LEHMAN

BROTHERS

Where vision gets built…

 CONTENTS
• INTRODUCTION
• ORGANIZATION STRUCTURE
• PRODUCTS
• SALES ANALYSIS
• STRATEGIES
• COMPETITORS
• TREND PROJECTION
• REFERENCES
INTRODUCTION

The journey begins…

 LEHMAN BROTHERS
• Lehman brothers holding inc and
its subsidiaries together called
Lehman brothers
• Leading global investment bank
• Serves institutional, corporate,
government and high net worth
individuals clients
 OVER THE YEARS
• Under the Lehman Family
(1850–1969)
• Into the Arms of a Giant
(1969–1994)
• On Their Own Again
(1994–present)
• Recovery from Disaster
(9/11/2001)
 LOCATIONS
Headquarters
• Worldwide: New York
• Regional : Tokyo, London

Additional locations:
• North America
• Europe
• Middle east
• Latin America
• Asia pacific
 PRIMARY BUSINESS
• Capital markets

• Investment banking

• Investment management
 OPERATING PRINCIPLES
1. Delivering the entire firm to our clients
2. Doing the right thing
3. Demonstrating a commitment to excellence
4. Promoting and demonstrating teamwork
5. Ensuring our organization is a true meritocracy
6. Respecting each other
7. Demonstrating smart risk management
8. Preserving and strengthening the culture
9. Giving back to the community
10. Acting always with an ownership mentality
11. Building and protecting the brand
12. Maximizing shareholder value
 REVENUE GENERATION
• Structuring transactions
• Market maker and intermediary
• Originating loans for distribution
• Provide investment management
• Provide advisory services
• Acting as an underwriter
• Maintain inventory
• Make principal investments
 PHILANTHROPY
• Supported daycare for 500 homeless
children in Dallas
• Provided 50,000 meals for families in
New York
• Funded rebuilding of a primary school
in China
• Built 100 houses in Malavli village,India
• Provided high school education for 660
girls in Africa
• Launched mentoring program for
African-Caribbean boys
ORGANISATION
STRUCTURE

The basic framework…

 BOARD OF DIRECTORS
• Richard S. Fuld,Jr.
• Michael L. Ainslie
• John F. Akers
• Roger S. Berlind
• Thomas H. Cruikshank
• Marsha Johnson Evans
• Sir Christopher gent
• Roland A. Hernandez
• Dr. Henry Kaufman
• John D. Macomber
 SENIOR MANAGEMENT
• Richard S. Fuld,Jr. (Chairman and CEO)
• Jasjit S. Bhattal (CEO,Asia)
• Scott J. Freidheim (CAO)
• Michael Gelband (Global Head, Fixed Income)
• Dave Goldfarb (Global Head, Strategic
Partnership,Prime Investing and Risk)
• Joseph M. Gregory (President and COO)
• Jeremy M. Isaacs (CEO,Europe and Asia)
• Theodore P.Janulis (Global head,Mortgage
Capital)
 SENIOR MANAGEMENT
• Stephen M. Lessing (Head of CRM)
• Ian T. Lowitt (CAO)
• Herbert H. McDade III (Global head equities)
• Hugh e. McGee III (Global head IB)
• Roger B. Nagioff (COO ,Europe)
• Christopher M. O’Meara (CFO)
• Thomas A. Russo (VC and Chief legal officer)
• George H. Walker (Global Head IM)
PRODUCTS

The inside story…

 FIXED INCOME
Businesses include :
• Government and Agency Obligations
• Corporate Debt Securities and Loans
• High-yield Securities and Leveraged
Bank Loans
• Money Market Products
• Mortgage and Loan Origination
• Mortgage and Asset-backed Securities.
 EQUITIES
Products Include :
• Listed and Over-the-counter Securities
• American Depositary Receipts
• Convertibles
• Options
• Futures
• Warrants
• Derivatives.
 INVESTMENT BANKING
1. Underwriting

2. Advisory Services
• Mergers and Acquisitions (M&A)
• Restructuring

3. Global Finance Activities

• Underwriting
• Private Placements
• Leveraged Finance
• Other Activities
 INVESTMENT
MANAGEMENT
• Traditional Brokerage Services
• Comprehensive Investment
• Wealth Advisory
• Asset Management
• Hedge Funds
• Trust and Capital Markets
Execution Services
SALES ANALYSIS

The rewards..
 HIGHLIGHTS OF 2006
• Net revenues $17.6 billion
(20% increase)
• Earnings per share $6.81
( 25% increase)
• Stock price rose to $73.67
(17 % increase)
 HIGHLIGHTS OF 2006
• 2006 Sales (mil.) $46,709
(44.1% growth)
• 2006 Net Income (mil.) $4,007
(22.9% growth)
• 2006 Employees 25,900
(13.1% growth)
 INCOME STATEMENT
Income Statement
Total Revenue $46,709
Gross Profit $16,170
Total Operating Expense $40,804
Operating Income $5,905
Net Income before taxes $5,905
Net Income After taxes $3,960
Net Profit Margin 8.0%
 FINANCIAL STATUS

TOTAL ASSETS $503,545

TOTAL LIABILITIES $484,354

TOTAL STOCKHOLDERS’ $19,191

EQUITY
 OVER LAST 5 YEARS

2006 2005 2004 2003 2002

Net
$17,583 $14630 $11576 $8647 $6155
Revenue

Net
$4007 $3260 $2369 $1699 $975
income

Total
$503545 $410063 $357168 $312061 $260336
assets
 STRATEGIES

The style of doing things…

 IN BRIEF
• Hired worldwide for senior level jobs
• Opened an office in Dubai an India
• Strengthened asset management and private
equity in Europe
• Established investment management in Asia
• Added new asset classes
• Expanded energy trading platform
• Expanded global client base
• 2-for-1 common stock split in the form of stock
dividend.
 NEW VENTURES
• Acquired Campus Door, provider of
student loans
• Entered Japan's mortgage capital
business through L-STaRS one funding
limited issue
• Acquired Townsend Analytics, a
software development and financial
services provider
• Invested in BATS trading Inc ad BIDS
• Together with IBM formed China
Investment Fund
 ADVISORY
• Financial advisor to AT&T in acquiring
BellSouth Corporation
• Advised Citadel Investment group and
Och-Ziff capital management group
about Hedge funds Advised abbey
national PLC in its sale to Resolution
PLC
• Advised KKR led consortium in
acquiring France telecom group’s stake
in PagesJaunes groups SA
COMPETITIORS

The main driving force…

 COMPARISON TO
INDUSTRY & MARKET
Valuation Company Industry1 Market2

Price/Sales Ratio 0.55 1.88 2.06

Price/Earnings Ratio 7.04 20.01 18.01

Price/Book Ratio 1.40 2.16 2.06

Price/Cash Flow Ratio -- 19.60 12.51

•1Industry: Security And Commodity Brokers, Dealers, Exchanges,

And Services
•2Market: Public companies trading on the NYSE, AMEX, and
NASDAQ
 TOP COMPETITORS
Revenue Profit Margin Employees Market Cap

Morgan Stanley $76,551.0 14.3% 58,333 $63,805.4

UBS AG (USA) $73,127.5 30.6% 80,637 $104,934.9

Goldman Sachs $69,353.0 20.4% 28,012 $72,888.1

Group, Inc.
Merrill Lynch & $68,622.0 16.7% 61,900 $60,193.1
Co., Inc.
Lehman Brothers $46,709.0 11.9% 28,323 $29,607.2
Holdings Inc.
Credit Suisse $42,069.6 39.9% 45,600 $68,708.8
Group (ADR)
Nomura Holdings, $17,311.7 18.5% 16,145 $34,287.5
Inc. (ADR)
The Bear Stearns $16,551.4 16.0% 15,120 $12,582.0
Companies Inc.
TREND PROJECTION

What the future holds…

 INDUSTRY
• Global equity indices will gain 10%
• Equity offering calendar to increase to
15%
• $9.6 trillion of global fixed income
origination
• M&A activity to grow by 15%
 COMPANY
• Equities will boost and grow at about 50 %
• Fixed income will continue to grow at
around 15 %
• Investment banking may grow at about
15% owing to new territories
• Investment management will rise and grow
at 45%
 RISKS
• Market risk
• Competitive environment
• Business environment
• Liquidity
• Credit ratings
• Credit exposure
• Operational risk
• Legal,Regulatory and Reputational risk
 REFERENCES
• Lehman Brothers 2006 annual report
• www.lehman.com
• www.investor.reuters.com
• Google Finance
• Yahoo Finance
• SEC filing for LEH
SWATHI VELISETTY

MMS – I
JBIMS
113