Fourth Quarter 2007
Lehman Brothers Reports Record Net Revenues, Net Income and Earnings Per Share for Fiscal 2007

Reports Net Income of $886 Million and Net Revenues of $4.4 Billion for the Fourth Quarter of Fiscal 2007

NEW YORK, December 13, 2007 —
Lehman Brothers Holdings Inc. (ticker symbol: LEH) today reported net income of $886 million, or $1.54 per common share (diluted), for the fourth quarter ended November 30, 2007, representing decreases of 12% and 10%, respectively, from net income of $1.0 billion, or $1.72 per common share (diluted), reported for the fourth quarter of fiscal 2006. For the third quarter of fiscal 2007, net income was $887 million, or $1.54 per common share (diluted).

For the 2007 full fiscal year, net income and earnings per common share (diluted) increased 5% and 7%, respectively, to a record $4.2 billion and $7.26, respectively, compared to $4.0 billion and $6.81, respectively, in fiscal 2006. The 2006 results include an after-tax gain of $47 million, or $0.08 per common share (diluted), from the cumulative effect of a change in accounting principle associated with the Firm's adoption of SFAS 123R on December 1, 2005.

Full Year Business Highlights

Chairman and Chief Executive Officer Richard S. Fuld, Jr. said, "Despite what continues to be a difficult operating environment, the Firm's results for the quarter highlight our ability to perform across market cycles and deliver value to our shareholders. Our global franchise and brand have never been stronger, and our record results for the year reflect the continued diversified growth of our businesses. As always, our people remain committed to managing risk and providing the best solutions to our clients."

Net revenues (total revenues less interest expense) for the fourth quarter of fiscal 2007 were $4.4 billion, a decrease of 3% from $4.5 billion reported in the fourth quarter of fiscal 2006 and an increase of 2% from $4.3 billion reported in the third quarter of fiscal 2007. Capital Markets net revenues decreased 10% to $2.7 billion in the fourth quarter of fiscal 2007 from $3.0 billion in the fourth quarter of fiscal 2006. Fixed Income Capital Markets reported net revenues of $860 million, a decrease of 60% from $2.1 billion in the fourth quarter of fiscal 2006, due to the very challenging markets experienced during the period, although strong results from client activity were reported in the Foreign Exchange and Commodities businesses. Fixed Income Capital Markets recorded negative valuation adjustments on trading assets, principally in the Firm's Securitized Products and Real Estate businesses. These valuation adjustments were offset, in part, by valuation gains on economic hedges and liabilities, as well as realized gains from the sale of certain leveraged loan positions, resulting in a net revenue reduction in Fixed Income Capital Markets of approximately $830 million. Equities Capital Markets reported record net revenues of $1.9 billion, more than double the $900 million reported in the fourth quarter of fiscal 2006. This performance was driven by solid customer flow activities as well as gains from private equity and the Firm's investment in GLG Partners. These results represent the fourth straight quarter that Equities Capital Markets has surpassed $1 billion in net revenues. Investment Banking reported net revenues of $831 million, a decrease of 3% from $858 million in the fourth quarter of fiscal 2006, driven by declines in debt and equity origination revenues, which decreased 38% and 6%, respectively, from the prior year's period. Merger and acquisition advisory reported its second-highest net revenue quarter, an increase of 52% from the fourth quarter of fiscal 2006. Investment Management reported record net revenues of $832 million in the fourth quarter of fiscal 2007, an increase of 30% from $640 million in the fourth quarter of fiscal 2006. This performance was driven by record revenues in Asset Management and strong revenues in Private Investment Management. Assets under management grew to a record $282 billion.

For the full 2007 fiscal year, net revenues increased 10% to a record $19.3 billion, from $17.6 billion for fiscal 2006, with record net revenues in each business segment. For fiscal 2007, non-U.S. revenues grew 49% to a record $9.6 billion, representing 50% of Firmwide net revenues.

Non-interest expenses for the fourth quarter of fiscal 2007 were $3.2 billion, compared to $3.0 billion in the fourth quarter of fiscal 2006 and $3.1 billion in the third quarter of fiscal 2007. Compensation and benefits as a percentage of net revenues was 49.3% during the fourth quarter of fiscal 2007, consistent with both the fourth quarter of fiscal 2006 and the third quarter of fiscal 2007. For the full 2007 fiscal year, compensation and benefits as a percentage of net revenues remained at 49.3% compared to fiscal 2006. Non-personnel expenses in the fourth quarter of fiscal 2007 were $996 million, compared with $979 million in the third quarter of fiscal 2007 and $809 million in the fourth quarter of fiscal 2006, reflecting continued investments in growing the franchise. Non-personnel expenses for the full year of fiscal 2007 were $3.8 billion, compared with $3.0 billion in fiscal 2006.

The Firm's pre-tax margin was 28.0% for the fourth quarter of fiscal 2007 and 31.2% for the full 2007 fiscal year, compared to 32.8% for the fourth quarter of fiscal 2006 and 33.6% for the full 2006 fiscal year. Return on average common equity was 16.6% for the fourth quarter of fiscal 2007, compared with 22.3% for the fourth quarter of fiscal 2006. For the full 2007 fiscal year, return on average common equity was 20.8%, compared with 23.4% for fiscal 2006. Return on average tangible common equity was 20.6% for the fourth quarter of fiscal 2007, compared with 27.6% for the fourth quarter of fiscal 2006. For the full 2007 fiscal year, return on average tangible common equity was 25.7%, compared with 29.1% for fiscal 2006.

As of November 30, 2007, Lehman Brothers' total stockholders' equity was $22.5 billion, and total long-term capital (stockholders' equity and long-term borrowings, excluding any borrowings with remaining maturities of less than twelve months) was approximately $145.7 billion. Book value per common share was $39.45.

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. Lehman Brothers Inc. is a member of SIPC.

Conference Call
A conference call, to discuss the Firm's financial results and outlook, will be held today at 10:00 a.m. ET. 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 at least ten minutes prior to the start of the conference call. 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 800-685-0230 (domestic) or 203-369-3628 (international). The replay will be available approximately one hour after the event and will remain available on the Lehman Brothers Web site and by phone until 11:59 p.m. ET on January 13, 2008.

Please direct any questions regarding the conference call to Shaun Butler at 212-526-8381, sbutler@lehman.com, Ed Grieb at 212-526-0588, egrieb@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 (82 k)

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