Lehman Brothers Inc.

399 Park Avenue NEW YORK NY 10179

www.lehman.com

History of Lehman Brothers

Founded in 1844 by Henry Lehman in Montgomery, Alabama. Two brothers joined him 6 years later to form Lehman Brothers; initially as a cotton broker. Opened office in NYC in 1858 to expand commodities operations. By 1900, had expanded into securities trading and investment banking in US, Europe, and Japan. Over the next 60 years, Lehman grew organically by building strong relationships in every major sector. 1920s - Motion Pictures (studios) w/ Paramount, Fox 1930s - Oil & Gas w/ Halliburton, Kerr-McGee 1940s - Consumer Industries w/ Ford, GM 1950s Electronics/Computers w/ Digital Equipment 1960s Transportation/Travel w/ Hertz, TWA, American Airlines 1984- American Express acquired Lehman to combine its strength in i-banking and institutional sales with newly acquired Shearson Loeb, known particularly for retail sales strength New firm Shearson Lehman produced uneven results, so Amex sold Shearson, then Lehman in 1993. Loss of retail sales network and poor compensation plans drove away top equity analyst talent and Lehmans underwriting business. Good news..Lehman is back!

Lehman Price Performance (1996-2006)

Lehman Today

The Leader in Fixed Income Business Growing in reputation for Equity and M&A

Investment Management Division continues to grow Lehman has rebounded and is again seen as a strong competitor

Fixed Income Focus

82% of Pretax Profits from underwriting/trading of bonds (Q3 2006) Working to diversifying business Purchased Mutual Fund Neuberger Berman in 2003

Total Assets under Management now total $160 billion

Non-fixed income workforce has increased 68% since 2001

Fixed Income % Change YoY Q3 2006 10%

Equity 38%

Investment 25%

Financials

Financial Information Net revenues Revenue Growth Net Income NI Growth Total capital Capital Growth

2005 $14,630 26.38% $3,260 37.61% $79,103 10.78%

2004 $11,576 33.90% $2,369 39.40% $71,406 23.10%

2003 $8,647 40.50% $1,699 74.30% $58,013 20.00%

Source: Business Week

Financials.continued
Current Stock Price: $76.15 Current Market Capitalization: $40.4 billion As of close of trading 11/6/06 2005 Tangible Bk. Val. Cash Flow Earnings Dividends Payout Ratio Prices- High Prices- Low P/E Ratio- High P/E Ratio- Low 22.92 5.42 5.44 0.4 7% 66.58 42.7 12 8 2004 18.78 4.19 3.95 0.32 8% 44.86 33.62 11 9 2003 16.04 3.08 3.17 0.24 8% 38.85 25.07 12 8

Source: Business Week

Culture

Client focused Global bank New York, Tokyo, & London Pride themselves in the talent and diversity of their employees People are fairly atypical for Wall Street Important to get into a strong group at Lehman Recruiting organization distinguishes b/w:

I-Banking Associate Private Investment Management Associate

Strengths

Generalist program, with rotation through several groups, then receive specific assignment after assessing the groups and your interests Three and a half year program Flat organization, and meritocracy Lehmans name will be better recognized on resume than small boutiques and newly formed specialist I-banks

Management

Dick Fuld

With Lehman since analyst days in 1955 According to Lehman Brothers' former Chairman and CEO Peter Peterson, Dick deserves enormous credit for reinventing the culture of Lehman Brothers. He was wise enough to see how destructive the old Lehman culture was and effective enough to build a new culture to replace it. In today's investment banking industry, with trading and capital markets and investment banking so integrated, that kind of teamwork is utterly essential, and I think it's one big reason why they've been so successful.

Joseph M. Gregory, President and Chief Operating Officer Chris OMeara, Chief Financial Officer

Recognitions
#1 Corporate Performance - Barron 2006 #1 "All-America Fixed-Income Research Team" - Institutional Investor 2006 #1 "All-America Equities Research Team" - Institutional Investor 2006 Best M&A House in Western Europe Euromoney 2006 #3 Global Mergers and Acquisitions - BusinessWeek 2006 "Most Improved Investment Bank of the Decade" Financial News 2006 Best Investment Bank Euromoney 2005 #2 Most Admired Securities Company Fortune 2005 #1 All America Fixed Income Research , Trading, and Sales Team Institutional Investor 2005 #1 All America Fixed Income Trading Team Institutional Investor 2005 #1 All America Fixed Income Sales Team Institutional Investor 2005

Fortune rates the companies in their industry on eight attributes:

Innovation Employee Talent Use of Corporate Assets Social Responsibility Quality of Management Financial Soundness Long-term Investment Quality of Products/Services