The Firm reported net revenues (total revenues less interest expense) for
the second quarter of fiscal 2008 of negative
During the second quarter of fiscal 2008, the Firm further strengthened
its liquidity and capital position (all below amounts as of
-- Grew the Holding Company liquidity pool to $45 billion from $34 billion at the end of the prior quarter -- The Firm reported gross assets and net assets of approximately $639 billion and $327 billion, respectively, which decreased approximately $147 billion and $70 billion, respectively, from the first quarter of fiscal 2008 -- Reduced gross leverage to 24.3x from 31.7x at the end of the first quarter, and reduced net leverage to 12.0x from 15.4x -- Reduced exposure to residential mortgages, commercial mortgages and real estate investments by approximately 20% in each asset class -- Reduced acquisition finance exposures by approximately 35% -- Reduced aggregate non-investment grade inventory (including funded acquisition finance assets) by approximately 20% -- Completed the budgeted full year fiscal 2008 unsecured funding plan -- Increased the Firm's long-term capital through the issuance of $4.0 billion of convertible preferred stock in April and approximately $5.5 billion of public benchmark long-term debt
Chairman and Chief Executive Officer
Business Segments
Capital Markets reported net revenues of negative
Investment Banking reported net revenues of
Investment Management reported net revenues of
Firm Profitability and Capital
Non-interest expenses for the second quarter of fiscal 2008 were
As of
In June, Lehman Brothers closed a
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
Conference Call
A conference call to discuss the Firm's financial results and outlook will
be held today at
Please direct any questions regarding the conference call to
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.
LEHMAN BROTHERS HOLDINGS INC. SELECTED STATISTICAL INFORMATION (Preliminary and Unaudited) (Dollars in millions, except share data) At or for the Quarter Ended May 31, Feb 29, Nov 30, Aug 31, May 31, 2008 2008 2007 2007 2007 Income Statement Net Revenues $(668) $3,507 $4,390 $4,308 $5,512 Non-Interest Expenses: Compensation and Benefits 2,325 1,841 2,164 2,124 2,718 Non-personnel Expenses 1,094 1,003 996 979 915 Income before provision for income taxes (4,087) 663 1,230 1,205 1,879 Net Income (2,774) 489 886 887 1,273 Net Income Applicable to Common Stock (2,873) 465 870 870 1,256 Earnings per Common Share: Basic ($5.14) $0.84 $1.60 $1.61 $2.33 Diluted ($5.14) $0.81 $1.54 $1.54 $2.21 Financial Ratios (%) Return on Average Common Stockholders' Equity (annualized)(a) NM 8.6% 16.6% 17.1% 25.8% Return on Average Tangible Common Stockholders' Equity (annualized) (b) NM 10.6% 20.6% 21.1% 31.6% Pre-tax Margin NM 18.9% 28.0% 28.0% 34.1% Compensation and Benefits/Net Revenues NM 52.5% 49.3% 49.3% 49.3% Effective Tax Rate 32.1% 26.3% 27.9% 26.4% 32.3% Financial Condition Total Assets $639,000 $786,035 $691,063 $659,216 $605,861 Net Assets (c)(i) 326,899 396,673 372,959 357,102 337,667 Common Stockholders' Equity (d) 19,283 21,839 21,395 20,638 20,034 Total Stockholders' Equity (d) 26,276 24,832 22,490 21,733 21,129 Total Stockholders' Equity Plus Junior Subordinated Notes (e) 31,280 29,808 27,230 26,647 25,650 Tangible Equity Capital (e) 27,179 25,696 23,103 22,164 21,881 Total Long-Term Capital (f) 154,458 153,117 145,640 142,064 121,948 Book Value per Common Share (g) 34.21 39.45 39.44 38.29 37.15 Leverage Ratio (h) 24.3x 31.7x 30.7x 30.3x 28.7x Net Leverage Ratio (i) 12.0x 15.4x 16.1x 16.1x 15.4x Other Data (#s) Employees 26,189 28,088 28,556 28,783 28,323 Assets Under Management (in billions) $277 $277 $282 $275 $263 Common Stock Outstanding (in millions) 552.7 551.4 531.9 529.4 530.2 Weighted Average Shares (in millions): Basic 559.3 551.5 542.6 540.4 538.2 Diluted 559.3 572.8 563.7 565.8 568.1 * See Footnotes to Selected Statistical Information. LEHMAN BROTHERS HOLDINGS INC. FOOTNOTES TO SELECTED STATISTICAL INFORMATION (Preliminary and Unaudited) NM = Not Meaningful (a) Return on average common stockholders' equity is computed by dividing annualized net income applicable to common stock for the period by average common stockholders' equity. See the reconciliation on page 12. (b) Return on average tangible common stockholders' equity is computed by dividing annualized net income applicable to common stock for the period by average tangible common stockholders' equity. Average tangible common stockholders' equity equals average common stockholders' equity less average identifiable intangible assets and goodwill. See the reconciliation on page 12. Management believes tangible common stockholders' equity is a meaningful measure because it reflects the common stockholders' equity deployed in our businesses. (c) We calculate net assets by excluding from total assets: (i) cash and securities segregated and on deposit for regulatory and other purposes; (ii) collateralized lending agreements; and (iii) identifiable intangible assets and goodwill. See reconciliation on page 15. Net assets as presented are not necessarily comparable to similarly-titled measures provided by other companies in the securities industry because of different methods of presentation. (d) Effective December 1, 2007, we adopted Financial Accounting Standards Board ("FASB") Interpretation No. 48, Accounting for Uncertainty in Income Taxes -- an Interpretation of FASB Statement No. 109. The aggregate impact to opening retained earnings from the adoption of this standard was a decrease of approximately $178 million. Effective December 1, 2006, we adopted both Statement of Financial Accounting Standards ("SFAS") No. 157, Fair Value Measurements and SFAS No. 159, The Fair Value Option for Financial Assets and Financial Liabilities. The aggregate impact to opening retained earnings from the adoption of these standards was an after-tax increase of approximately $67 million (approximately $113 million pre-tax). (e) We calculate tangible equity capital by including stockholders' equity and junior subordinated notes and excluding identifiable intangible assets and goodwill. These measures may not be comparable to similarly-titled calculations by other companies as a result of different calculation methodologies. We believe tangible equity capital to be a more meaningful measure of our equity base as it includes stockholders' equity and junior subordinated notes (which we consider to be equity-like instruments due to their subordinated and long-term nature) and excludes identifiable intangible assets and goodwill (which are fully supported by equity). Prior to fiscal year 2008, our definition for tangible equity capital limited the amount of junior subordinated notes and preferred stock included in the calculation to 25% of tangible equity capital. The amounts excluded were approximately $237 million, $375 million and $117 million in the fourth, third and second quarters of 2007, respectively. See the reconciliation on page 15. (f) Total long-term capital includes long-term borrowings (excluding any borrowings with remaining maturities within one year of the financial statement date) and total stockholders' equity. We believe total long-term capital is useful to investors as a measure of our financial strength. (g) The book value per common share calculation includes amortized restricted stock units granted under employee stock award programs, which have been included in total stockholders' equity. (h) Leverage ratio is defined as total assets divided by total stockholders' equity. (i) Net leverage ratio is defined as net assets (see note (c) above) divided by tangible equity capital (see note (e) above). We believe net leverage based on net assets to be a more useful measure of leverage, because it excludes certain low-risk, non-inventory assets and utilizes tangible equity capital as a measure of our equity base. Net leverage as presented is not necessarily comparable to similarly-titled measures provided by other companies in the securities industry because of different methods of presentation. LEHMAN BROTHERS HOLDINGS INC. CONSOLIDATED STATEMENT OF INCOME (Preliminary and Unaudited) (In millions, except per share data) Quarter Ended % Change from Feb May May 31, Feb 29, May 31, 29, 31, 2008 2008 2007 2008 2007 Revenues: Principal transactions $(3,534) $773 $2,889 Investment banking 858 867 1,150 Commissions 639 658 568 Interest and dividends 7,771 9,635 10,558 Asset management and other 506 437 414 Total revenues 6,240 12,370 15,579 Interest expense 6,908 8,863 10,067 Net revenues (668) 3,507 5,512 NM NM Non-interest expenses: Compensation and benefits(a) 2,325 1,841 2,718 Technology and communications 309 302 287 Brokerage, clearance and distribution fees 252 253 201 Occupancy 188 185 152 Professional fees 100 98 120 Business development 87 89 100 Other (b) 158 76 55 Total non-interest expenses 3,419 2,844 3,633 20% -6% Income before provision for income taxes (4,087) 663 1,879 Provision for income taxes (1,313) 174 606 Net income $(2,774) $489 $1,273 NM NM Net income applicable to NM NM common stock $(2,873) $465 $1,256 Earnings per common share: Basic ($5.14) $.84 $2.33 NM NM Diluted ($5.14) $.81 $2.21 NM NM (a) For the quarter ended May 31, 2008, approximately $140 million of severance is included in Compensation and benefits. (b) For the quarters ended May 31, 2008 and February 29, 2008, approximately $20 million and $34 million, respectively, of costs associated with the restructuring of the Firm's global residential mortgage origination business have been included in Other expenses. LEHMAN BROTHERS HOLDINGS INC. CONSOLIDATED STATEMENT OF INCOME (Preliminary and Unaudited) (In millions, except per share data) % Change Six Months Ended from May 31, May 31, 2008 2007 2007 Revenues: Principal transactions $(2,762) $5,810 Investment banking 1,725 2,000 Commissions 1,297 1,108 Interest and dividends 17,405 19,647 Asset management and other 945 809 Total revenues 18,610 29,374 Interest expense 15,771 18,815 Net revenues 2,839 10,559 (73)% Non-interest expenses: Compensation and benefits (a) 4,166 5,206 Technology and communications 612 553 Brokerage, clearance and distribution fees 504 395 Occupancy 373 298 Professional fees 198 218 Business development 175 184 Other (b) 235 127 Total non-interest expenses 6,263 6,981 (10)% Income before provision for income taxes (3,424) 3,578 Provision for income taxes (1,139) 1,159 Net income $(2,285) $2,419 NM Net income applicable to common stock $(2,408) $2,385 NM Earnings per common share: Basic ($4.33) $4.42 NM Diluted ($4.33) $4.17 NM (a) For the six months ended May 31, 2008, approximately $170 million of severance is included in Compensation and benefits. (b) For the six months ended May 31, 2008, approximately $54 million of costs associated with the restructuring of the Firm's global residential mortgage origination business have been included in other expenses. LEHMAN BROTHERS HOLDINGS INC. BUSINESS SEGMENT AND GEOGRAPHIC NET REVENUES (Preliminary and Unaudited) (In millions) Business Segments(a) Quarter Ended % Change from May 31, Feb 29, May 31, Feb 29, May 31, 2008 2008 2007 2008 2007 Capital Markets: Fixed Income $(2,975) $262 $1,902 Equities 601 1,410 1,692 Total (2,374) 1,672 3,594 NM NM Investment Banking: Global Finance - Debt 288 322 540 Global Finance - Equity 330 215 333 Advisory Services 240 330 277 Total 858 867 1,150 (1)% (25)% Investment Management: Asset Management 496 618 460 Private Investment Management 352 350 308 Total 848 968 768 (12)% 10 % Total Net Revenues $(668) $3,507 $5,512 NM NM Geographic Net Revenues Quarter Ended % Change from May 31, Feb 29, May 31, Feb 29, May 31, 2008 2008 2007 2008 2007 Europe and the Middle East $(499) $760 $1,829 Asia-Pacific 57 1,348 762 Total Non-Americas (442) 2,108 2,591 NM NM U.S. (290) 1,342 2,888 Other Americas 64 57 33 Total Americas (226) 1,399 2,921 NM NM Total Net Revenues $(668) $3,507 $5,512 NM NM (a) Certain prior-period amounts reflect reclassifications to conform to the presentation in the current period. LEHMAN BROTHERS HOLDINGS INC. BUSINESS SEGMENT AND GEOGRAPHIC NET REVENUES (Preliminary and Unaudited) (In millions) Business Segments (a) Six Months Ended May 31, % Change from 2008 2007 May 31, 2007 Capital Markets: Fixed Income $(2,714) $4,075 Equities 2,011 3,021 Total (703) 7,096 NM Investment Banking: Global Finance - Debt 610 968 Global Finance - Equity 545 508 Advisory Services 570 524 Total 1,725 2,000 (14)% Investment Management: Asset Management 1,114 876 Private Investment Management 703 587 Total 1,817 1,463 24% Total Net Revenues $2,839 $10,559 (73)% Geographic Net Revenues Six Months Ended May 31, % Change from 2008 2007 May 31, 2007 Europe and the Middle East $261 $3,197 Asia-Pacific 1,405 1,356 Total Non-Americas 1,666 4,553 (63)% U.S. 1,052 5,916 Other Americas 121 90 Total Americas 1,173 6,006 (80)% Total Net Revenues $2,839 $10,559 (73)% (a) Certain prior-period amounts reflect reclassifications to conform to the presentation in the current period. LEHMAN BROTHERS HOLDINGS INC. RECONCILIATION OF AVERAGE STOCKHOLDERS' EQUITY TO AVERAGE TANGIBLE COMMON STOCKHOLDERS' EQUITY (Preliminary and Unaudited) (In millions) Quarter Ended May 31, Feb 29, Nov 30, Aug 31, May 31, 2008 2008 2007 2007 2007 Annualized net income applicable to common stock $(11,491) $1,860 $3,479 $3,480 $5,025 Average stockholders' equity $25,554 $23,661 $22,112 $21,431 $20,567 Less: average preferred stock (4,993) (2,044) (1,095) (1,095) (1,095) Average common stockholders' equity 20,561 21,617 21,017 20,336 19,472 Less: average identifiable intangible assets and goodwill (4,107) (4,120) (4,118) (3,880) (3,592) Average tangible common stockholders' equity $16,454 $17,497 $16,899 $16,456 $15,880 Return on average common stockholders' equity NM 8.6% 16.6% 17.1% 25.8% Return on average tangible common stockholders' equity NM 10.6% 20.6% 21.1% 31.6% LEHMAN BROTHERS HOLDINGS INC. ASSETS UNDER MANAGEMENT (Preliminary and Unaudited) Composition of Assets Under Management At (In billions) May 31, Feb 29, May 31, 2008 2008 2007 Equity $109 $101 $108 Fixed Income 75 77 65 Money Markets 54 65 64 Alternative Investments 39 34 26 Assets Under Management $277 $277 $263 Quarter Ended May 31, Feb 29, May 31, Assets Under Management Rollforward 2008 2008 2007 (In billions) Opening balance $277 $282 $236 Net additions/(subtractions) (9) - 16 Net market appreciation/(depreciation) 9 (5) 11 Total increase/(decrease) - (5) 27 Ending balance $277 $277 $263 LEHMAN BROTHERS HOLDINGS INC. VALUE-AT-RISK (VaR) SUMMARY (Preliminary and Unaudited) VaR - Historical Simulation(a) (In millions) Average VaR Three Three Months At Months Ended Ended May 31, May 31, Feb 29, May 31, Feb 29, 2008 2008 2008 2008 2008 High Low Interest rate risk $88 $90 $109 $103 $127 $87 Equity price risk 41 43 46 49 61 32 Foreign exchange risk 10 14 12 13 16 9 Commodity risk 12 11 12 13 16 9 Diversification benefit (47) (52) (56) (48) $104 $106 $123 $130 $140 $103 Average VaR Three Three Months At Months Ended Ended May 31, May 31, Feb 29, May 31, Feb 29, 2008 2008 2008 2008 2008 High Low Weighted Basis $104 $106 $123 $130 $140 $103 Un-Weighted Basis 75 89 84 97 100 75 (a) VaR is an approximation of earnings and loss distributions a portfolio would realize if current market risks were as observed in historical markets. VaR for our financial instrument inventory positions, estimated at a 95% confidence level over a one-day time horizon. This means that there is a 1-in-20 chance that daily trading net revenue losses on a particular day would exceed the reported VaR. LEHMAN BROTHERS HOLDINGS INC. LEVERAGE and NET LEVERAGE CALCULATIONS (Preliminary and Unaudited) (In millions) At May 31, Feb 29, Nov 30, Aug 31, May 31, 2008 2008 2007 2007 2007 Net assets: Total assets $639,000 $786,035 $691,063 $659,216 $605,861 Less: Cash and securities segregated and on deposit for regulatory and other purposes (13,000) (16,569) (12,743) (10,579) (7,154) Collateralized lending agreements (295,000) (368,681) (301,234) (287,427) (257,388) Identifiable intangible assets and goodwill (4,101) (4,112) (4,127) (4,108) (3,652) Net assets $326,899 $396,673 $372,959 $357,102 $337,667 Tangible equity capital: Total stockholders' equity $26,276 $24,832 $22,490 $21,733 $21,129 Junior subordinated notes (a) 5,004 4,976 4,740 4,539 4,404 Less: Identifiable intangible assets and goodwill (4,101) (4,112) (4,127) (4,108) (3,652) Tangible equity capital (a) $27,179 $25,696 $23,103 $22,164 $21,881 Leverage (total assets / total stockholders' equity) 24.3x 31.7x 30.7x 30.3x 28.7x Net leverage (net assets / tangible equity capital) 12.0x 15.4x 16.1x 16.1x 15.4x (a) Prior to fiscal year 2008, our definition for tangible equity capital limited the amount of junior subordinated notes and preferred stock included in the calculation to 25% of tangible equity capital. The amounts excluded were approximately $237 million, $375 million and $117 million in the fourth, third and second quarters of 2007, respectively. Lehman Brothers Holdings Inc. Attachment I Mark to market adjustments (Unaudited) Gain/(Loss) (in billions) For the Three For the Six Fiscal Year Months Ended Months Ended 2007 through May 31, 2008 May 31, 2008 May 31, 2008(1) Gross Net(2) Gross Net(2) Gross Net(2) Residential mortgage-related positions $(2.4) $(2.0) $(5.4) $(2.8) $(10.1) $(4.1) Other asset-backed -related positions (0.4) (0.4) (0.6) (0.5) (1.2) (0.7) Commercial mortgage and real estate-related investments (3) (0.9) (1.3) (2.3) (2.3) (3.7) (3.2) Acquisition finance facilities (funded and unfunded) (0.3) (0.4) (1.0) (0.9) (2.0) (1.3) Subtotal $(4.0) $(4.1) $(9.3) $(6.5) $(17.0) $(9.3) Valuation of debt liabilities(4) 0.4 0.4 1.0 1.0 1.9 1.9 Total $(3.6) $(3.7) $(8.3) $(5.5) $(15.1) $(7.4) (1) Substantially all of these adjustments occurred in the twelve months ended May 31, 2008. (2) The net impact represents the remaining impact from the components after deducting the impact of certain economic risk mitigation strategies. Gross balances shown do not reflect the impact of economic hedges. (3) Included within this category are valuation adjustments attributable to commercial mortgage-related positions, equity investments in real estate companies and debt and equity investments in parcels of land and related physical property. (4) Represents the amount of gains on debt liabilities for which the Firm elected to fair value under SFAS No. 159. These gains represent the effect of changes in the Firm's credit spread and exclude any Interest income or expense as well as any gain or loss from the embedded derivative components of these instruments. Changes in valuations are allocated to the businesses in relation to the cash generated by, or funding requirements of, the underlying positions. Lehman Brothers Holdings Inc. Attachment II Mortgage and asset-backed securities(1) (Unaudited) (in billions) At Percent Inc / (Dec) Nov. 30, Feb. 29, May 31, May vs. May vs. 2007 2008 2008 Feb. Nov. Residential mortgages Securities $16.7 $18.2 $15.0 Whole loans 14.2 11.9 8.3 Servicing and other 1.2 1.7 1.6 Subtotal 32.1 31.8 24.9 (22)% (22)% Commercial mortgages Whole loans $26.2 $24.9 $19.9 Securities and other 12.7 11.2 9.5 Subtotal 38.9 36.1 29.4 (19)% (24)% Other asset-backed securities $6.2 $6.5 $6.5 Total $77.2 $74.4 $60.8 (18)% (21)% (1) Balances shown exclude those for which the Company transferred mortgage-related loans to securitization vehicles where such transfers were accounted for as secured financings rather than sales under SFAS No. 140, Accounting for Transfers and Servicing of Financial Assets and Extinguishments of Liabilities -- a replacement of FASB Statement No. 125. The securitization vehicles issued securities that were distributed to investors. The Company does not consider itself to have economic exposure to the underlying assets in those securitization vehicles beyond the Company's retained interests (which are included above). Lehman Brothers Holdings Inc. Attachment III Residential mortgage-related (Unaudited) (in billions) At Percent Inc / (Dec) Nov. 30, Feb. 29, May 31, May vs. May vs. 2007 2008 2008 Feb. Nov. Residential mortgages U.S. Alt-A/Prime (1) $12.7 $14.6 $10.2 Subprime/Second Lien (2) 5.3 4.0 2.8 Other U.S. 2.3 2.1 1.3 Subtotal 20.3 20.7 14.3 (31)% (30)% Europe $10.2 $9.5 $9.3 Asia-Pacific 0.5 0.7 0.7 Other asset-backed 1.1 0.9 0.6 Total $32.1 $31.8 $24.9 (22)% (22)% (1) For purposes of this presentation, the Company has categorized U.S. residential mortgages frequently referred to as Alt-A within Prime. The Company generally defines U.S. Alt-A residential mortgage loans as those associated with borrowers who may have creditworthiness of "prime" quality but may have traits that prevent the loans from qualifying as "prime." Those traits could include documentation deficiencies related to the borrowers' income disclosure, referred to as partial or no documentation; or the underlying property may not be owner occupied despite full or lower documentation of the borrowers' income levels. (2) The Company generally defines U.S. subprime residential mortgage loans as those associated with borrowers having a credit score in the range of 620 or lower using the Fair Isaac Corporation's statistical model, or having other negative factors within their credit profiles. We also include residential mortgage loans that were originated through BNC Mortgage LLC ("BNC") prior to its closure in the third quarter of the Company's 2007 fiscal year. BNC served borrowers with subprime qualifying credit profiles but also served borrowers with stronger credit history as a result of broker relationships or product offerings and such loans are also included in our subprime business activity. Lehman Brothers Holdings Inc. Attachment IV Residential mortgage-related (Unaudited) (in billions) Percent At Change Feb. 29, May 31, May vs. 2008 2008 Feb. Residential mortgages U.S. Alt-A/Prime Whole loans $3.7 $2.1 Securities: AAA 6.4 3.9 Other RMBS(1) 2.8 2.6 Servicing and Other 1.7 1.6 Subtotal 14.6 10.2 (30)% Subprime/Second Lien Whole loans $1.3 $1.1 Securities: AAA 1.6 0.9 Other RMBS(1) 1.1 0.8 Servicing and Other - - Subtotal 4.0 2.8 (30)% Other U.S. Whole loans $1.6 $1.0 Securities 0.5 0.3 Servicing and Other - - Subtotal 2.1 1.3 (38)% Europe Whole loans $5.0 $3.6 Securities 4.5 5.7 Servicing and Other - - Subtotal 9.5 9.3 (2)% Asia-Pacific Whole loans $0.3 $0.5 Securities 0.4 0.2 Servicing and Other - - Subtotal 0.7 0.7 - Asset-backed securities 0.9 0.6 (33)% Total $31.8 $24.9 (22)% (1) Includes amounts related to residuals. Lehman Brothers Holdings Inc. Attachment V Commercial mortgage and real estate-related investments (Unaudited) (in billions) At Percent Inc / (Dec) Nov. 30, Feb. 29, May 31, May vs. May vs. 2007 2008 2008 Feb. Nov. Commercial mortgages Whole loans $26.2 $24.9 $19.9 Securities and other 12.7 11.2 9.5 Subtotal 38.9 36.1 29.4 (19)% (24)% Real estate held for sale (1) $12.8 $12.9 $10.4 Total $51.7 $49.0 $39.8 (19)% (23)% (1) These positions are reflected within Real estate held for sale and are accounted for at the lower of its carrying amount or fair value less cost to sell. The Company makes equity and debt investments in entities whose underlying assets are real estate held for sale. The Company consolidates those entities in which we are the primary beneficiary in accordance with FIN No. 46-R, Consolidation of Variable Interest Entities (revised December 2003)-an interpretation of ARB No. 51. The Company does not consider itself to have economic exposure to the total underlying assets in those entities. The amounts presented are the Company's net investment and therefore exclude the amounts that have been consolidated but for which the Company does not consider itself to have economic exposure. Lehman Brothers Holdings Inc. Attachment VI Commercial mortgage and real estate-related investments (Unaudited) (in billions) May 31, 2008 vs. At February 29, 2008 May 31, Inc / (Dec) At May 31, 2008 2008 Dollars Percent Americas Europe Asia Whole loans Senior $19.5 $(4.8) (20)% $10.7 $4.7 $4.1 Mezzanine 5.9 (1.3) (18)% 4.6 0.7 0.6 NPLs(5) 1.9 (0.1) (3)% 0.2 - 1.7 Equity 7.2 (1.0) (12)% 4.5 1.5 1.2 Securities 5.3 (2.2) (29)% 0.9 3.8 0.6 Total $39.8 $20.9 $10.7 $8.2 May 31, 2008 Average Number of Position At May 31, 2008 Positions Value(1) WALTV(2) WAM(3) WALA(4) Fixed Float Whole loans Senior 875 $22.2 76 % 34 18 9 % 91 % Mezzanine 299 19.8 78 % 26 13 15 % 85 % NPLs(5) 327 5.8 Equity 670 10.7 Inv. Non-Inv. Grade Grade AA or Better Securities 371 14.2 Total 2,542 $15.7 94 % 6 % 77 % (1) In millions. (2) WALTV is weighted average loan to value at origination. (3) WAM is weighted average number of months remaining to fully extended maturity. (4) WALA is weighted average loan age in months. (5) NPLs are loans purchased as non-performing loans. Lehman Brothers Holdings Inc. Attachment VII Acquisition Finance Facilities (Funded and Unfunded) (1) (Unaudited) (in billions) At Percent Inc / (Dec) Nov. 30, Feb. 29, May 31, May vs. May vs. 2007 2008 2008 Feb. Nov. High grade Contingent $10.2 $7.2 $1.7 Unfunded - 0.8 1.1 Funded 1.7 2.9 3.7 Subtotal 11.9 10.9 6.5 (40)% (45)% High yield Contingent $9.7 $3.7 $0.4 Unfunded 2.7 2.2 2.1 Funded 11.5 11.9 9.0 Subtotal 23.9 17.8 11.5 (35)% (52)% Total $35.8 $28.7 $18.0 (37)% (50)% (1) For purposes of this presentation, high yield amounts are defined as commitments to or loans to companies rated BB+ or lower or equivalent ratings by recognized credit rating agencies, as well as non-rated securities or loans that in the Company's management's opinion are non-investment grade. Additionally and for purposes of this presentation, the Company has categorized amounts contingently committed as "Contingent"; amounts that were contingently committed in the prior period but unfunded in the current period as "Unfunded;" and amounts that were contingently committed in the prior period but funded in the current period as "Funded."
SOURCE Lehman Brothers Holdings Inc.