This company appears to have been delisted
Reason: Filed for bankruptcy
Last recorded trade on: December 31, 2008
Source: https://en.wikipedia.org/wiki/Bankruptcy_of_Lehman_Brothers

Lehman Brothers

LEHM

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Lehman Brothers was a major global financial services firm that operated for over 150. The firm is most famous for its spectacular collapse during the 2008 financial crisis.

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SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

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FORM 10-K

(MARK ONE)

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<C> <S>

/X/ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE

SECURITIES EXCHANGE ACT OF 1934

FOR THE FISCAL YEAR ENDED NOVEMBER 30, 2001

/ / TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE

SECURITIES EXCHANGE ACT OF 1934

FOR THE TRANSITION PERIOD FROM TO

COMMISSION FILE NUMBER 1-9466

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LEHMAN BROTHERS HOLDINGS INC.

(Exact Name of Registrant as Specified in its Charter)

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DELAWARE 13-3216325

(State or other jurisdiction of (I.R.S. Employer Identification No.)

incorporation or organization)

745 SEVENTH AVENUE

NEW YORK, NEW YORK 10019

(Address of principal executive (Zip Code)

offices)

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REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (212) 526-7000

SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT:

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NAME OF EACH EXCHANGE

TITLE OF EACH CLASS ON WHICH REGISTERED

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Common Stock, $.10 par value New York Stock Exchange

Pacific Exchange

Depositary Shares representing 5.94% Cumulative Preferred

Stock, Series C New York Stock Exchange

Depositary Shares representing 5.67% Cumulative Preferred

Stock, Series D New York Stock Exchange

Depositary Shares representing Fixed/Adjustable Rate

Cumulative Preferred Stock, Series E New York Stock Exchange

8% Trust Preferred Securities, Series I, of Subsidiary Trust

(and Registrant's guarantee thereof) New York Stock Exchange

7.875% Trust Preferred Securities, Series J, of Subsidiary

Trust (and Registrant's guarantee thereof) New York Stock Exchange

Dow Jones Internet Index Stock Upside Note Securities Due

2004 American Stock Exchange

10 Uncommon Values Index Basket Adjusting Structured Equity

Securities Notes Due 2004 American Stock Exchange

10 Uncommon Values Index Basket Adjusting Structured Equity

Securities Notes Series B, Due 2004 American Stock Exchange

10 Uncommon Values Index Basket Adjusting Structured Equity

Securities Notes Due 2003 American Stock Exchange

Notes due November 14, 2007-Performance Linked to Marsh &

McLennan Companies, Inc. (MMC) Common Stock American Stock Exchange

Notes due November 14, 2007-Performance Linked to Pfizer

Inc. (PFE) Common Stock American Stock Exchange

8 3/4% Notes Due 2002 New York Stock Exchange

NASDAQ-100 Index 109% Minimum Redemption Stock Upside Note

Securities Due April 26, 2004 American Stock Exchange

NASDAQ-100 Index Risk Adjusting Equity Range Securities Plus

Notes Due January 24, 2003 American Stock Exchange

Prudential Research Universe Diversified Equity Notes Due

December 29, 2004 American Stock Exchange

10 Uncommon Values Index Stock Upside Note Securities Notes

Due July 3, 2004 American Stock Exchange

10 Uncommon Values Index Risk Adjusting Equity Range

Securities Plus Notes Due July 3, 2003 American Stock Exchange

Portfolio Risk Adjusting Equity Range Securities Notes Due

August 14, 2003, Based Upon a Basket of Ten Stocks American Stock Exchange

Prudential Research Universe Diversified Equity Notes Due

July 2, 2006, Linked to a Basket of Healthcare Stocks American Stock Exchange

Return Accelerated Portfolio Debt Securities Notes Due

November 5, 2002 American Stock Exchange

8% Yield Enhanced Equity Linked Debt Securities Plus Due

November 13, 2003, Based Upon a Basket of Five Technology

Stocks American Stock Exchange

S&P 500 Index Stock Upside Note Securities Due December 26,

2006 American Stock Exchange

S&P 500 Index Stock Upside Note Securities Due February 5,

2007 American Stock Exchange

</Table>

SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT:

NONE

Indicate by check mark whether the Registrant: (1) has filed all reports

required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of

1934 during the preceding 12 months (or for such shorter period that the

Registrant was required to file such reports), and (2) has been subject to such

filing requirements for the past 90 days. Yes /X/: No / /

Indicate by check mark if disclosure of delinquent filers pursuant to Item

405 of Regulation S-K (Section 229.405 of this chapter) is not contained herein,

and will not be contained, to the best of Registrant's knowledge, in definitive

proxy or information statements incorporated by reference in Part III of this

Form 10-K or any amendment to this Form 10-K. /X/:

The aggregate market value of the voting and nonvoting common equity held by

non-affiliates of the Registrant at January 31, 2002, was approximately

$14,873,500,000. For purposes of this information, the outstanding shares of

common stock owned by directors of the Registrant were deemed to be shares of

common stock held by affiliates. As of January 31, 2002, 236,999,678 shares of

the Registrant's Common Stock, $.10 par value per share, were issued and

outstanding.

DOCUMENTS INCORPORATED BY REFERENCE:

(1) Lehman Brothers Holdings Inc. 2001 Annual Report to Stockholders (the "2001

Annual Report")--Incorporated in part in Parts I, II and IV.

(2) Lehman Brothers Holdings Inc. Definitive Proxy Statement for its 2002 Annual

Meeting of Stockholders (the "Proxy Statement")--Incorporated in part in

Parts III and IV.

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PART I

ITEM 1. BUSINESS

GENERAL DEVELOPMENT OF BUSINESS

As used herein, "Holdings" or the "Registrant" means Lehman Brothers

Holdings Inc., a Delaware corporation, incorporated on December 29, 1983.

Holdings and its subsidiaries are collectively referred to as the "Company," the

"Firm" or "Lehman Brothers," and Lehman Brothers Inc., a Delaware corporation

and the principal subsidiary of Holdings, is referred to herein as "LBI."

The Company is one of the leading global investment banks, serving

institutional, corporate, government and high-net-worth individual clients and

customers. Its executive offices are located at 745 Seventh Avenue, New York,

New York 10019, and its telephone number is (212) 526-7000.

FORWARD-LOOKING STATEMENTS

Some of the statements contained in this report, including those relating to

the Company's strategy and other statements that are predictive in nature, that

depend upon or refer to future events or conditions or that include words such

as "expects," "anticipates," "intends," "plans," "believes," "estimates" and

similar expressions, are forward-looking statements within the meaning of

Section 21E of the Securities Exchange Act of 1934. 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 market, credit or counterparty,

liquidity, legal and operational risks. Market and liquidity risks include

changes in interest and foreign exchange rates and securities and commodities

valuations, the availability and cost of capital and credit, changes in investor

sentiment, global economic and political trends and industry competition. Legal

risks include legislative and regulatory developments in the United States and

throughout the world. 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. 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" on pages 38 - 57 of the 2001 Annual Report.

The Company undertakes no obligation to update any forward-looking statements,

whether as a result of new information, future events or otherwise.

LEHMAN BROTHERS

Lehman Brothers is one of the leading global investment banks, serving

institutional, corporate, government and high-net-worth individual clients and

customers. The Company's worldwide headquarters in New York and regional

headquarters in London and Tokyo are complemented by offices in additional

locations in the United States, Europe, the Middle East, Latin America and the

Asia Pacific region. The Company is engaged primarily in providing financial

services. Other businesses in which the Company is engaged represent less than

10 percent of consolidated assets, revenues or pre-tax income.

The Company's business includes capital raising for clients through

securities underwriting and direct placements, corporate finance and strategic

advisory services, private equity investments, securities sales and trading,

research, and the trading of foreign exchange and derivative products and

certain commodities. The Company acts as a market-maker in all major equity and

fixed income products in both the domestic and international markets. Lehman

Brothers is a member of all principal securities and commodities exchanges in

the United States, as well as the National Association of Securities

Dealers, Inc. ("NASD"), and holds memberships or associate memberships on

several principal international securities and commodities exchanges, including

the London, Tokyo, Hong Kong, Frankfurt, Paris and Milan stock exchanges.

Lehman Brothers provides a full array of capital market products and

advisory services worldwide. Through the Company's investment banking, research,

trading, structuring and distribution capabilities in equity and fixed income

products, the Company continues its focus of building its client/customer

business

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model. These "customer flow" activities represent a majority of the Company's

revenues. In addition to its customer flow activities, the Company also takes

proprietary positions, the success of which is dependent on its ability to

anticipate economic and market trends. The Company believes its customer flow

orientation mitigates its overall revenue volatility.

The Company operates in three business segments (each of which is described

below): Investment Banking, Capital Markets and Client Services. Financial

information concerning the Company for the fiscal years ended November 30, 2001,

November 30, 2000, and November 30, 1999, including the amount of net revenue

contributed by each segment in such periods, is set forth in the Consolidated

Financial Statements and the Notes thereto in the 2001 Annual Report and is

incorporated herein by reference. Information with respect to the Company's

operations by segment and net revenues by geographic area is set forth in

Note 17 of the Notes to Consolidated Financial Statements on pages 91 - 92 of

the 2001 Annual Report and is incorporated herein by reference.

EVENTS OF SEPTEMBER 11

Lehman Brothers' world headquarters and other facilities had occupied space

that was owned and leased in the World Financial Center and the World Trade

Center in downtown New York City. As a result of the terrorist attacks of

September 11, 2001, the World Financial Center offices were damaged and the

World Trade Center space was destroyed. The United States debt and equity

financial markets were temporarily closed. All Lehman Brothers employees

(approximately 6,400 persons) and operations in downtown Manhattan were

displaced. Key business activities and necessary support functions were

relocated to the Company's back-up facilities in Jersey City, New Jersey, and to

various other temporary sites. In November 2001, the Company purchased a new

1,000,000 square-foot office tower at 745 Seventh Avenue in New York, New York,

to serve as the Firm's new world headquarters. The Company began occupying the

new building in January 2002 and expects to have substantially occupied the

space by the summer of 2002. Also in the wake of September 11, the Company

leased additional office and data center space in Manhattan and in Jersey City.

The Company has been informed that the facilities in the World Financial

Center complex can be repaired; however, the damage to many of the floors at

Three World Financial Center ("3WFC"), which is owned jointly with American

Express Company, is significant. A repair and remediation plan is currently

underway, although a completion date has not been finalized. As a result, the

Company is currently evaluating its space needs and exploring its alternatives

with respect to 3WFC and the other downtown New York facilities. Lehman Brothers

has significant levels of insurance in place to cover losses resulting from the

terrorist attack, including a policy covering damage to the core and shell of

3WFC and a separate policy covering the property damage to the World Trade

Center and World Financial Center facilities, losses resulting from business

interruption and extra expenses associated with the Company's relocation to, and

occupancy of, the temporary facilities.

During the fourth quarter of fiscal 2001, Lehman Brothers recognized a

pretax special charge of $127 million ($71 million after-tax) associated with

the net losses (after offsetting estimated insurance recoveries) stemming from

the events of September 11. The charge does not reflect any loss resulting from

the damage to the core and shell of 3WFC, as this amount is not yet known.

However, the Company believes that any loss will be fully recoverable under the

Company's insurance policy.

The displacement and relocation of the Company's New York workforce, the

closure of markets for certain periods following the terrorist attack and other

issues directly related to the September 11 tragedy have negatively impacted the

Company's business. The Company is in the process of pursuing a business

interruption claim with its insurance carriers for lost revenue and related

damages. As of November 30, 2001, the Company has not given any accounting

recognition to the anticipated business interruption recovery.

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For more information concerning the effects of September 11, the special

charge and the Firm's facilities, see Item 2, Properties, on pages 9 - 10 of

this report; "Management's Discussion and Analysis of Financial Condition and

Results of Operations" on pages 38 - 57 of the 2001 Annual Report; and Note 2 of

the Notes to Consolidated Financial Statements on pages 69 - 70 of the 2001

Annual Report.

INVESTMENT BANKING

Lehman Brothers' Investment Banking professionals are responsible for

developing and maintaining relationships with issuer clients, gaining a thorough

understanding of their specific needs and bringing together the full resources

of Lehman Brothers to accomplish their financial objectives. Investment Banking

is organized into industry, geographic and product coverage groups, enabling

individual bankers to develop specific expertise in particular industries and

markets. Industry coverage groups include Communications & Media,

Consumer/Retailing, Financial Institutions, Financial Sponsors, Healthcare,

Industrial, Natural Resources, Power, Real Estate and Technology. Where

appropriate, specialized product groups are partnered with the global industry

and geographic groups to provide tailor-made solutions for Lehman Brothers'

clients. These product groups include Equity Capital Markets, which consists of

equity and equity-related securities and derivatives, Fixed Income Capital

Markets, which incorporates expertise in syndicate, liability management,

derivatives, private placements, high yield debt and bank loan syndication, and

Mergers and Acquisitions/Strategic Advisory Services. Geographically, Lehman

Brothers maintains investment banking offices in six cities in the U.S. and in

twenty-one cities in Europe, the Middle East, Asia and Latin America. The high

degree of integration between the Company's industry, product and geographic

groups has allowed Lehman Brothers to become a leading source of one-stop

financial solutions for its global clients.

MERGERS AND ACQUISITIONS/STRATEGIC ADVISORY. Lehman Brothers has a long

history of providing strategic advisory services to corporate, institutional and

government clients around the world on a wide range of financial matters,

including mergers and acquisitions, restructurings and spin-offs, targeted stock

transactions, share repurchase strategies, government privatization programs,

takeover defenses and tax optimization strategies.

UNDERWRITING. The Company is a leading underwriter of initial and other

public and private offerings of equity and fixed income securities, including

listed and over-the-counter securities, government and agency securities and

mortgage- and asset-backed securities.

CAPITAL MARKETS

Lehman Brothers combines the skills from the sales, trading and research

areas of its Equities and Fixed Income Divisions to serve the financial needs of

the Company's clients and customers. This integrated approach enables Lehman

Brothers to structure and execute global transactions for clients and to provide

worldwide liquidity in marketable securities.

EQUITIES

The Equities group is responsible for the Company's equity operations and

all dollar and non-dollar equity and equity-related products worldwide. These

products include listed and over-the-counter securities, American Depositary

Receipts, convertibles, options, warrants and derivatives.

EQUITY CASH PRODUCTS. Lehman Brothers makes markets in equity and

equity-related securities and executes block trades on behalf of clients and

customers. The Company participates in the global equity and equity-related

markets in all major currencies through its worldwide presence and membership in

major stock exchanges, including, among others, those in New York, London,

Tokyo, Hong Kong, Frankfurt, Paris and Milan.

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EQUITY DERIVATIVES. Lehman Brothers offers equity derivative capabilities

across a wide spectrum of products and currencies, including domestic and

international portfolio trading, listed options and futures and over-the-counter

derivatives. The Firm's equity derivatives business is organized into two major

product areas: a global volatility business, encompassing options-related

products, and a global portfolio trading business that specializes in

agency/risk baskets and other structured products.

EQUITY FINANCE. Lehman Brothers maintains an integrated Equity Financing

and Prime Broker business to provide liquidity to its clients and customers and

supply a source of secured financing for the Firm. Equity Financing provides

financing in all markets on a margin basis for customer purchases of equities

and other capital markets products as well as securities lending and

short-selling facilitation. The Prime Broker business also engages in full

operations, clearing and processing services for that unit's customers.

ARBITRAGE. Lehman Brothers engages in a variety of arbitrage activities

including "riskless" arbitrage, where the Company seeks to benefit from

temporary price discrepancies that occur when a security is traded in two or

more markets, and "risk" arbitrage activities, which involve the purchase of

securities at discounts from the expected values that would be realized if

certain proposed or anticipated corporate transactions (such as mergers,

acquisitions, recapitalizations, exchange offers, reorganizations, bankruptcies,

liquidations or spin-offs) were to occur. Lehman Brothers' arbitrage activities

benefit from the Company's presence in the global capital markets, access to

advanced information technology, in-depth market research, proprietary risk

management tools and general experience in assessing rapidly changing market

conditions.

FIXED INCOME

Lehman Brothers actively participates in all key fixed income markets

worldwide and maintains a 24-hour trading presence in global fixed income

securities. The Company is a preeminent market-maker in new issue and other

fixed income securities.

Fixed Income businesses include the following:

GOVERNMENT AND AGENCY OBLIGATIONS. Lehman Brothers is one of the leading

primary dealers in U.S. government securities, as designated by the Federal

Reserve Bank of New York, participating in the underwriting and market-making of

U.S. Treasury bills, notes and bonds, and securities of federal agencies. The

Company is also a market-maker in the government securities of all G7 countries,

and participates in other major European and Asian government bond markets.

CORPORATE DEBT SECURITIES. Lehman Brothers makes markets in fixed and

floating rate investment grade debt worldwide. The Company is also a major

participant in the preferred stock market, managing numerous offerings of

long-term and perpetual preferreds and auction rate securities.

HIGH YIELD SECURITIES AND LEVERAGED BANK LOANS. The Company also makes

markets in non-investment grade debt securities and bank loans. Lehman Brothers

provides "one-stop" leveraged financing solutions for corporate and financial

acquirers and high yield issuers, including multi-tranche, multi-product

acquisition financing. The Company remains one of the leading investment banks

in the syndication of leveraged loans.

MONEY MARKET PRODUCTS. Lehman Brothers holds leading market positions in

the origination and distribution of medium-term notes and commercial paper. The

Company is an appointed dealer or agent for numerous active commercial paper and

medium-term note programs on behalf of companies and government agencies

worldwide.

MORTGAGE AND ASSET-BACKED SECURITIES. The Company is a leading underwriter

of and market-maker in residential and commercial mortgage- and asset-backed

securities and is active in all areas of secured

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lending, structured finance and securitized products. Lehman Brothers

underwrites and makes markets in the full range of U.S. agency-backed mortgage

products, mortgage-backed securities, asset-backed securities and whole loan

products. It is a leader in the global market for mortgage and asset-backed

securities, leases, mortgages, multi-family financing and commercial loans. The

Company also originates mortgage loans directly through its subsidiary savings

bank, Lehman Brothers Bank, FSB. In addition, Lehman Brothers engages in select

investments in commercial and residential properties.

MUNICIPAL AND TAX-EXEMPT SECURITIES. Lehman Brothers is a major dealer in

municipal and tax-exempt securities, including general obligation and revenue

bonds, notes issued by states, counties, cities and state and local governmental

agencies, municipal leases, tax-exempt commercial paper and put bonds.

FINANCING. The Company's Financing Unit engages in three primary functions:

managing the Company's matched book activities, supplying secured financing to

customers, and providing funding for the Company's activities. Matched book

funding involves borrowing and lending cash on a short-term basis to

institutional customers collateralized by marketable securities, typically

government or government agency securities. The Company enters into these

agreements in various currencies and seeks to generate profits from the

difference between interest earned and interest paid. The Financing Unit works

with the Company's institutional sales force to identify customers that have

cash to invest and/or securities to pledge to meet the financing and investment

objectives of the Company and its customers. Financing also coordinates with the

Company's Treasury area to provide collateralized financing for a large portion

of the Company's securities and other financial instruments owned. In addition

to its activities on behalf of its U.S. clients and customers, the Company is a

major participant in the European and Asian repurchase agreement markets,

providing secured financing for the Firm's customers in those regions.

FIXED INCOME DERIVATIVES. The Company offers a broad range of derivative,

interest rate and credit products and services. Derivatives professionals are

integrated into all of the Company's fixed income areas in response to the

worldwide convergence of the cash and derivative markets.

FOREIGN EXCHANGE. Lehman Brothers' global foreign exchange operations

provide market access and liquidity in all currencies for spot, forward and

over-the-counter options markets around the clock. Lehman Brothers offers its

customers superior execution, market intelligence, analysis and hedging

capabilities, utilizing foreign exchange as well as foreign exchange options and

derivatives. Lehman Brothers also provides advisory services to central banks,

corporations and investors worldwide, structuring innovative products to fit

their specific needs. The Firm makes extensive use of its global macroeconomics

research to advise clients on the appropriate strategies to minimize interest

rate and currency risk.

GLOBAL DISTRIBUTION

Lehman Brothers' institutional sales organizations encompass distinct global

sales forces that have been integrated into the Fixed Income and Equities

businesses to provide investors with the full array of products and research

offered by the Firm. Lehman Brothers has a strategic alliance with Fidelity

Investments that provides the Firm access to Fidelity's retail brokerage

customers and a distribution channel for new issue and secondary products and

research to individual investors on-line.

EQUITY SALES. Lehman Brothers' institutional Equity sales force provides an

extensive range of services to institutional investors through locations in the

U.S., Europe and Asia. The Equity sales organization focuses on developing

long-term relationships though a comprehensive understanding of customers'

investment objectives, while providing proficient execution and consistent

liquidity in a wide range of global equity securities and derivatives.

FIXED INCOME SALES. Lehman Brothers' Fixed Income sales force is one of the

most productive in the industry, serving the investing and liquidity needs of

major institutional investors. Employing a relationship

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management approach that provides superior information flow and product

opportunities for the Firm's customers, the Fixed Income sales organization

covers the major share of the buying power in the global fixed income markets.

RESEARCH

EQUITY RESEARCH. The Equity Research department is integrated with the

Company's sales and trading activities. To ensure in-depth expertise within

various markets, Equity Research has established regional teams on a worldwide

basis that are staffed with industry and strategy specialists.

FIXED INCOME RESEARCH. Fixed Income research at Lehman Brothers encompasses

the full range of research disciplines: quantitative, economic, strategic,

credit, relative value and market-specific analysis. Fixed Income research is

integrated with the Company's sales and trading activities. The department's

specialists provide expertise in U.S., European and Asian government and agency

securities, derivatives, sovereign issues, corporate securities, high yield,

asset- and mortgage-backed securities, emerging market debt and municipal

securities.

CLIENT SERVICES

Client Services includes the Company's Private Client Services group, a

retail-based organization that primarily serves the investment needs of wealthy

individuals, and its Private Equity Division, which manages assets through a

series of private equity funds.

PRIVATE CLIENT SERVICES

The Company's Private Client Services group has a staff of approximately

980, including approximately 475 investment representatives who serve the

investment needs of private investors with substantial assets as well as over

2,200 mid-sized institutional accounts worldwide. The group has a global

presence, with investment representatives located in 18 offices worldwide. Among

other services, investment professionals provide their clients with direct

access to fixed income, equity, foreign exchange and derivative products, as

well as the Firm's research and execution capabilities, thereby serving as a

valuable extension of the Firm's institutional sales force.

The Firm also provides asset management services, including Investment

Consulting Services, a wrap-fee series of third party managed products,

management of multiple manager funds onshore and offshore and a managed futures

advisory business. The Firm also has dealer agreements with a large number of

mutual fund families.

PRIVATE EQUITY

The Company currently has over $5.6 billion in Private Equity assets under

management, primarily in three asset classes: Merchant Banking, Venture Capital

and Real Estate. The primary goal of each asset class is to make investments

that provide attractive returns to investors, including institutions,

high-net-worth individuals, the Firm and certain employees of the Firm.

MERCHANT BANKING. Lehman Brothers' merchant banking activities include

making principal investments in established companies worldwide, often in

partnership with clients of the Firm, and managing these investments until they

are realized. Merchant banking seeks to partner with proven operating teams that

have a compelling business strategy or vision, with the aim of creating

long-term value for investors.

VENTURE CAPITAL. Lehman Brothers manages investments in venture capital

focused on technology, communications and healthcare companies. The primary

investment objective of the Firm's venture capital investment activities is to

make growth-oriented equity or equity-related investments in privately held

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companies. Venture capital investments focus on companies capable of turning

innovative technology and management solutions into successful businesses.

REAL ESTATE. Lehman Brothers' Real Estate Fund is focused on making equity

investments in properties, real estate companies and related service businesses.

Commitments for all of the Firm's private equity funds are raised in private

placements not requiring registration under the Securities Act of 1933.

TECHNOLOGY AND E-COMMERCE

Lehman Brothers is committed to maintaining a technology platform to deliver

a full range of capital markets information and services to its institutional

and high-net-worth client base. The Firm-wide e-Commerce organization, which

brings together senior management from all of the Firm's global business areas,

has developed the Firm's overall e-commerce strategy, approves all e-commerce

investments and provides a forum to share e-commerce knowledge and new

developments across the Firm's businesses and geographies. The Firm's e-commerce

strategy focuses on client and markets connectivity, content and strategic

ventures. Lehman Brothers has an integrated client and employee web site,

LehmanLive, which serves as a complete suite of services, including pre-trade

(research and analytics), trade and post-trade (clearing and settlement

information, risk management and prime brokerage) information and employee

applications. LehmanLive was an important element in the Firm's recovery after

the terrorist attacks of September 11, 2001. Lehman Brothers has made many

strategic investments and is a participant in a number of institutional trading

networks in the U.S., Europe and Asia. Notable investments include TradeWeb,

MarketAxess and SecuritiesHub in Fixed Income, and TheMarkets.com, EquiLend,

Redi/Arca and NYFIX Millennium in Equities. Additionally, Lehman Brothers has

supported the global expansion of NASDAQ with an investment in its U.S.,

European and Japanese ventures.

CORPORATE

The Company's Corporate division provides support to its businesses through

the processing of certain securities and commodities transactions; receipt,

identification and delivery of funds and securities; safeguarding of customers'

securities; risk management; and compliance with regulatory and legal

requirements. In addition, this staff is responsible for technology

infrastructure and systems development, treasury operations, financial control

and analysis, tax planning and compliance, internal audit, expense management,

career development and recruiting and other support functions.

RISK MANAGEMENT

As a leading global investment banking company, risk is an inherent part of

the Company's businesses. Global markets, by their nature, are prone to

uncertainty and subject participants to a variety of risks. Lehman Brothers has

developed policies and procedures designed to identify, measure and monitor each

of the risks involved in its trading, brokerage and investment banking

activities on a global basis. The principal risks of Lehman Brothers are market,

credit, liquidity, legal and operational risks. As part of the Company's

customer-flow activities, Lehman Brothers takes proprietary positions in

interest rates, foreign exchange and various securities, derivatives and

commodities. Although the Company seeks to mitigate risk associated with such

positions through hedging activities, consistent with its expectations of future

events, it is subject to the risk that actual market events may differ from the

Company's expectations, which may result in losses associated with such

positions.

Lehman Brothers has developed a control infrastructure to monitor and manage

each type of risk on a global basis throughout the Company. A full description

of the Firm's Risk Management procedures is contained in "Management's

Discussion and Analysis of Financial Condition and Results of Operations--Risk

Management" on pages 53 - 55 of the 2001 Annual Report, and is incorporated

herein by reference.

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COMPETITION

All aspects of the Company's business are highly competitive. The Company

competes in domestic and international markets directly with numerous other

brokers and dealers in securities and commodities, including traditional and

online securities brokerage firms, investment banking firms, investment advisors

and certain commercial banks and, indirectly for investment funds, with

insurance companies and others.

The financial services industry has become considerably more concentrated as

numerous securities firms have been acquired by or merged into other firms.

These developments have increased competition from other firms, many of which

have significantly greater equity capital than the Company. Legislative and

regulatory changes in the United States allow commercial banks to enter

businesses previously limited to investment banks, and several combinations

between commercial banks and investment banks have occurred, which has further

increased competition.

REGULATION

The securities industry in the United States is subject to extensive

regulation under both federal and state laws. LBI is registered as a

broker-dealer, and LBI and certain other subsidiaries of Holdings are registered

as investment advisors, with the Securities and Exchange Commission (the "SEC")

and as such are subject to regulation by the SEC and by self-regulatory

organizations, principally the NASD, national securities exchanges such as the

New York Stock Exchange (which has been designated by the SEC as LBI's primary

regulator) and the Municipal Securities Rulemaking Board. Securities firms are

also subject to regulation by state securities administrators in those states in

which they conduct business. LBI is a registered broker-dealer in all 50 states,

the District of Columbia and the Commonwealth of Puerto Rico. The SEC,

self-regulatory organizations and state securities commissions may conduct

administrative proceedings, which may result in censure, fine, the issuance of

cease-and-desist orders or suspension or expulsion of a broker-dealer or an

investment advisor, its officers or employees.

LBI is also registered with the Commodity Futures Trading Commission (the

"CFTC") as a futures commission merchant and is subject to regulation as such by

the CFTC and various domestic boards of trade and other commodity exchanges. The

Company's U.S. commodity futures and options business is also regulated by the

National Futures Association, a not-for-profit membership corporation which has

been designated as a registered futures association by the CFTC.

The Company does business in the international fixed income and equity

markets and undertakes international investment banking activities, principally

through its regional headquarters in London and Tokyo. The U.K. Financial

Services and Markets Act 2000 (the "FSMA") governs all aspects of the United

Kingdom investment business, including regulatory capital, sales and trading

practices, use and safekeeping of customer funds and securities, record keeping,

margin practices and procedures, approval standards for individuals, periodic

reporting and settlement procedures. Pursuant to the FSMA, certain subsidiaries

of Holdings are subject to regulations promulgated and administered by the

Financial Services Authority.

Holdings' subsidiary, Lehman Brothers Japan Inc., is a licensed securities

company in Japan and a member of the Tokyo Stock Exchange Limited, the Osaka

Stock Exchange Limited and the Tokyo Financial Futures Exchange and, as such, is

regulated by the Financial Services Agency, the Japan Securities Dealers

Association and such exchanges.

Lehman Brothers Bank, FSB, the Company's thrift subsidiary, is regulated by

the Office of Thrift Supervision. Lehman Brothers Bankhaus A.G. is regulated by

the German Federal Banking Authority.

The Company believes that it is in material compliance with the regulations

described herein.

<Page>

CAPITAL REQUIREMENTS

LBI, Lehman Brothers International (Europe), the Tokyo branch of Lehman

Brothers Japan Inc. and others of Holdings' subsidiaries are subject to various

securities, commodities and banking regulations and capital adequacy

requirements promulgated by the regulatory and exchange authorities of the

countries in which they operate. Reference is made to Note 10 of the Notes to

Consolidated Financial Statements on page 80 of the 2001 Annual Report, which is

incorporated herein by reference.

EMPLOYEES

As of November 30, 2001, the Company employed approximately 13,100 persons,

including 8,500 in North America and 4,600 internationally. The Company

considers its relationship with its employees to be good.

ITEM 2. PROPERTIES

As a result of the terrorist attacks of September 11, 2001, Lehman Brothers

was forced to relocate its employees and operations from downtown Manhattan. In

November 2001 the Company purchased a new 1,000,000 square-foot office tower at

745 Seventh Avenue in New York City. This building is the Firm's new world

headquarters. The Company began occupying the new building in January 2002 and

expects to have substantially occupied the space by the summer of 2002.

In October 2001, the Company leased approximately 437,000 square feet of

office space at 399 Park Avenue and 56,000 square feet of data center space at

another location in New York City, each with a term extending until 2016.

The Company's former world headquarters at Three World Financial Center in

downtown New York City, occupying approximately 1.1 million square feet, which

the Company owns under a tenancy-in-common arrangement with American Express

Company, suffered significant damage in the terrorist attacks. A repair and

remediation plan is currently underway, although a completion date has not been

finalized.

The Company had leased approximately 160,000 square feet of space at One

World Trade Center in New York City, which was destroyed in the September 11

attacks. The Company exercised its right to terminate this lease effective

February 2002. This lease was due to expire in 2015.

Lehman Brothers also leases space at One World Financial Center in the same

office complex as Three World Financial Center. This space suffered some damage

in the attacks and is currently unoccupied. Prior to September 11, the Company

had occupied 100,000 square feet of the One World Financial Center space, which

was scheduled ultimately to consist of approximately 715,000 square feet.

Approximately 95,000 square feet were to be occupied during 2001 after

September 11, and 520,000 square feet were to be occupied in stages thereafter.

The lease terms at One World Financial Center expire at various dates from

December 2015 through 2025, with the exception of a lease for 148,000 square

feet, which expires in 2006.

The Company is currently evaluating its space needs and exploring its

alternatives with respect to its downtown New York City facilities.

In September 2001, Lehman Brothers assumed a 409,000 square foot lease for

additional office space in Jersey City, New Jersey, with a term extending until

2016. Approximately 256,000 square feet of the premises have been subleased to a

third-party tenant. The Company also leases approximately 400,000 square feet of

office space in a nearby building (the "Operations Center"), of which

approximately 32,000 square feet have been subleased to a third-party tenant.

The Operations Center is used by systems, operations and certain administrative

personnel. The lease term expires in 2011.

<Page>

The Company's European headquarters in London, England, occupy approximately

450,000 square feet of leased office space in the Broadgate complex. These

leases expire at various dates to 2017. Approximately 60,000 square feet have

been subleased to two third-party tenants. In March 2001, the Company agreed to

lease up to 1,000,000 square feet of space in a new tower at the Canary Wharf

development, to the east of the City of London. The Company expects to relocate

to this location during late 2003.

The Company's Asian headquarters occupy approximately 100,000 square feet of

leased office space in the ARK Mori Building in central Tokyo, Japan. The Tokyo

lease expires in December 2002.

Facilities occupied by the Company and its subsidiaries (or to be occupied

as described above) are believed to be adequate for the purposes for which they

are or are to be used, and the occupied facilities are well maintained.

ITEM 3. LEGAL PROCEEDINGS

The Company is involved in a number of judicial, regulatory and arbitration

proceedings concerning matters arising in connection with the conduct of its

business. Such proceedings include actions brought against the Company and

others with respect to transactions in which the Company acted as an underwriter

or financial advisor, actions arising out of the Company's activities as a

broker or dealer in securities and commodities and actions brought on behalf of

various classes of claimants against many securities and commodities firms,

including the Company.

Although there can be no assurance as to the ultimate outcome, the Company

generally has denied, or believes it has a meritorious defense and will deny,

liability in all significant cases pending against it including the matters

described below, and it intends to defend vigorously each such case. Based on

information currently available and established reserves, the Company believes

that the eventual outcome of the actions against it, including the matters

described below, will not, in the aggregate, have a material adverse effect on

the consolidated financial position of the Company but may be material to the

Company's operating results for any particular period, depending on the level of

the Company's income for such period.

LEHMAN BROTHERS COMMERCIAL CORPORATION AND LEHMAN BROTHERS SPECIAL

FINANCING INC. V. MINMETALS INTERNATIONAL NON-FERROUS METALS TRADING COMPANY

On November 15, 1994, a Holdings subsidiary, Lehman Brothers Commercial

Corporation ("LBCC"), and an LBI subsidiary, Lehman Brothers Special

Financing Inc. ("LBSF"), commenced an action against Minmetals International

Non-Ferrous Metals Trading Company ("Minmetals") and China National Metals and

Minerals Import and Export Company ("CNM") in the United States District Court

for the Southern District of New York alleging breach of contract against

Minmetals and breach of guarantee against CNM. The litigation arose from the

refusal by Minmetals and CNM to honor their obligations with respect to certain

foreign exchange and swap transactions. LBCC and LBSF seek to recover

approximately $52.5 million from Minmetals and/or CNM. Minmetals filed

counterclaims against Lehman entities based on violations of federal securities

and commodities laws and rules and theories of fraud, breach of fiduciary duty

and conversion. A non-jury trial began on December 10, 2001, and testimony was

completed on February 15, 2002. The court has the case under submission.

AIA HOLDING SA ET AL. V. LEHMAN BROTHERS INC. AND BEAR STEARNS & CO., INC.

On July 9, 1997, LBI was served with a complaint in the United States

District Court for the Southern District of New York in which 277 named

plaintiffs assert 24 causes of action against LBI and Bear Stearns & Co., Inc.

The amount of damages claimed is unspecified. The claims arise from the

activities of an individual named Ahmad Daouk, who was employed by an

introducing broker which introduced accounts to LBI between 1988 and 1992. Daouk

allegedly perpetrated a fraud upon the claimants, who are

<Page>

mostly investors of Middle Eastern origin, and the complaint alleges that LBI

breached various contractual and common law duties owed to the investors. On

March 27, 1998, the District Court dismissed without prejudice 18 of the 24

counts pleaded in the complaint. On July 3, 1998, the plaintiffs served their

First Amended Complaint containing 18 causes of action against LBI and/or Bear

Stearns. The court has ordered the plaintiffs divided into 14 groups of 20 for

trial purposes. No trial date has been set.

HAROLD GILLET, ET AL. V. GOLDMAN SACHS & CO., ET AL.; YAKOV PRAGER, ET AL. V.

GOLDMAN, SACHS & CO., ET AL.; DAVID HOLZMAN, ET AL. V. GOLDMAN, SACHS & CO.,

ET AL.

Beginning in November 1998, three class actions were filed in the United

States District Court for the Southern District of New York against in excess of

25 underwriters of initial public offering ("IPO") securities, including LBI.

Plaintiffs, alleged purchasers of securities issued in certain IPOs, seek

compensatory and injunctive relief for alleged violations of the antitrust laws

based on the theory that the defendants fixed and maintained fees for

underwriting certain IPO securities at supra-competitive levels. On March 15,

1999, plaintiffs filed a Consolidated Amended Complaint. On April 29, 1999, LBI

and the other defendants moved to dismiss the Consolidated Amended Complaint. By

order dated November 17, 1999, a fourth purported class action, also brought on

behalf of purchasers, was consolidated with the existing actions.

By memorandum and order dated February 9, 2001 (the "Order"), the court

granted defendants' motion to dismiss the Consolidated Amended Complaint and

denied plaintiffs' request for leave to file a Second Amended Complaint. In the

Order, the court concluded that the purchaser plaintiffs lacked standing under

the antitrust laws to assert the claims. The court indicated in the Order that

its decision did not apply to any claims brought on behalf of issuers of IPO

securities. The case is on appeal to the U.S. Court of Appeals for the Second

Circuit.

IN RE ISSUER PLAINTIFF INITIAL PUBLIC OFFERING FEE ANTITRUST LITIGATION

By order dated April 10, 2001, the United States District Court for the

Southern District of New York consolidated four actions pending before the court

brought by bankrupt issuers of IPO securities against more than 20 underwriter

defendants (including LBI): (1) CHS ELECTRONICS, INC. V. CREDIT SUISSE FIRST

BOSTON CORP., ET AL.; (2) EQUALNET COMMUNICATIONS CORP. V. GOLDMAN SACHS

GROUP, INC., ET AL.; (3) MDCM HOLDINGS, INC. F/K/A MORTGAGE.COM, INC. BY LEWIS

B. FREEMAN, ASSIGNEE FOR THE BENEFIT OF CREDITORs; and (4) JEFFREY A. WEINMAN,

AS TRUSTEE OF THE BANKRUPTCY ESTATE OF WESTERN PACIFIC AIRLINES V. SALOMON SMITH

BARNEY INC., ET AL. On July 6, 2001, the plaintiffs filed a consolidated class

action complaint seeking unspecified compensatory damages and injunctive relief

for alleged violations of the antitrust laws based on the theory that the

defendant underwriters fixed and maintained fees for underwriting certain IPO

securities at supra-competitive levels. CHS Electronics voluntarily dismissed

its claims with prejudice in October 2001.

ISLAND VENTURE CORPORATION, ET AL. V. LEHMAN BROTHERS INC. AND LEHMAN BROTHERS

SECURITIES ASIA, LTD.

On February 9, 2001, Island Venture Corporation, Continental Resources

Corporation, Recola Investment Corporation, Grand Concord Corporation and

Goodwell Industrial Corporation filed a First Amended Complaint in the United

States District Court for the District of New Jersey against LBI and Lehman

Brothers Securities Asia, Ltd. In July 2001, plaintiffs filed a Second Amended

Complaint. The complaint arises in connection with the plaintiffs' purchase of

various promissory notes issued by Indonesian companies in 1997 and upon which

the issuers have defaulted. It also asserts claims relating to an alleged

unauthorized liquidation for $8.5 million of a $10 million Asia Investment Grade

Default Note ("Basket Note") issued by Lehman Brothers Holdings PLC. The

complaint seeks rescission and damages under various common law theories of

mutual mistake, breach of contract, breach of fiduciary duty, negligence,

negligent misrepresentation and constructive fraud, as well as asserting claims

under Section 10(b) of the Securities Exchange Act of 1934 (the "Exchange Act").

The plaintiffs seek to recover

<Page>

damages of approximately $60 million on all the notes they purchased and the

difference between the liquidation price and the face value of the Basket Note

plus lost interest payments.

IPO ALLOCATION CASES

LBI has been named as a defendant in approximately 192 purported securities

class actions that were filed between March and December 2001 in the United

States District Court for the Southern District of New York. The actions, which

allege improper IPO allocation practices, have been brought by persons who,

either directly or in the aftermarket, purchased IPO securities during the

period between March 1997 and December 2000. The plaintiffs allege that Lehman

and other IPO underwriters required persons receiving allocations of IPO shares

to pay excessive commissions on unrelated trades and to purchase shares in the

aftermarket at specified escalating prices. The plaintiffs, who seek unspecified

compensatory damages, claim that these alleged practices violated various

provisions of the federal securities laws, specifically, sections 11, 12(a)(2)

and 15 of the Securities Act of 1933 (the "Securities Act"), section 10(b) of

the Exchange Act, Rule 10b-5 promulgated thereunder, and section 20(a) of the

Exchange Act. The 192 actions in which LBI was named a defendant have been

consolidated into 83 cases, each involving a distinct offering. Those 83

consolidated cases, and approximately 240 others in which LBI is not named as a

defendant, have been coordinated for pretrial purposes before a single judge.

On January 2, 2002, a separate consolidated class action, entitled IN RE

INITIAL PUBLIC OFFERING ANTITRUST LITIGATION, was filed against LBI, among other

underwriters, alleging violations of federal and state antitrust laws. The

complaint alleges that the underwriter defendants conspired to require customers

who wanted IPO allocations to pay back to the underwriters a percentage of their

IPO profits in the form of commissions on unrelated trades, to purchase other,

less attractive securities and to buy shares in the aftermarket at predetermined

escalating prices. Originally filed as twelve separate class actions in three

different courts, the consolidated antitrust action is now pending before a

single judge--different from the one hearing the securities cases--in the United

States District Court for the Southern District of New York. The antitrust

plaintiffs seek unspecified treble damages.

FRED KAUFMAN V. ROGER S. BERLIND, ET AL.

In June 2001 a shareholder of Holdings filed a derivative action in the

United States District Court for the Southern District of New York against

Holdings and Holdings' board of directors for the purported benefit of Holdings

and its shareholders. The action alleges that the board members breached their

fiduciary duties of loyalty and good faith and failed to exercise their duties

of due care and due diligence by failing to maintain systems to alert them to

the alleged improper IPO allocation practices challenged in the IPO ALLOCATION

CASES (see above) and by failing to become informed of the alleged practices.

The action seeks unspecified compensatory damages based on the alleged damages

that Holdings may suffer if it is found liable in the pending IPO ALLOCATION

CASEs. Pursuant to a Stipulation and Order of Dismissal, agreed to by the

parties and approved by the court, the case was dismissed without prejudice in

November 2001.

YOUNG, ET AL. V. DREISBACH, ET AL.

On November 1, 2001, this purported class action was filed in the United

States District Court for the Northern District of California. The action is

brought on behalf of a purported class of investors who purchased the common

stock of Metricom, Inc., during the period from June 21, 1999, to July 2, 2001.

Plaintiffs name various officers, directors and selling shareholders of

Metricom, along with LBI and the four other co-managing underwriters of an

offering of Metricom common stock on February 3, 2000. Prior to the commencement

of this action, Metricom filed for protection under the federal bankruptcy code.

The February 2000 offering raised approximately $500 million. Against the

underwriters, plaintiffs allege violations of Sections 11 and 12(2) of the

Securities Act and of Section 10(b) of the Exchange Act. The complaint alleges

that the prospectus and registration statement for the offering failed to

disclose material facts concerning, among other things, Metricom's flawed

business plan and marketing strategy. The

<Page>

complaint seeks class action status, damages and "statutory compensation", and

attorneys' fees and other costs.

ACTIONS REGARDING FRANK GRUTTADAURIA

The Company discovered in January 2002 that Frank Gruttadauria, the former

branch manager of the Company's Cleveland office, which was acquired in

October 2000 from SG Cowen Securities Corporation ("SG Cowen") as part of the

purchase by the Company of certain accounts and related assets belonging to SG

Cowen's private client group, has apparently been involved in creating false

account statements for clients of that office and may have caused unauthorized

transfers of funds from client accounts. This conduct has allegedly taken place

for a number of years and began well prior to the acquisition of this office by

Lehman Brothers. Lehman Brothers continues to investigate the situation and

cooperate with law enforcement authorities. Under the terms of the purchase

agreement, SG Cowen retained liability for activities arising out of the conduct

or operation of the business while owned by SG Cowen.

ROBERT FAZIO ET AL. V. FRANK GRUTTADAURIA, LEHMAN BROTHERS INC., LEHMAN

BROTHERS HOLDINGS INC. ET AL. In February 2002, LBI and Holdings were served

with an amended complaint in the United States District Court for the

Northern District of Ohio, Eastern Division. The amended complaint alleges

violations of section 10(b) of the Exchange Act and Rule 10b-5 thereunder;

violations of various NASD and New York Stock Exchange rules; violations of

the Racketeer Influenced and Corrupt Organizations Act (RICO); violations of

Ohio laws; common law fraud; breach of fiduciary duty; failure to supervise

and respondeat superior liability. Plaintiffs seek the amounts in their

accounts from various times, alleged as approximately $18.5 million, plus

appreciation on that amount, plus all income taxes plaintiffs paid on any

non-existent gains; treble damages on the foregoing amounts; statutory

relief; punitive damages; pre- and post-judgment interest; attorneys fees

and costs and any other relief the court deems appropriate.

EUNICE POST MELTZER V. LEHMAN BROTHERS INC. AND SG COWEN SECURITIES

CORPORATION. In January 2002, LBI was served with a complaint in the United

States District Court for the Northern District of Illinois, Eastern

Division. The complaint alleges theft, embezzlement and negligent and

reckless failure to supervise and that plaintiff has been damaged in excess

of $1 million. Plaintiff seeks delivery of all assets allegedly stolen plus

interest and dividends, punitive damages, attorneys fees and costs and any

other relief the court deems appropriate.

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

None.

<Page>

PART II

ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

The approximate number of holders of record of the Registrant's Common Stock

was 23,030 at February 15, 2002. Information concerning the market for the

Registrant's common equity, dividends and related stockholder matters is set

forth under the captions "Selected Financial Data" on page 94 of the 2001 Annual

Report and "Other Stockholder Information" on page 96 of the 2001 Annual Report,

and is incorporated herein by reference.

ITEM 6. SELECTED FINANCIAL DATA

The Selected Financial Data contained on page 94 of the 2001 Annual Report

is incorporated herein by reference.

ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS

OF OPERATIONS

Management's Discussion and Analysis of Financial Condition and Results of

Operations is set forth under the same caption on pages 38 - 57 of the 2001

Annual Report. Such information is incorporated herein by reference and should

be read in conjunction with the Consolidated Financial Statements and the Notes

thereto contained on pages 58 - 93 of the 2001 Annual Report.

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

The information under the caption "Management's Discussion and Analysis of

Financial Condition and Results of Operations--Risk Management" on pages

53 - 55 of the 2001 Annual Report is incorporated herein by reference.

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

The Consolidated Financial Statements of the Registrant and its Subsidiaries

together with the Notes thereto and the Report of Independent Auditors thereon

required by this Item are contained in the 2001 Annual Report on pages 58 - 93

and are incorporated herein by reference. Condensed unconsolidated financial

information of Holdings and notes thereto are set forth in Schedule I beginning

on Page F-2 of this report and are incorporated herein by reference.

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND

FINANCIAL DISCLOSURE

None.

<Page>

PART III

ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

Information relating to Directors of the Registrant is set forth under the

captions "Nominees for Election as Class I Directors to Serve until the 2005

Annual Meeting of Stockholders", "Class II Directors Whose Terms Continue until

the 2004 Annual Meeting of Stockholders" and "Class III Directors Whose Terms

Continue until the 2003 Annual Meeting of Stockholders" on pages 4 - 6 of the

Proxy Statement, and information relating to Executive Officers of the

Registrant is set forth under the caption "Executive Officers of the Company" on

page 9 of the Proxy Statement, and is incorporated herein by reference.

ITEM 11. EXECUTIVE COMPENSATION

Information relating to executive compensation is set forth under the

captions "Compensation of Directors", "Compensation and Benefits Committee

Interlocks and Insider Participation", "Compensation of Executive Officers",

"Pension Benefits", "Employment Contracts, Termination of Employment and Change

of Control Arrangements" and "Performance Graph" on pages 8 and 12 - 17 of the

Proxy Statement and is incorporated herein by reference.

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

Information relating to security ownership of certain beneficial owners and

management is set forth under the caption "Security Ownership of Principal

Stockholders" on page 3 of the Proxy Statement and the caption "Security

Ownership of Directors and Executive Officers" on page 10 of the Proxy Statement

and is incorporated herein by reference.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

Information relating to certain relationships and related transactions is

set forth under the captions "Certain Transactions and Agreements with Directors

and Executive Officers" and "Certain Transactions and Agreements with American

Express and Subsidiaries" on pages 18 - 20 of the Proxy Statement and is

incorporated herein by reference.

<Page>

PART IV

ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K

(a) 1. Financial Statements:

The Financial Statements and the Notes thereto and the Report of Independent

Auditors thereon incorporated by reference herein and filed as an exhibit hereto

are listed on page F-1 hereof by reference to the corresponding page numbers in

the 2001 Annual Report.

2. Financial Statement Schedules:

The financial statement schedule and the notes thereto filed as a part

hereof are listed on page F-1 hereof.

3. Exhibits:

<Table>

EXHIBIT

NO.

- ---------------------

<C> <S>

3.01 Restated Certificate of Incorporation of the Registrant

dated May 27, 1994 (incorporated by reference to Exhibit 3.1

to the Registrant's Transition Report on Form 10-K for the

eleven months ended November 30, 1994)

3.02 Certificate of Designations with respect to the Registrant's

5.94% Cumulative Preferred Stock, Series C (incorporated by

reference to Exhibit 4.1 to the Registrant's Current Report

on Form 8-K filed with the SEC on May 13, 1998)

3.03 Certificate of Designations with respect to the Registrant's

5.67% Cumulative Preferred Stock, Series D (incorporated by

reference to Exhibit 4.2 to the Registrant's Current Report

on Form 8-K filed with the SEC on July 23, 1998)

3.04 Certificate of Designations with respect to the Registrant's

Fixed/Adjustable Rate Cumulative Preferred Stock, Series E

(incorporated by reference to Exhibit 4.2 to the

Registrant's Current Report on Form 8-K filed with the SEC

on March 30, 2000)

3.05 Certificate of Amendment of the Restated Certificate of

Incorporation of the Registrant, dated April 9, 2001

(incorporated by reference to Exhibit 3.5 to the

Registrant's Quarterly Report on Form 10-Q for the quarter

ended February 28, 2001)

3.06 By-Laws of the Registrant, amended as of March 26, 1997

(incorporated by reference to Exhibit 3 to the Registrant's

Quarterly Report on Form 10-Q for the quarter ended February

28, 1997)

4.01 Standard multiple series indenture provisions with respect

to the senior and subordinated debt securities (incorporated

by reference to Exhibit 4(a) to Post-Effective Amendment No.

1 to the Registrant's Registration Statement on Form S-3

(Reg. No. 33-16141))

4.02 Indenture with respect to senior debt securities

(incorporated by reference to Exhibit 4(b) to Post-

Effective Amendment No. 1 to the Registrant's Registration

Statement on Form S-3 (Reg. No. 33-16141))

4.03 First Supplemental Indenture with respect to senior debt

securities (incorporated by reference to Exhibit 4(m) to the

Registrant's Registration Statement on Form S-3 (Reg. No.

33-25797))

4.04 Second Supplemental Indenture with respect to senior debt

securities (incorporated by reference to Exhibit 4(e) to the

Registrant's Registration Statement on Form S-3 (Reg.

No. 33-49062))

4.05 Third Supplemental Indenture with respect to senior debt

securities (incorporated by reference to Exhibit 4(f) to the

Registrant's Registration Statement on Form S-3 (Reg. No.

33-46146))

</Table>

<Page>

<Table>

EXHIBIT

NO.

- ---------------------

<C> <S>

4.06 Fourth Supplemental Indenture with respect to senior debt

securities (incorporated by reference to Exhibit 4(f) to

Registrant's Registration Statement on Form 8-A filed with

the SEC on October 7, 1993)

4.07 Fifth Supplemental Indenture with respect to the senior debt

securities (incorporated by reference to Exhibit 4(h) to

Post-Effective Amendment No. 1 to the Registrant's

Registration Statement on Form S-3 (Reg. No. 33-56615))

4.08 Sixth Supplemental Indenture with respect to the senior debt

securities (incorporated by reference to Exhibit 4(h) to the

Registrant's Registration Statement on Form S-3

(No. 333-38227))

4.09 The other instruments defining the rights of holders of the

long-term debt securities of the Registrant and its

subsidiaries are omitted pursuant to section (b)(4)(iii)(A)

of Item 601 of Regulation S-K. The Registrant hereby agrees

to furnish copies of these instruments to the Securities and

Exchange Commission upon request.

10.01 Agreement of Tenants-In-Common by and among American Express

Company, American Express Bank Ltd., American Express Travel

Related Services Company, Inc., Shearson Lehman Brothers

Inc., Shearson Lehman Government Securities, Inc. and

Shearson Lehman Commercial Paper Incorporated (incorporated

by reference to Exhibit 10.1 to the Registrant's Transition

Report on Form 10-K for the eleven months ended November 30,

1994)

10.02 Tax Allocation Agreement between Shearson Lehman Brothers

Holdings Inc. and American Express Company (incorporated by

reference to Exhibit 10.2 to the Registrant's Transition

Report on Form 10-K for the eleven months ended November 30,

1994)

10.03+ Lehman Brothers Inc. Executive and Select Employees Plan

(incorporated by reference to Exhibit 10.4 to the

Registrant's Registration Statement on Form S-1 (Reg.

No. 33-12976))

10.04+ Lehman Brothers Holdings Inc. Deferred Compensation Plan for

Non-Employee Directors (incorporated by reference to Exhibit

10.11 to the Registrant's Registration Statement on

Form S-1 (Reg. No. 33-12976))

10.05 Amended and Restated Agreements of Limited Partnership of

Shearson Lehman Hutton Capital Partners II (incorporated by

reference to Exhibit 10.48 to the Registrant's Annual Report

on Form 10-K for the year ended December 31, 1988)

10.06+ Amended and Restated Lehman Brothers Holdings Inc. 1994

Management Ownership Plan as of April 3, 2001 (incorporated

by reference to Exhibit 10.1 to the Registrant's Quarterly

Report on Form 10-Q for the quarter ended February 28, 2001)

10.07+ Amended and Restated Lehman Brothers Holdings Inc. 1996

Management Ownership Plan, as of March 31, 2001 (including

amendments to Section 3(a) and to Exhibit A(c))*

10.08+ Lehman Brothers Holdings Inc. Short-Term Executive

Compensation Plan (incorporated by reference to Exhibit 10.2

to the Registrant's Quarterly Report on Form 10-Q for the

quarter ended August 31, 1996)

</Table>

- ------------------------

* Filed herewith

+ Management contract or compensatory plan or arrangement required to be filed

as an exhibit to this Form 10-K pursuant to Item 14(c)

<Page>

<Table>

EXHIBIT

NO.

- ---------------------

<C> <S>

10.09+ Lehman Brothers Holdings Inc. 1996 Short-Term Executive

Compensation Plan (incorporated by reference to Exhibit

10.26 to the Registrant's Registration Statement on Form S-1

(Reg. No. 33-52977))

10.10+ Amended and Restated Lehman Brothers Holdings Inc. Employee

Incentive Plan, as amended through March 31, 2001 (including

amendments to Section 3(a) and to Exhibit A(c))*

10.11+ Lehman Brothers Holdings Inc. Cash Award Plan (incorporated

by reference to Exhibit 10.36 to the Registrant's Transition

Report on Form 10-K for the Eleven Months ended

November 30, 1994)

10.12 Amended and Restated Agreement of Limited Partnership of

Lehman Brothers Capital Partners III, L.P. (incorporated by

reference to Exhibit 10.27 to the Registrant's Annual Report

on Form 10-K for the fiscal year ended November 30, 1995)

10.13 Agreement of Limited Partnership of Lehman Brothers Capital

Partners IV, L.P. (incorporated by reference to Exhibit

10.30 to the Registrant's Annual Report on Form 10-K for the

fiscal year ended November 30, 1997)

10.14 A description of the Lehman Brothers Supplemental Executive

Retirement Plan is contained under the caption "Pension

Benefits" on pages 15 and 16 of the Proxy Statement and is

incorporated herein by reference.

10.15 Purchase and Sale Agreement dated as of October 19, 2001,

between MSDW 745, LLC, as seller, and LB 745 LLC, as

purchaser*

10.16 Amendment to Purchase and Sale Agreement dated as of the

October 19, 2001, between MSDW 745, LLC, as seller, and LB

745 LLC, as purchaser*

10.17 JV Option Agreement dated November 19, 1998, between

Rock-Forty-Ninth LLC and LB 745 LLC (as assignee of MSDW

745, LLC)*

12 Computations in support of ratio of earnings to fixed

charges and ratio of earnings to combined fixed charges and

preferred stock dividends*

13 The following portions of the Company's 2001 Annual Report

to Stockholders, which are incorporated by reference herein:

"Management's Discussion and Analysis of Financial Condition

and Results of Operations", pages 38 - 57*; "Consolidated

Financial Statements", pages 58 - 93*; "Selected Financial

Data", page 94*; and "Other Stockholder Information", page

96*.

21 List of the Registrant's Subsidiaries*

23 Consent of Ernst & Young LLP*

24 Powers of Attorney*

</Table>

- ------------------------

* Filed herewith

+ Management contract or compensatory plan or arrangement required to be filed

as an exhibit to this Form 10-K pursuant to Item 14(c)

<Page>

(b) Reports on Form 8-K

1. Form 8-K dated September 25, 2001, Items 5 and 7

<Table>

<S> <C>

Financial Statements:

Exhibit 99.2 Consolidated Statement of Income (Three Months Ended

August 31, 2001) (Preliminary and Unaudited)

Exhibit 99.3 Consolidated Statement of Income (Nine Months Ended

August 31, 2001) (Preliminary and Unaudited)

Exhibit 99.4 Segment Net Revenue Information (Three and Nine Months

Ended August 31, 2001) (Preliminary and Unaudited)

Exhibit 99.5 Selected Statistical Information (Preliminary and

Unaudited)

</Table>

2. Form 8-K dated October 2, 2001, Item 7

3. Form 8-K dated October 5, 2001, Item 7

4. Form 8-K dated November 13, 2001, Item 7

<Page>

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities

Exchange Act of 1934, the Registrant has duly caused this Annual Report to be

signed on its behalf by the undersigned, thereunto duly authorized.

<Table>

LEHMAN BROTHERS HOLDINGS INC.

(REGISTRANT)

February 28, 2002

By: /s/ DAVID GOLDFARB

-----------------------------------------

David Goldfarb

Chief Financial Officer and Senior Vice

President

</Table>

Pursuant to the requirements of the Securities Exchange Act of 1934, this

report has been signed below by the following persons on behalf of the

Registrant and in the capacities and on the dates indicated.

<Table>

SIGNATURES TITLE DATE

---------- ----- ----

Chief Executive Officer and

/s/ RICHARD S. FULD, JR. Chairman of the Board of

------------------------------------------- Directors (principal February 28, 2002

Richard S. Fuld, Jr. executive officer)

Chief Financial Officer and

/s/ DAVID GOLDFARB Senior Vice President

------------------------------------------- (principal financial and February 28, 2002

David Goldfarb accounting officer)

/s/ MICHAEL L. AINSLIE Director