Fourth Quarter 2004
Lehman Brothers Reports Record Revenues and
Net Income for Fiscal 2004

Fourth Quarter Net Income Increases 22%

NEW YORK, December 15, 2004 —
Lehman Brothers Holdings Inc. (ticker symbol: LEH) today reported net income of $585 million, or $1.96 per common share (diluted), for the fourth quarter ended November 30, 2004, representing increases of 22% and 15%, respectively, from net income of $481 million, or $1.71 per common share (diluted), in the fourth quarter of fiscal 2003. Third quarter 2004 net income was $505 million, or $1.71 per common share (diluted).

For the 2004 full fiscal year, net income increased 39% to a record $2.4 billion compared to $1.7 billion in fiscal 2003, and earnings per common share (diluted) rose 24% to $7.90 from $6.35 in fiscal 2003.

Full Year Business Highlights

•	Reported record net revenues, net income and earnings per share
•	Earned record net revenues in our Investment Banking segment, reflecting market share gains in merger and acquisition advisory and equity origination
•	Produced highest ever net revenues in our Capital Markets segment, with our sixth consecutive year of record Fixed Income net revenues and our second best year of Equity net revenues
•	Reported record net revenues in our Client Services segment and grew assets under management to $137 billion from $120 billion last year
•	Ranked #1 in both Equity and Fixed Income Research by Institutional Investor's "All America Research" polls
•	Achieved record international net revenues, posting record net revenues in Asia for the second consecutive year and our second best year of net revenues in Europe

Richard S. Fuld, Jr., chairman and chief executive officer, said, "Due to excellent performance throughout the year and very strong fourth quarter results, we are reporting record annual net revenues, net income and earnings per share. Both our reputation as a trusted advisor to our clients and our momentum as a franchise have never been stronger."

The Firm reported its third highest quarterly net revenues, which rose 25% to $2.9 billion, from $2.3 billion in the fourth quarter of fiscal 2003 and 10% from $2.6 billion in the third quarter of fiscal 2004. Record Investment Banking revenues, which rose 27% to $608 million from $477 million in the prior year's period, reflected a 95% increase in merger and acquisition advisory fees, to our highest level in almost four years, and record revenues from debt origination activity. Capital Markets net revenues increased 18% to $1.8 billion from $1.5 billion last year, and were driven by continued strength in the Firm's Fixed Income franchise and a rebound in Equity Capital Markets activity. A significant increase in the foreign exchange business and continued strength in mortgage products contributed to robust Fixed Income customer flow activity. The increase in Equity Capital Markets net revenues reflected a resurgence in the global equity markets, including a significant rise in trading volumes during the quarter. The Firm also achieved record net revenues in its Client Services segment, reflecting a record performance in the Asset Management business as assets under management rose to $137 billion. Private Client activity improved during the quarter, largely as a result of an increase in the distribution of equity products following the rally in the equity markets.

For the full 2004 fiscal year, net revenues increased 34% to a record $11.6 billion, from $8.6 billion for fiscal 2003, reflecting improved net revenues in each business segment, as well as each of the regions.

Non-interest expenses for the quarter were $2.0 billion, compared to $1.6 billion in the fiscal 2003 fourth quarter and $1.9 billion in the trailing quarter of fiscal 2004. Compensation and benefits as a percentage of net revenues was 48.6% during the fourth quarter of fiscal 2004, compared to 48.0% for the fourth quarter of fiscal 2003 and 49.8% for the third quarter of fiscal 2004. For the full fiscal year, compensation and benefits as a percentage of net revenues was 49.5%, compared to 49.9% in fiscal 2003. Nonpersonnel expenses in the fiscal 2004 fourth quarter were $603 million, compared with $473 million in the fiscal fourth quarter of 2003 and $594 million in the fiscal third quarter of 2004. Nonpersonnel expenses for the full fiscal year of 2004 were $2.3 billion compared with $1.8 billion ($1.7 billion excluding a charge related to a global real estate configuration) in fiscal 2003.

For the quarter ended November 30, 2004, the Firm's pre-tax margin was 30.5%, compared with 31.4% in the fourth quarter of fiscal 2003. For the full fiscal year, the Firm's pre-tax margin was 30.4%, compared with 29.3% for fiscal 2003. Return on average common equity was 17.0% for the fourth quarter of fiscal 2004, compared with 18.9% for the fourth quarter of fiscal 2003. For the full fiscal year, return on average common equity was 17.9%, compared with 18.2% for fiscal 2003. Return on average tangible common equity was 23.0% for the fourth quarter of fiscal 2004, compared with 20.6% for the fourth quarter of fiscal 2003. For the full fiscal year, return on average tangible common equity was 24.7%, compared with 19.2% for fiscal 2003.

As of November 30, 2004, Lehman Brothers' total stockholders' equity was $14.9 billion, and total capital (stockholders' equity and long-term debt) was approximately $71.4 billion. Book value per common share was $49.32.

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., EST on Wednesday, December 15, 2004. 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 866-408-8449 (domestic) or 203-369-0633 (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. EST on January 15, 2005, and by phone until 5:00 p.m. EST on January 7, 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 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 Operations" in the Firm's most recent Annual Report to Shareholders and Quarterly Report on Form10-Q.

Selected Statistical and Financial Information Attached (156k)

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