fiscal 2006, from $579 million for the same period a year ago. Second quarter revenues were driven by strong advisory and equity underwriting revenues, partially offset by a decline in debt underwriting. Capital Markets reported record net revenues of $3.1 billion in the second quarter of fiscal 2006, a 38% increase from $2.2 billion reported in the second quarter of fiscal 2005. Equities Capital Markets net revenues increased 85% to $878 million in the second quarter of fiscal 2006 compared to $474 million in the second quarter of fiscal 2005, and were driven by higher trading volumes in the cash businesses and improved results in the global derivatives and prime brokerage businesses. Fixed Income Capital Markets reported record net revenues of $2.2 billion in the second quarter of fiscal 2006, an increase of 25% from $1.8 billion in the second quarter of fiscal 2005, representing strong results across all products, including credit, municipals, real estate, mortgages and interest rate products. Investment Management net revenues were a record $592 million in the second quarter of fiscal 2006, an increase of 25% versus $472 million in the second quarter of fiscal 2005. Record Private Investment Management net revenues of $245 million in the second quarter of fiscal 2006 increased 13% from $217 million in the second quarter of fiscal 2005. Asset Management reported net revenues of $347 million, an increase of 36% compared to $255 million in the same period a year ago, as assets under management grew to a record $198 billion.

Non-interest expenses for the second quarter of fiscal 2006 were $2.9 billion, compared to $2.3 billion in the second quarter of fiscal 2005 and $2.9 billion in the first quarter of fiscal 2006. Compensation and benefits as a percentage of net revenues was 49.3% during the second quarter of fiscal 2006, compared to 49.5% during the second quarter of fiscal 2005 and 49.3% in the first quarter of fiscal 2006. Non-personnel expenses in the second quarter of fiscal 2006 were $738 million, compared to $711 million in the first quarter of fiscal 2006 and $642 million in the second quarter of fiscal 2005.

For the second quarter of fiscal 2006, the Firm's pre-tax margin was 34.0%, compared to 30.9% in the second quarter of fiscal 2005. The Firm's return on average common stockholders' equity was 23.7% for the second quarter of fiscal 2006, compared to 18.2% in the second quarter of fiscal 2005, and return on average tangible common stockholders' equity was 29.5% for the second quarter of fiscal 2006, compared to 23.5% in the second quarter of fiscal 2005.

As of May 31, 2006, Lehman Brothers stockholders' equity was approximately $18 billion, and total capital (stockholders' equity and long-term borrowings) was approximately $99 billion. Book value per common share was $31.08.

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.

Conference Call
A conference call, to discuss the Firm's financial results and outlook, will be held at 10:00 a.m. EDT today. 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. 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 866-454-9170 (domestic) or 203-369-1254 (international). The replay will be available approximately one hour after the event and will remain available on the Lehman Brothers Web site until 6:00 p.m. EDT on July 12, 2006, and by phone until 5:00 p.m. EDT on July 13, 2006. 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 "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.

Selected Statistical and Financial Information Attached (163 k)

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