LEH Q1 2008

Overall --NI $489 million, $0.81 per share, 57% drop from Q1 2007($1.15 billion, or $1.96), 59% drop from Q4 2007 (886 million, $1.54) --Net Revenue $3.5 billion, 31% drop from Q1 07(5 bil) and 20% drop from Q4 07(4.4 bil) Segments -- only FI capital market suffered --Capital Market: 1.7 bil revenue, 52% decrease from from 3.5 Q1 07. ----FI:0.262 mil, 88% from 2.2 bil Q1 07 ----Equity:1.4 bil, 6% increase from 1.3 bil (drivers prime borkerage and execution service) --IBanking: $867 million, an increase of 2% from $850 million Q1 07 (driver: M&A) --Investment Mg: 968 mil, an increase of 39% from 695 mil. ----Asset Mg: 618 mil, 49% from $416 mil ----Private Wealth Mg: 350 mil from 279 mil, 25% Costs: -- eff cost control, still has more room to cut --Non-interest expenses $2.8 billion, $3.3 billion Q1 2007 and $3.2 Q4 2007. --Compensation and benefits as a percentage of net revenues was 52.5%, 49.3% Q1 and Q4 2007. Liquidity and Funding -- shfit to long term funding --liquidity pool of $34 billion Q1 08. other unencumbered assets of $64 billion and our regulated entities had unencumbered assets of $99 billion. --Our policy is to operate with an excess of long-term funding sources over our long-term funding requirements (“cash capital surplus”). We seek to maintain a cash capital surplus at Holdings of at least $2.0 billion. As of November 30, 2007, our cash capital surplus at Holdings increased to $8.0 billion, up from $6.0 billion at November 30, 2006. --Long-term borrowings (less current portion) increased to $123.2 billion at November 30, 2007, up from $81.2 billion at November 30..(50% increase) Asset Quality -- appropriate hedge --Mortgage: Gross writedown 3 bil, but net bil 0.6 bil, remaining exposure 31.8 bil ----Prime and Alt-A: 14.6 bil --CMBS: gross writedown 1.1 bil (3%), net 0.7 bil, $36.1 bil --Leveraged Financing: writeoff 0.7(3%), net 0.7, exp 28.7(70% high yield) --