Third Quarter 2004
Lehman Brothers Reports Third Quarter Earnings

Net Income of $505 Million and EPS of $1.71

NEW YORK, September 21, 2004 —
Lehman Brothers Holdings Inc. (ticker symbol: LEH) today reported net income of $505 million for the third quarter ended August 31, 2004, or $1.71 per common share (diluted), versus net income of $480 million, or $1.81 per common share (diluted) for the third quarter of fiscal 2003. Second quarter 2004 net income was $609 million, or $2.01 per common share (diluted).

For the first nine months of 2004, net income was a record $1.8 billion, or $5.94 per common share (diluted), increases of 46% and 28%, respectively, from $1.2 billion, or $4.63 per common share (diluted) for the comparable period of 2003.

Business Highlights

•	Earned net income in excess of $500 million for third straight quarter
•	Achieved record net income and net revenues for the first nine months of 2004; greater than full-year 2003's results
•	Ranked No. 1 by Greenwich Associates for overall quality of Fixed Income sales, trading and research for the fourth consecutive year
•	Ranked No. 1 in Institutional Investor's "2004 All-America Fixed Income Research Team" survey for the fifth year in a row
•	Achieved market share gains in calendar 2004 in key investment banking products, including M&A advisory and global equity origination
•	Named a qualified foreign institutional investor in China, which will allow the Firm to trade yuan-denominated securities

Richard S. Fuld, Jr., chairman and chief executive officer, said, "Our businesses performed well during the third quarter, despite the pressures of a more challenging market environment. With revenues and net income for the first nine months of 2004 already ahead of our full-year 2003 results, we are on our way to another outstanding year."

Net revenues (total revenues less interest expense) for the third quarter rose 12% to $2.6 billion, up from $2.3 billion in the third quarter of 2003, and down 10% from $2.9 billion in the second quarter of 2004. Capital Markets revenues rose 2% compared with the third quarter of 2003, reflecting a 16% rise in Fixed Income Capital Markets, partially offset by a 33% decline in Equities Capital Markets. Fixed Income Capital Markets revenues remained resilient, due in part to robust mortgage and asset-backed securitization activity, which helped offset reduced activity in investment grade debt and interest rate products. Equities Capital Markets revenues were impacted by low trading volumes and volatility, as well as a valuation decline in the global equity markets, which were adversely affected by geopolitical concerns, higher oil prices, mixed economic data and the seasonal summer slowdown. Investment Banking revenues rose 16% from the third quarter of 2003, driven by increased equity and debt origination fees and enhanced levels of M&A advisory activity. Revenues from Client Services rose 75% from the same quarter last year, reflecting the positive impact of the acquisition of Neuberger Berman.

For the first nine months of 2004, net revenues increased 37%, to a record $8.7 billion, from $6.3 billion for the first nine months of 2003.

Non-interest expenses for the quarter were $1.9 billion, compared to $1.6 billion in the 2003 third quarter and $2.0 billion in the trailing quarter of 2004. Compensation and benefits as a percentage of net revenues was 49.8% during the third quarter of 2004, compared to 50.0% during the third quarter of 2003 and 49.8% in the second quarter of 2004. Non-personnel expenses in the 2004 third quarter were $594 million, compared with $424 million in the previous year's third quarter, largely reflecting a number of acquisitions completed subsequent to the third quarter of 2003. Non-personnel expenses were $585 million in the second quarter of 2004.

For the quarter ended August 31, 2004, the Firm's pretax margin was 27.6%, compared to 31.9% in the 2003 third quarter. For the 2004 third quarter, the Firm's return on average common equity was 15.0%, compared to 20.7% in the 2003 third quarter, and return on average tangible common equity was 20.9% for the third quarter of 2004, compared with 21.2% in the third quarter of 2003.

As of August 31, 2004, Lehman Brothers stockholders' equity totaled $14.4 billion, and total capital (stockholders' equity and long-term debt) was approximately $64.5 billion. Book value per common share was $48.10.

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, 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 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, September 21, 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 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 888-567-0424 (domestic) or 402-998-1797 (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 October 21, 2004, and by phone until 11:59 p.m. EDT on October 8, 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 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. 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 Operation" in the Firm's most recent Annual Report to Shareholders and Quarterly Report on Form 10-Q.

Selected Statistical and Financial Information Attached (160k)

You will need to have Adobe Acrobat Reader software to view these .PDF files on your computer. If you do not have Adobe Acrobat, visit the Adobe Web site. If you are an Internet Explorer 5.5 user and are having difficulty viewing these files, please upgrade your browser to the latest version.