REGISTRATION NO. 33-65674
NASD File No. 930707011
Rule 424(b)(2)
AMENDED PRICING SUPPLEMENT NO. 28
AMENDMENT DATED FEBRUARY 9, 1994
(To Prospectus dated October 4, 1993 as supplemented by
a Prospectus Supplement dated October 4, 1993)
LEHMAN BROTHERS HOLDINGS INC.
Medium Term Notes, Series E
Due 9 Months or More from Date of Issue
(Indexed Notes)
___________________________
Principal Amount: $100,000,000. See "Description of
Indexed Notes-Maturity Amount" below.
Stated Maturity: February 10, 1996
Issue Date: February 10, 1994
Issue Price: 100%
Agent's Commission: .25%
Interest Payment Dates: The 10th calendar day of each month
(or, if any such day is not a Business
Day, the next following Business Day),
commencing on March 10, 1994 and ending
on the Stated Maturity
Initial Interest Rate: To be determined on the initial
Interest Determination Date. See
"Description of Indexed Notes -
Interest".
Interest Rate Basis: The interest payable on any Interest
Payment Date will be calculated as the
product of the principal amount of the
Indexed Notes and the greater of:
(i) the Index Total Return for the
related Interest Payment Period; or
(ii) zero.
See "Description of Indexed Notes-
Interest" below.
Spread: None
Spread Multiplier: None
Interest Determination
Dates: Last calendar day of each month,
commencing February 28, 1994
Calculation Agent: Lehman Brothers Special Financing Inc.
Interest Payment Period: Monthly
Interest Reset Period: Monthly
Index: Lehman Brothers High Yield Index, as
published on Bloomberg page LEHM
Initial Index Value: Index Value as of January 31, 1994
Maturity Amount: See "Description of Indexed Notes -
Maturity Amount."
Form of Note: Book-Entry Note
The aggregate principal amount of this offering is $100,000,000
and relates only to Pricing Supplement No. 28. Medium-Term
Notes, Series E may be issued by the Company in an aggregate
principal amount of up to $2,500,000,000 and, to date, including
this offering, an aggregate of $1,076,550,000 Medium-Term Notes,
Series E have been issued and are outstanding.
DESCRIPTION OF INDEXED NOTES
I. General
The following description of the particular terms of the Indexed
Notes (as defined below) supplements, and to the extent
inconsistent therewith replaces, the description of the general
terms and provisions of the Notes set forth in the accompanying
Prospectus Supplement and the description of Debt Securities set
forth in the accompanying Prospectus, to which descriptions
reference is hereby made. All terms used herein but not
otherwise defined herein and which are defined in the
accompanying Prospectus or Prospectus Supplement shall have the
meanings therein assigned to them.
II. Interest
Interest on the Indexed Notes in respect of an Interest Payment
Period (as defined below) will be payable monthly on the tenth
calendar day of each month, or in the event that any such day is
not a Business Day, then on the immediately following day that is
a Business Day (each such day, an "Interest Payment Date"),
beginning on March 10, 1994 and ending on the Stated Maturity.
With respect to any Interest Payment Date, interest on the
Indexed Notes will accrue from the first calendar day of the
preceding calendar month, or in the case of the first Interest
Payment Date, February 10, 1994, through the last calendar day of
such month (each, an "Interest Payment Period").
The amount of interest to be paid on the Indexed Notes on each
Interest Payment Date will be equal to the amount determined by
multiplying the principal amount of the Indexed Notes by the
greater of (i) the Index Total Return for the related Interest
Payment Period or (ii) zero. The "Index Total Return" for an
Interest Payment Period shall be determined by dividing the Index
Value for the final day of such Interest Payment Period by the
Index Value for the final day of the immediately preceding
Interest Payment Period in respect of which an interest payment
greater than zero was made (or the Initial Index Value, where the
determination is being made with respect to the initial Interest
Payment Period or any other Interest Payment Period when no
interest payment greater than zero has yet been made) and
subtracting one (1) from the resultant number (regardless of
whether the result of such steps is a positive or negative
number). The "Index Value" shall equal 100 plus the total return
of the Index from inception through the time of the relevant
determination of the level of the Index. The Interest
Determination Date with respect to each Interest Payment Period
for the Indexed Notes shall be the final day of such Interest
Payment Period, beginning on February 28, 1994 and ending on
January 31, 1996. Determinations of the Index Value shall be
made by Lehman Brothers Special Financing Inc. on the basis of
the level of the Index at 3:00 p.m., New York City time, on the
relevant determination date. "Index" means the Lehman Brothers
High Yield Index, as published on or about the third Business Day
succeeding the final day of the relevant Interest Payment Period
and set forth on the "LEHM" page (or such other service as may be
nominated for the purpose of displaying such Index), under the
captions Lehman Bond Indices, High Yield Index, Monthly Returns
and High Yield Index, published by Bloomberg Financial Services,
Inc.
III. Maturity Amount
The amount payable at Maturity in respect of the principal amount
of the Indexed Notes (the "Maturity Amount") will be equal to the
product of (a) the principal amount of the Indexed Notes and (b)
the lesser of (i) the Final Index Total Return minus .0225 and
(ii) .9775 but will in no event be less than zero. The "Final
Index Total Return" shall be determined by dividing the Index
Value for the final day of the Interest Payment Period
immediately preceding the Stated Maturity by the Index Value for
the final day of the most recent previous Interest Payment Period
in respect of which an interest payment greater than zero on the
Indexed Notes was made (or the Initial Index Value, if no
interest payment greater than zero has previously been made).
"Index Value" and "Index" in respect of the Maturity Amount shall
have the meanings assigned to such terms under the description of
"Interest" set forth above and the determination of the Index
Value for each Index shall be made in the manner set forth in
such description. The Indexed Notes mature on February 10, 1996,
and the Maturity Amount will be paid on such day (or if such day
is not a Business Day, on the following Business Day).
THE LEHMAN BROTHERS HIGH YIELD INDEX
General
The Index is a proprietary index published by Lehman Brothers
Inc. ("Lehman"), a subsidiary of the Company. The Index is
comprised of bonds which (i) are registered with the Securities
and Exchange Commission, (ii) offer a fixed rate of interest,
(iii) have no rights of conversion, (iv) are rated Ba1 or lower
(including bonds that are in default) by Moody's Investors
Service, Inc., (v) have a minimum amount outstanding of $100
million, (vi) mature more than one year from the issue date,
(vii) are sold primarily in the U.S., (viii) are denominated in
U.S. dollars, and (ix) are not pay-in-kind ("PIK") bonds. Any
bond which due to redemption, call, tender, maturity, or any
other reason ceases to meet such requirements is automatically
removed.
The requirements of the Index are established by Lehman's Bond
Strategies Group. The original requirements formulated at the
inception of the Index in January 1986 were revised for the first
time in January 1993 in order to increase the effectiveness of
the Index as an indicator of the health of the high yield
corporate bond market. Among the significant changes resulting
from this revision was an increase in the minimum outstanding
amount from $50 million to $100 million and the exclusion of PIK
bonds from the Index. There can be no assurance that Lehman will
not adjust or change the rules of the Index at some point in the
future.
The Index is calculated each month by aggregating the monthly
total returns for each of the constituent bonds of the Index,
weighted according to market value, to arrive at the total return
of the Index for such month. The monthly total return for each
constituent bond is calculated as: (a) the sum of (i) the price
of the bond at the end of the month, (ii) the interest accrued at
the end of the month and (iii) any coupon payments received
during the month, minus (b) the sum of (i) the price of the bond
at the beginning of the month and (ii) accrued interest at the
beginning of the month, divided by (c) the sum of (i) the price
of the bond at the beginning of the month and (ii) the interest
accrued at the beginning of the month.
As of December 1993, the Index included 659 issues with a total
market value of $132 billion. The average maturity of the bonds
was 9.43 years. Of the issuers represented in the Index as of
such date, a large majority were industrial companies, but the
Index also included utilities, finance companies and issuers in
other industries. The maturities of the component bond issues as
of such date were as follows: approximately 81% had maturities
of less than ten years; and approximately 19% had maturities of
ten or more years. BB rated bonds made up 39% of the Index, B
rated bonds, 51%; and CCC or less rated bonds, 10%.
If LB should revise or supplement the Index such that the Index
Values for the Index, calculated after such revision or
supplement, are incompatible with the Index Values calculated
prior to such revision or supplement, the Index Values of the
Index after such revision or supplement shall, for purposes of
calculating the interest payments due on the Indexed Notes, the
Maturity Amount, or both, as the case may be, be calculated by
such method as the Calculation Agent after consultation with the
Company shall deem fair and equitable under the circumstances.
If LB should cease to publish the Index, the Index Values for
purposes of calculating the interest payments due on the Indexed
Notes, the Maturity Amount, or both, as the case may be, will be
based on a comparable successor to the Index, to be selected by
the Calculation Agent after consultation with the Company; or if
no such comparable successor to the Index shall exist, Index
Values for such purposes will be calculated by such method as the
Calculation Agent after consultation with the Company shall deem
fair and equitable under the circumstances.
CERTAIN UNITED STATES FEDERAL INCOME TAX CONSEQUENCES
Set forth below is a summary of certain United States federal
income tax consequences resulting from the ownership of Indexed
Notes. Such consequences are in addition to those summarized in
the accompanying Prospectus Supplement under the heading "Certain
United States Federal Income Tax Consequences."
Taxation of U.S. Investors
While the matter is not free from doubt, the Indexed Notes should
constitute debt obligations of the Company for U.S. federal
income tax purposes, and no portion of the issue price of the
Indexed Notes should be separately allocated to the contingent
feature of the Indexed Notes. The Internal Revenue Service,
however, may argue that the Indexed Notes should be treated as
creating, in whole or in part, something other than a debt
obligation. For example, all or a portion of a Holder's rights
under the Indexed Notes could be characterized as cash-settled
options with respect to the Index.
If the Indexed Notes are treated as indebtedness of the Company
for federal income tax purposes, the appropriate tax accounting
is not entirely clear. The Indexed Notes may be treated as
consisting of a debt obligation issued at a premium paying a
fixed principal amount, and an option settled in cash with the
proceeds from the principal payment at maturity. The interest
payments, including any interest payment made on the Stated
Maturity, may be treated as ordinary interest income as such
amounts are determined. See "Certain Federal Income Tax
Consequences - Market Discount and Premium" in the accompanying
Prospectus Supplement. The method for amortizing premium with
respect to a debt instrument providing for contingent payments is
not clear. A Holder is advised to consult its tax advisor
regarding the amortization of premium. Under this approach, a
Holder would likely be entitled to recognize a loss, which may be
a capital loss, to the extent the Maturity Amount is less than a
Holder's basis in the Indexed Notes.
The Internal Revenue Service, however, has issued proposed
regulations under the original issue discount provisions of the
Internal Revenue Code for debt instruments providing for
contingent payments which would provide significantly different
treatment of the Indexed Notes. Although the proposed
regulations are not at present effective, they are proposed to be
retroactively effective once adopted in final form. These
regulations have been criticized and the IRS recently released
draft proposed regulations which would have revoked the
outstanding proposed regulations and provided substantially
revised rules. Prior to issuance, however, these draft proposed
regulations were withdrawn. The IRS has indicated that it may
replace the proposed regulations with a rule that requires some
minimum amount of interest income to be accrued on all contingent
payment debt instruments. It is impossible to predict whether,
or in what manner, the proposed regulations may be modified and
whether any modifications would apply to the Indexed Notes or
whether any such proposed regulations would become final
regulations.
Taxation of Certain Foreign Investors
Amounts paid to a nonresident alien individual, foreign
corporation, foreign partnership or foreign estate or trust will
be exempt from U.S. withholding tax.
Backup Withholding
See the discussion of "Certain United States Federal Income Tax
Consequences-- Backup Withholding and Information Reporting" in
the accompanying Prospectus Supplement.
OTHER CONSIDERATIONS
Risks Associated with Payments of Interest on the
Indexed Notes and the Maturity Amount
Pursuant to the formula employed in determining the amount of
interest payable in respect of any Interest Payment Period, an
investor in the Indexed Notes may receive no payment in respect
of interest for one or more Interest Payment Periods.
Pursuant to the formula employed in determining the Maturity
Amount, an investor in the Indexed Notes will receive a payment
in respect of the Maturity Amount that is less than par by at
least 2.25%. Such formula does not ensure any minimum payment in
respect of the Maturity Amount.
