Fourth Quarter 2005
Lehman Brothers Reports Record Revenues, Net Income and Earnings Per Share for Fiscal 2005

Fiscal Fourth Quarter Net Income and Earnings Per Share Increase 41% from the Prior Year

NEW YORK, December 13, 2005 —
Lehman Brothers Holdings Inc. (ticker symbol: LEH) today reported net income of $823 million, or $2.76 per common share (diluted), for the fourth quarter ended November 30, 2005, both up 41% from net income of $585 million, or $1.96 per common share (diluted), in the fourth quarter of fiscal 2004. Third quarter fiscal 2005 net income was $879 million, or $2.94 per common share (diluted).

For the 2005 full fiscal year, net income and earnings per common share (diluted) both increased 38% to a record $3.3 billion and $10.87, respectively, compared to $2.4 billion and $7.90, respectively, in fiscal 2004.

Full Year Business Highlights

Richard S. Fuld, Jr., chairman and chief executive officer, said, "By every measure, we delivered another strong quarter and finished the year with our best results ever. Record performances for the year across all of our segments and regions continue to demonstrate the diversity, depth and scale of our global franchise. Reaching this new level of performance is a testament to our commitment to deliver the Firm's full platform to our clients worldwide and provide best-in-class total returns to our shareholders."

The Firm reported net revenues (total revenues less interest expense) for the fourth quarter of fiscal 2005 of $3.7 billion, an increase of 28% from $2.9 billion reported in the fourth quarter of fiscal 2004 and a decrease of 4% from the $3.9 billion reported in the third quarter of fiscal 2005. Investment Banking revenues were a record for the quarter, increasing 34% to $817 million from $608 million in the fourth quarter of fiscal 2004. These results were driven by record merger and acquisition advisory revenue, which increased 54% from the prior year's period, and solid performances in equity and debt origination, which increased 48% and 15%, respectively, from the prior year's period. Capital Markets net revenues increased 30% to $2.4 billion in the fourth quarter of fiscal 2005 from $1.8 billion in the prior year's fourth quarter on strong performances from both Fixed Income and Equities Capital Markets. Fixed Income Capital Markets revenues increased 22% in the fourth quarter of fiscal 2005 over the prior year's period, primarily due to higher revenues in interest rate products and high grade credit. Equities Capital Markets revenues, which increased 49% compared to the fourth quarter of fiscal 2004, were driven by increased customer flow activity across most products, and represented the second highest quarterly level ever. The Firm also reported its second highest revenue quarter ever in Investment Management, with net revenues increasing 13% to $509 million in the fourth quarter of fiscal 2005, from $452 million in the fourth quarter of fiscal 2004. This strong performance was driven by record revenues in the Private Investment Management business and record assets under management, which grew to $175 billion. In addition, the Firm posted its highest level ever of non-U.S. revenues in the fourth quarter of fiscal 2005, reflecting the Firm's increased scale in Europe and Asia.

For the full 2005 fiscal year, net revenues increased 26% to a record $14.6 billion, from $11.6 billion for fiscal 2004, with record net revenues in each business segment and in each region.

Non-interest expenses for the fourth quarter of fiscal 2005 were $2.5 billion, compared to $2.6 billion in the third quarter of fiscal 2005 and $2.0 billion in the fiscal 2004 fourth quarter. Compensation and benefits as a percentage of net revenues was 48.7% during the fourth quarter of fiscal 2005 compared to 49.5% for the third quarter of fiscal 2005 and 48.6% for the fourth quarter of fiscal 2004. For the full 2005 fiscal year, compensation and benefits as a percentage of net revenues was 49.3%, compared to 49.5% in fiscal 2004. Nonpersonnel expenses in the fiscal 2005 fourth quarter were $675 million, compared with $653 million in the third quarter of fiscal 2005 and $603 million in the fourth quarter of fiscal 2004. Nonpersonnel expenses for the full year of fiscal 2005 were $2.6 billion, compared with $2.3 billion in fiscal 2004.

For both the year and quarter ended November 30, 2005, the Firm's pretax margin was 33.0%, compared with 30.5% in the fourth quarter of fiscal 2004 and 30.4% for fiscal 2004. Return on average common equity was 20.9% for the fourth quarter of fiscal 2005, compared with 17.0% for the fourth quarter of fiscal 2004. For the full 2005 fiscal year, return on average common equity was 21.6%, compared with 17.9% for fiscal 2004. Return on average tangible common equity was 26.5% for the fourth quarter of fiscal 2005, compared with 23.0% for the fourth quarter of fiscal 2004. For the full 2005 fiscal year, return on average tangible common equity was 27.8%, compared with 24.7% for fiscal 2004.

As of November 30, 2005, Lehman Brothers' total stockholders' equity was $16.8 billion, and total capital (stockholders' equity and long-term debt) was approximately $79.5 billion. Book value per common share was $57.50.

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 our Web site at www.lehman.com.

Conference Call
A conference call, to discuss the Firm's financial results and outlook, will be held today at 9:30 a.m. EST. 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 866-414-6059 (domestic) or 203-369-0673 (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 30, 2006, and by phone until 5:00 p.m. EST on January 30, 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 "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 (141k)

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