Third Quarter 2005
Lehman Brothers Reports Record Third Quarter Results

Highest Quarterly Net Revenues, Net Income and Earnings Per Share

NEW YORK, September 14, 2005 —
Lehman Brothers Holdings Inc. (ticker symbol: LEH) today reported record net income of $879 million for the third quarter ended August 31, 2005, or $2.94 per common share (diluted), representing increases of 74% and 72%, respectively, from net income of $505 million, or $1.71 per common share (diluted) for the third quarter of fiscal 2004. Second quarter fiscal 2005 net income was $683 million, or $2.26 per common share (diluted).

For the first nine months of fiscal 2005, net income was a record $2.4 billion, or $8.11 per common share (diluted), both up 37% from $1.8 billion, or $5.94 per common share (diluted) for the comparable period of fiscal 2004.

Third Quarter Business Highlights

Richard S. Fuld, Jr., Lehman Brothers' chairman and chief executive officer, said, "Our record results this quarter speak to the Firm's increased earnings capacity. Our nine month results are by far the best we have ever reported, with record net revenues in each of our business segments and regions. The extraordinary momentum we have built through our commitment to partnering with clients worldwide is clearly evident in our performance."

Net revenues (total revenues less interest expense) for the third quarter of fiscal 2005 rose to a record $3.9 billion, up 47% from $2.6 billion in the third quarter of fiscal 2004, and up 18% from $3.3 billion in the second quarter of fiscal 2005. Investment Banking revenues increased 55% to $815 million in the third quarter of fiscal 2005, from $526 million in the third quarter of fiscal 2004, driven by the Firm's highest level ever of debt origination revenues as well as strong equity origination and mergers and acquisitions ("M&A") revenues. The Firm advised on three of the largest completed M&A transactions for the quarter. Capital Markets net revenues in the third quarter of fiscal 2005 rose 49% to $2.5 billion, compared to $1.7 billion for the same period in fiscal 2004, reflecting the Firm's second highest net revenue quarter ever. Within Capital Markets, the Fixed Income business reported net revenues of $1.9 billion in the third quarter of fiscal 2005, up 37% from $1.4 billion reported in the third quarter of fiscal 2004. These results were attributable to increased contributions from the Firm's commercial mortgage and real estate business, continued strength in residential mortgages and improved performance in credit and interest rate products. Equities Capital Markets net revenues nearly doubled to $637 million in the third quarter of fiscal 2005, compared to $319 million in the third quarter of fiscal 2004, reflecting robust customer flow activity, particularly in the cash businesses and equity derivatives, improved results in convertibles and continued growth in the Firm's prime broker business. Record Investment Management net revenues, which increased 29% to $511 million in the third quarter of fiscal 2005, compared to $397 million a year ago, reflected record performances in the Private Investment Management and Asset Management businesses. Within Asset Management, Neuberger Berman continued to produce extremely strong results.

For the first nine months of fiscal 2005, net revenues increased 26%, to a record $10.9 billion, from $8.7 billion for the first nine months of fiscal 2004.

Non-interest expenses for the third quarter of fiscal 2005 were $2.6 billion, compared to $1.9 billion in the third quarter of fiscal 2004 and $2.3 billion in the second quarter of fiscal 2005. Compensation and benefits as a percentage of net revenues was 49.5% during the third quarter of fiscal 2005, compared to 49.8% during the third quarter of fiscal 2004 and 49.5% in the second quarter of fiscal 2005. Non-personnel expenses in the third quarter of fiscal 2005 were $653 million, compared to $642 million in the second quarter of fiscal 2005, and $594 million in the third quarter of fiscal 2004.

For the third quarter of fiscal 2005, the Firm's pre-tax margin was 33.6%, compared to 27.6% in the third quarter of fiscal 2004. For the third quarter of fiscal 2005, the Firm's return on average common stockholders' equity was 23.0%, compared to 15.0% in the third quarter of fiscal 2004, and return on average tangible common stockholders' equity was 29.5% for the third quarter of fiscal 2005, compared to 20.9% in the third quarter of fiscal 2004.

As of August 31, 2005, Lehman Brothers stockholders' equity totaled $16.3 billion, and total capital (stockholders' equity and long-term debt) was approximately $79.4 billion. Book value per common share was $54.91.

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 and products, 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 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 866-405-7293 (domestic) or 203-369-0605 (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 14, 2005, and by phone until 11:59 p.m. EDT on October 14, 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 and Quarterly Report on Form 10-Q.

Selected Statistical and Financial Information Attached (70k)

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