<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 11-K
[X] ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE
SECURITIES AND EXCHANGE COMMISSION
For the fiscal year ended December 30, 1997
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 For the transition period from _______ to _______.
Commission file number 1-7657
A. Full title of the plan and the address of the plan, if different
from that of the issuer named below:
LEHMAN BROTHERS HOLDINGS INC.
TAX DEFERRED SAVINGS PLAN
Lehman Brothers Holdings Inc.
3 World Financial Center
New York, NY 10285
B. Name of issuer of the securities held pursuant to the plan and the
address of its principal executive office:
Lehman Brothers Holdings Inc.
3 World Financial Center
New York, NY 10285
<PAGE> 2
Financial Statements
and Supplemental Information
Lehman Brothers Holdings Inc.
Tax Deferred Savings Plan
For the years ended December 30, 1997 and 1996
with Report of Independent Auditors
<PAGE> 3
Lehman Brothers Holdings Inc.
Tax Deferred Savings Plan
Financial Statements
and Supplemental Information
For the years ended December 30, 1997 and 1996
CONTENTS
<TABLE>
<S> <C>
Report of Independent Auditors ....................................................................... 1
Financial Statements
Statements of Net Assets Available for Plan Benefits, With Fund Information .......................... 2
Statements of Changes in Net Assets Available for Plan Benefits
With Fund Information ............................................................................. 4
Notes to Financial Statements ........................................................................ 6
Supplemental Information
Schedule I Schedule of Investments Held ......................................................... 14
Schedule II Schedule of Series of Transactions in Excess of Five Percent of Net Assets
Available for Plan Benefits at Beginning of Year ..................................... 15
</TABLE>
A schedule of single transactions in excess of five percent of net assets
available for plan benefits at the beginning of the year has not been presented
because there were no single transactions in excess of five percent of net
assets during fiscal year 1997, which require disclosure under the Employee
Retirement Income Security Act of 1974, as amended ("ERISA") and for which there
are no statutory or administrative exemptions.
A schedule of party-in-interest transactions has not been presented because
there were no party-in-interest transactions which are prohibited by Section 406
of Employee Retirement Income Security Act of 1974, as amended ("ERISA") and for
which there are no statutory or administrative exemptions.
<PAGE> 4
[ERNST & YOUNG LLP LETTERHEAD]
Report of Independent Auditors
The Employee Benefits Plans Committee
Lehman Brothers Holdings Inc.
We have audited the accompanying statements of net assets available for plan
benefits of the Lehman Brothers Holdings Inc. Tax Deferred Savings Plan (the
"Plan") as of December 30, 1997 and 1996, and the related statements of changes
in net assets available for plan benefits for the years then ended. These
financial statements are the responsibility of the Plan's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the net assets available for plan benefits of the Plan at
December 30, 1997 and 1996, and the changes in its net assets available for plan
benefits for the years then ended in conformity with generally accepted
accounting principles.
Our audits were performed for the purpose of forming an opinion on the basic
financial statements taken as a whole. The accompanying supplemental schedules
of investments held as of December 30, 1997, and series of transactions in
excess of five percent of net assets available for plan benefits for the year
then ended, are presented for purposes of complying with the Department of
Labor's Rules and Regulations for Reporting and Disclosure under the Employee
Retirement Income Security Act of 1974, and are not a required part of the basic
financial statements. The fund information in the statements of net assets
available for the plan benefits and the statements of changes in net assets
available for plan benefits are presented for purposes of additional analysis
rather than to present the net assets available for plan benefits and changes in
net assets available for plan benefits of each fund. The supplemental schedules
and fund information have been subjected to the auditing procedures applied in
our audits of the basic financial statements and, in our opinion, are fairly
stated in all material respects in relation to the basic financial statements
taken as a whole.
ERNST & YOUNG LLP
May 1, 1998
1
<PAGE> 5
Lehman Brothers Holdings Inc.
Tax Deferred Savings Plan
Statement of Net Assets Available for
Plan Benefits, With Fund Information
December 30, 1997
Investment Funds
<TABLE>
<CAPTION>
AMERICAN LEHMAN
EXPRESS BROTHERS
FIXED COMPANY HOLDINGS INC. AMERICAN
SHORT-TERM INCOME COMMON COMMON CENTURY ULTRA
INTEREST FUND FUND STOCK FUND STOCK FUND INVESTORS FUND
------------- ------------- ------------- ------------- -------------
<S> <C> <C> <C> <C> <C>
ASSETS
Institutional Contracts (at cost plus interest) $ 120,784,299
Investments at fair value:
American Express Company Common Stock Fund
440,443 shares (cost: $10,122,019) $ 38,593,823
Lehman Brothers Holdings Inc. Common Stock Fund
703,642 shares (cost: $15,659,963) $ 35,138,123
American Century Ultra Investors Fund
2,329,416 shares (cost: $56,928,938) $ 63,499,886
Prime Value Obligations Fund
16,716,816 shares (cost: $16,716,816)
Templeton Foreign Fund
3,713,252 shares (cost: $36,051,442)
Income Fund of America
1,340,881 shares (cost: $20,187,646)
Fidelity Capital & Income Fund
2,063,971 shares (cost: $19,392,385)
Vanguard Index Trust 500 Portfolio
516,381 shares (cost: $31,062,694)
PIMCO Total Return Fund
972,301 shares (cost: $9,938,846)
Brandywine Blue Fund
79,718 shares (cost: $2,300,525)
Vanguard Fixed Income Long-Term Corporate
Portfolio 1,063,658 shares (cost: $9,218,984)
------------- ------------- ------------- ------------- -------------
-- 120,784,299 38,593,823 35,138,123 63,499,886
Cash and short-term investments $ 324,335 2,328 -- 100,427 --
Interest and dividends receivable 1,512 3 99,240 287 2
Other receivables 10,084 10,839 79,678 1,702,188 4,137
Net Inter-fund transfers (payable) receivable 7,648 (1,937,644) (141,038) 28,870 (69,856)
------------- ------------- ------------- ------------- -------------
Total assets 343,579 118,859,825 38,631,703 36,969,895 63,434,169
LIABILITIES
Accrued liabilities -- 49,860 12,375 77,833 21,586
Other liabilities -- -- -- -- --
------------- ------------- ------------- ------------- -------------
Total liabilities -- 49,860 12,375 77,833 21,586
------------- ------------- ------------- ------------- -------------
Net assets available for plan benefits $ 343,579 $ 118,809,965 $ 38,619,328 $ 36,892,062 $ 63,412,583
============= ============= ============= ============= =============
</TABLE>
<TABLE>
<CAPTION>
PRIME VALUE INCOME FIDELITY VANGUARD
OBLIGATIONS TEMPLETON FUND OF CAPITAL & INDEX TRUST
FUND FOREIGN FUND AMERICA INCOME FUND 500 PORTFOLIO
------------- ------------- ------------- ------------- -------------
<S> <C> <C> <C> <C> <C>
ASSETS
Institutional Contracts (at cost plus interest)
Investments at fair value:
American Express Company Common Stock Fund
440,443 shares (cost: $10,122,019)
Lehman Brothers Holdings Inc. Common Stock Fund
703,642 shares (cost: $15,659,963)
American Century Ultra Investors Fund
2,329,416 shares (cost: $56,928,938)
Prime Value Obligations Fund
16,716,816 shares (cost: $16,716,816) $ 16,716,816
Templeton Foreign Fund
3,713,252 shares (cost: $36,051,442) $ 36,946,857
Income Fund of America
1,340,881 shares (cost: $20,187,646) $ 23,800,644
Fidelity Capital & Income Fund
2,063,971 shares (cost: $19,392,385) $ 20,598,427
Vanguard Index Trust 500 Portfolio
516,381 shares (cost: $31,062,694) $ 46,531,049
PIMCO Total Return Fund
972,301 shares (cost: $9,938,846)
Brandywine Blue Fund
79,718 shares (cost: $2,300,525)
Vanguard Fixed Income Long-Term Corporate
Portfolio 1,063,658 shares (cost: $9,218,984)
------------- ------------- ------------- ------------- -------------
16,716,816 36,946,857 23,800,644 20,598,427 46,531,049
Cash and short-term investments -- -- -- -- --
Interest and dividends receivable -- -- 1 -- 1
Other receivables -- 150 1,307 -- 10,557
Net Inter-fund transfers (payable) receivable (348,666) (287,693) 160,679 (8,801) 510,638
------------- ------------- ------------- ------------- -------------
Total assets 16,368,150 36,659,314 23,962,631 20,589,626 47,052,245
LIABILITIES
Accrued liabilities 6,987 13,308 7,866 7,417 13,119
Other liabilities 117,404 -- -- 4,058 --
------------- ------------- ------------- ------------- -------------
Total liabilities 124,391 13,308 7,866 11,475 13,119
------------- ------------- ------------- ------------- -------------
Net assets available for plan benefits $ 16,243,759 $ 36,646,006 $ 23,954,765 $ 20,578,151 $ 47,039,126
============= ============= ============= ============= =============
</TABLE>
<TABLE>
<CAPTION>
VANGUARD
FIXED INCOME
LONG-TERM
PIMCO TOTAL BRANDYWINE CORPORATE
RETURN FUND BLUE FUND PORTFOLIO TOTAL
------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
ASSETS
Institutional Contracts (at cost plus interest) $ 120,784,299
Investments at fair value:
American Express Company Common Stock Fund
440,443 shares (cost: $10,122,019) 38,593,823
Lehman Brothers Holdings Inc. Common Stock Fund
703,642 shares (cost: $15,659,963) 35,138,123
American Century Ultra Investors Fund
2,329,416 shares (cost: $56,928,938) 63,499,886
Prime Value Obligations Fund
16,716,816 shares (cost: $16,716,816) 16,716,816
Templeton Foreign Fund
3,713,252 shares (cost: $36,051,442) 36,946,857
Income Fund of America
1,340,881 shares (cost: $20,187,646) 23,800,644
Fidelity Capital & Income Fund
2,063,971 shares (cost: $19,392,385) 20,598,427
Vanguard Index Trust 500 Portfolio
516,381 shares (cost: $31,062,694) 46,531,049
PIMCO Total Return Fund
972,301 shares (cost: $9,938,846) $ 10,539,748 10,539,748
Brandywine Blue Fund
79,718 shares (cost: $2,300,525) $ 2,105,351 2,105,351
Vanguard Fixed Income Long-Term Corporate
Portfolio 1,063,658 shares (cost: $9,218,984) $ 9,881,380 9,881,380
------------- ------------- ------------- -------------
10,539,748 2,105,351 9,881,380 425,136,403
Cash and short-term investments -- -- -- 427,090
Interest and dividends receivable 1 -- -- 101,047
Other receivables -- -- 1,367 1,820,307
Net Inter-fund transfers (payable) receivable 200,681 1,562,248 322,934 --
------------- ------------- ------------- -------------
Total assets 10,740,430 3,667,599 10,205,681 427,484,847
LIABILITIES
Accrued liabilities 3,998 114 3,469 217,932
Other liabilities 946 3 -- 122,411
------------- ------------- ------------- -------------
Total liabilities 4,944 117 3,469 340,343
------------- ------------- ------------- -------------
Net assets available for plan benefits $ 10,735,486 $ 3,667,482 $ 10,202,212 $ 427,144,504
============= ============= ============= =============
</TABLE>
See accompanying notes.
2
<PAGE> 6
Lehman Brothers Holdings Inc.
Tax Deferred Savings Plan
Statement of Net Assets Available for
Plan Benefits, With Fund Information
December 30, 1996
Investment Funds
<TABLE>
<CAPTION>
AMERICAN LEHMAN
EXPRESS BROTHERS
COMPANY HOLDINGS INC. TWENTIETH
SHORT-TERM FIXED INCOME COMMON COMMON CENTURY ULTRA
INTEREST FUND FUND STOCK FUND STOCK FUND INVESTORS FUND
------------- ------------- ------------- ------------- -------------
<S> <C> <C> <C> <C> <C>
ASSETS
Institutional Contracts (at cost plus interest) $ 126,138,571
Investments at fair value:
American Express Company Common Stock Fund
523,614 shares (cost: $12,033,409) $ 30,042,353
Lehman Brothers Holdings Inc. Common Stock Fund
624,363 shares (cost: $11,363,000) $ 19,589,389
Twentieth Century Ultra Investors Fund
1,829,588 shares (cost: $41,439,988) $ 52,015,185
Prime Value Obligations Fund
16,757,626 shares (cost: $16,757,626)
Templeton Foreign Fund
3,175,898 shares (cost: $29,764,390)
Income Fund of America
1,134,086 shares (cost: $16,197,319)
Fidelity Capital & Income Fund
1,866,652 shares (cost: $17,459,339)
Vanguard Index Trust 500 Portfolio
431,688 shares (cost: $23,244,493)
PIMCO Total Return Fund
941,665 shares (cost: $9,750,046)
Vanguard Fixed Income Long-Term Corporate
Portfolio 929,657 shares (cost: $7,958,488)
------------- ------------- ------------- ------------- -------------
-- 126,138,571 30,042,353 19,589,389 52,015,185
Cash and short-term investments $ 263,792 598,115 472 43,781 101,091
Interest and dividends receivable 1,658 750,574 93 -- --
Other receivables 11,173 5,039 43,932 1,818,875 10,297
Net Inter-fund transfers (payable) receivable 47,878 (266,836) (411,102) (407,841) 143,106
------------- ------------- ------------- ------------- -------------
Total assets 324,501 127,225,463 29,675,748 21,044,204 52,269,679
LIABILITIES
Accrued liabilities -- 40,422 8,490 5,199 15,789
Other liabilities -- -- -- -- 101,091
------------- ------------- ------------- ------------- -------------
Total liabilities -- 40,422 8,490 5,199 116,880
------------- ------------- ------------- ------------- -------------
Net assets available for plan benefits $ 324,501 $ 127,185,041 $ 29,667,258 $ 21,039,005 $ 52,152,799
============= ============= ============= ============= =============
</TABLE>
<TABLE>
<CAPTION>
PRIME VALUE VANGUARD INDEX
OBLIGATIONS TEMPLETON INCOME FUND OF FIDELITY CAPITAL TRUST 500
FUND FOREIGN FUND AMERICA & INCOME FUND PORTFOLIO
------------- ------------- ------------- ------------- -------------
<S> <C> <C> <C> <C> <C>
ASSETS
Institutional Contracts (at cost plus interest)
Investments at fair value:
American Express Company Common Stock Fund
523,614 shares (cost: $12,033,409)
Lehman Brothers Holdings Inc. Common Stock Fund
624,363 shares (cost: $11,363,000)
Twentieth Century Ultra Investors Fund
1,829,588 shares (cost: $41,439,988)
Prime Value Obligations Fund
16,757,626 shares (cost: $16,757,626) $ 16,757,626
Templeton Foreign Fund
3,175,898 shares (cost: $29,764,390) $ 32,711,752
Income Fund of America
1,134,086 shares (cost: $16,197,319) $ 18,882,528
Fidelity Capital & Income Fund
1,866,652 shares (cost: $17,459,339) $ 17,434,530
Vanguard Index Trust 500 Portfolio
431,688 shares (cost: $23,244,493) $ 30,377,873
PIMCO Total Return Fund
941,665 shares (cost: $9,750,046)
Vanguard Fixed Income Long-Term Corporate
Portfolio 929,657 shares (cost: $7,958,488)
------------- ------------- ------------- ------------- -------------
16,757,626 32,711,752 18,882,528 17,434,530 30,377,873
Cash and short-term investments 27 57,707 21,006 31,523 79,873
Interest and dividends receivable -- -- -- -- --
Other receivables 1,584 400 1,544 -- 7,441
Net Inter-fund transfers (payable) receivable 635,063 (95,782) (153,304) 5,800 449,454
------------- ------------- ------------- ------------- -------------
Total assets 17,394,300 32,674,077 18,751,774 17,471,853 30,914,641
LIABILITIES
Accrued liabilities 5,478 9,704 5,610 5,246 7,610
Other liabilities 108,309 57,707 21,006 33,782 79,873
------------- ------------- ------------- ------------- -------------
Total liabilities 113,787 67,411 26,616 39,028 87,483
------------- ------------- ------------- ------------- -------------
Net assets available for plan benefits $ 17,280,513 $ 32,606,666 $ 18,725,158 $ 17,432,825 $ 30,827,158
============= ============= ============= ============= =============
</TABLE>
<TABLE>
<CAPTION>
VANGUARD
FIXED INCOME
LONG-TERM
PIMCO TOTAL CORPORATE
RETURN FUND PORTFOLIO TOTAL
------------- ------------- -------------
<S> <C> <C> <C>
ASSETS
Institutional Contracts (at cost plus interest) $ 126,138,571
Investments at fair value:
American Express Company Common Stock Fund
523,614 shares (cost: $12,033,409) 30,042,353
Lehman Brothers Holdings Inc. Common Stock Fund
624,363 shares (cost: $11,363,000) 19,589,389
Twentieth Century Ultra Investors Fund
1,829,588 shares (cost: $41,439,988) 52,015,185
Prime Value Obligations Fund
16,757,626 shares (cost: $16,757,626) 16,757,626
Templeton Foreign Fund
3,175,898 shares (cost: $29,764,390) 32,711,752
Income Fund of America
1,134,086 shares (cost: $16,197,319) 18,882,528
Fidelity Capital & Income Fund
1,866,652 shares (cost: $17,459,339) 17,434,530
Vanguard Index Trust 500 Portfolio
431,688 shares (cost: $23,244,493) 30,377,873
PIMCO Total Return Fund
941,665 shares (cost: $9,750,046) $ 9,953,400 9,953,400
Vanguard Fixed Income Long-Term Corporate
Portfolio 929,657 shares (cost: $7,958,488) $ 8,320,428 8,320,428
------------- ------------- -------------
9,953,400 8,320,428 362,223,635
Cash and short-term investments 9,999 14,708 1,222,094
Interest and dividends receivable -- -- 752,325
Other receivables -- 975 1,901,260
Net Inter-fund transfers (payable) receivable 39,015 14,549 --
------------- ------------- -------------
Total assets 10,002,414 8,350,660 366,099,314
LIABILITIES
Accrued liabilities 3,028 2,687 109,263
Other liabilities 10,908 14,708 427,384
------------- ------------- -------------
Total liabilities 13,936 17,395 536,647
------------- ------------- -------------
Net assets available for plan benefits $ 9,988,478 $ 8,333,265 $ 365,562,667
============= ============= =============
</TABLE>
See accompanying notes.
3
<PAGE> 7
Lehman Brothers Holdings Inc.
Tax Deferred Savings Plan
Statement of Changes in Net Assets Available
for Plan Benefits, With Fund Information
Year ended December 30, 1997
Investment Funds
<TABLE>
<CAPTION>
----------------------------------------------------------------------------------
AMERICAN LEHMAN
EXPRESS BROTHERS
COMPANY HOLDINGS INC. AMERICAN
SHORT-TERM FIXED INCOME COMMON COMMON CENTURY ULTRA
INTEREST FUND FUND STOCK FUND STOCK FUND INVESTORS FUND
------------- ------------- ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
Investment Income:
Interest and dividends $ 19,078 $ 8,639,070 $ 537,266 $ 167,428 $ 24,548
Net realized and unrealized appreciation
(depreciation) in fair value of investments -- -- 12,205,160 12,234,246 11,186,103
------------ ------------- ------------ ------------ ------------
19,078 8,639,070 12,742,426 12,401,674 11,210,651
Contributions:
Employer -- -- -- 1,722,065 --
Participants -- 3,313,957 -- 1,904,278 6,042,414
Rollovers -- 73,357 -- 346,569 885,332
------------ ------------- ------------ ------------ ------------
-- 3,387,314 -- 3,972,912 6,927,746
Net Inter-fund transfers (out) in -- (6,365,374) (1,380,654) 1,862,026 (1,171,441)
Administrative fees -- (122,050) (29,555) (25,684) (50,500)
Participant withdrawals -- (13,914,036) (2,380,147) (2,357,871) (5,656,672)
Transfer (to) from other plans -- -- -- -- --
------------ ------------- ------------ ------------ ------------
-- (20,401,460) (3,790,356) (521,529) (6,878,613)
------------ ------------- ------------ ------------ ------------
Net increase (decrease) 19,078 (8,375,076) 8,952,070 15,853,057 11,259,784
Net assets available for plan benefits,
beginning of year 324,501 127,185,041 29,667,258 21,039,005 52,152,799
------------ ------------- ------------ ------------ ------------
Net assets available for plan benefits,
end of year $ 343,579 $ 118,809,965 $ 38,619,328 $ 36,892,062 $ 63,412,583
============ ============= ============ ============ ============
</TABLE>
<TABLE>
<CAPTION>
---------------------------------------------------------------------------------
PRIME VALUE FIDELITY CAPITAL VANGUARD
OBLIGATIONS TEMPLETON INCOME FUND & INCOME INDEX TRUST
FUND FOREIGN FUND OF AMERICA FUND 500 PORTFOLIO
------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
Investment Income:
Interest and dividends $ 976,869 $ 1,328,608 $ 1,142,260 $ 1,358,842 $ 757,961
Net realized and unrealized appreciation
(depreciation) in fair value of investments -- 1,159,175 2,899,941 1,307,405 9,834,067
------------ ------------ ------------ ------------ ------------
976,869 2,487,783 4,042,201 2,666,247 10,592,028
Contributions:
Employer -- -- -- -- --
Participants 1,258,054 3,903,768 1,459,306 2,316,102 5,070,556
Rollovers 237,325 700,351 207,136 518,134 1,128,887
------------ ------------ ------------ ------------ ------------
1,495,379 4,604,119 1,666,442 2,834,236 6,199,443
Net Inter-fund transfers (out) in (113,136) 133,272 962,039 (838,733) 2,664,068
Administrative fees (14,775) (31,568) (18,081) (16,901) (35,445)
Participant withdrawals (3,381,091) (3,154,266) (1,422,994) (1,499,523) (3,208,126)
Transfer (to) from other plans -- -- -- -- --
------------ ------------ ------------ ------------ ------------
(3,509,002) (3,052,562) (479,036) (2,355,157) (579,503)
------------ ------------ ------------ ------------ ------------
Net increase (decrease) (1,036,754) 4,039,340 5,229,607 3,145,326 16,211,968
Net assets available for plan benefits,
beginning of year 17,280,513 32,606,666 18,725,158 17,432,825 30,827,158
------------ ------------ ------------ ------------ ------------
Net assets available for plan benefits,
end of year $ 16,243,759 $ 36,646,006 $ 23,954,765 $ 20,578,151 $ 47,039,126
============ ============ ============ ============ ============
</TABLE>
<TABLE>
<CAPTION>
----------------------------------------------------------------
VANGUARD
FIXED INCOME
LONG-TERM
PIMCO TOTAL BRANDYWINE CORPORATE
RETURN FUND BLUE FUND PORTFOLIO TOTAL
------------ ----------- ------------ -------------
<S> <C> <C> <C> <C>
Investment Income:
Interest and dividends $ 649,540 $ -- $ 596,346 $ 16,197,816
Net realized and unrealized appreciation
(depreciation) in fair value of investments 273,864 (206,749) 436,086 51,329,298
------------ ----------- ------------ -------------
923,404 (206,749) 1,032,432 67,527,114
Contributions:
Employer -- -- -- 1,722,065
Participants 793,294 22,709 759,110 26,843,548
Rollovers 85,395 -- 178,619 4,361,105
------------ ----------- ------------ -------------
878,689 22,709 937,729 32,926,718
Net Inter-fund transfers (out) in (392,051) 3,851,778 788,206 --
Administrative fees (8,750) (256) (7,229) (360,794)
Participant withdrawals (654,284) -- (882,191) (38,511,201)
Transfer (to) from other plans -- -- -- --
------------ ----------- ------------ -------------
(1,055,085) 3,851,522 (101,214) (38,871,995)
------------ ----------- ------------ -------------
Net increase (decrease) 747,008 3,667,482 1,868,947 61,581,837
Net assets available for plan benefits,
beginning of year 9,988,478 -- 8,333,265 365,562,667
------------ ----------- ------------ -------------
Net assets available for plan benefits,
end of year $ 10,735,486 $ 3,667,482 $ 10,202,212 $ 427,144,504
============ =========== ============ =============
</TABLE>
See accompanying notes.
4
<PAGE> 8
Lehman Brothers Holdings Inc.
Tax Deferred Savings Plan
Statement of Changes in Net Assets Available for
Plan Benefits, With Fund Information
Year ended December 30, 1996
Investment Funds
<TABLE>
<CAPTION>
--------------------------------------------------------------------
AMERICAN LEHMAN
EXPRESS BROTHERS
COMPANY HOLDINGS INC.
SHORT-TERM FIXED INCOME COMMON COMMON
INTEREST FUND FUND STOCK FUND STOCK FUND
------------ ------------- ------------ ------------
<S> <C> <C> <C> <C>
Investment Income:
Interest and dividends $ 19,411 $ 9,326,533 $ 536,067 $ 134,879
Net realized and unrealized appreciation
(depreciation) in fair value of investments -- -- 8,942,664 6,382,929
------------ ------------- ------------ ------------
19,411 9,326,533 9,478,731 6,517,808
Contributions:
Employer -- -- -- 1,829,783
Participants -- 3,982,268 -- 1,332,461
Rollovers -- 134,831 -- 160,079
------------ ------------- ------------ ------------
-- 4,117,099 -- 3,322,323
Net Inter-fund transfers (out) in -- (2,057,350) (1,982,537) (850,253)
Administrative fees -- (61,495) (13,103) (8,943)
Participant withdrawals -- (12,724,436) (3,568,012) (1,783,659)
Transfer (to) from other plans -- (208,682) (170,188) (33,131)
------------ ------------- ------------ ------------
-- (15,051,963) (5,733,840) (2,675,986)
------------ ------------- ------------ ------------
Net increase (decrease) 19,411 (1,608,331) 3,744,891 7,164,145
Net assets available for plan benefits,
beginning of year 305,090 128,793,372 25,922,367 13,874,860
------------ ------------- ------------ ------------
Net assets available for plan benefits,
end of year $ 324,501 $ 127,185,041 $ 29,667,258 $ 21,039,005
============ ============= ============ ============
</TABLE>
<TABLE>
<CAPTION>
-------------------------------------------------------------------------------
TWENTIETH CENTURY PRIME VALUE FIDELITY
ULTRA INVESTORS OBLIGATIONS TEMPLETON INCOME FUND OF CAPITAL
FUND FUND FOREIGN FUND AMERICA & INCOME FUND
------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
Investment Income:
Interest and dividends $ 1,011 $ 919,531 $ 856,000 $ 964,379 $ 1,449,302
Net realized and unrealized appreciation
(depreciation) in fair value of investments 7,163,514 -- 3,972,698 1,718,857 355,639
------------ ------------ ------------ ------------ ------------
7,164,525 919,531 4,828,698 2,683,236 1,804,941
Contributions:
Employer -- -- -- -- --
Participants 5,632,595 1,632,992 3,693,459 1,360,245 2,279,015
Rollovers 772,818 336,682 524,518 71,573 426,623
------------ ------------ ------------ ------------ ------------
6,405,413 1,969,674 4,217,977 1,431,818 2,705,638
Net Inter-fund transfers (out) in 339,031 (443,195) 1,068,291 83,558 (519,343)
Administrative fees (26,153) (7,931) (15,740) (9,226) (8,356)
Participant withdrawals (5,179,526) (3,622,291) (3,477,019) (1,500,889) (1,665,853)
Transfer (to) from other plans (236,880) (118,128) (131,310) (52,292) (14,858)
------------ ------------ ------------ ------------ ------------
(5,103,528) (4,191,545) (2,555,778) (1,478,849) (2,208,410)
------------ ------------ ------------ ------------ ------------
Net increase (decrease) 8,466,410 (1,302,340) 6,490,897 2,636,205 2,302,169
Net assets available for plan benefits,
beginning of year 43,686,389 18,582,853 26,115,769 16,088,953 15,130,656
------------ ------------ ------------ ------------ ------------
Net assets available for plan benefits,
end of year $ 52,152,799 $ 17,280,513 $ 32,606,666 $ 18,725,158 $ 17,432,825
============ ============ ============ ============ ============
</TABLE>
<TABLE>
<CAPTION>
----------------------------------------------------------------
VANGUARD
FIXED INCOME
VANGUARD INDEX LONG-TERM
TRUST 500 PIMCO TOTAL CORPORATE
PORTFOLIO RETURN FUND PORTFOLIO TOTAL
------------ ----------- ------------ -------------
<S> <C> <C> <C> <C>
Investment Income:
Interest and dividends $ 509,242 $ 580,338 $ 543,227 $ 15,839,920
Net realized and unrealized appreciation
(depreciation) in fair value of investments 4,987,516 (128,978) (433,708) 32,961,131
------------ ----------- ------------ -------------
5,496,758 451,360 109,519 48,801,051
Contributions:
Employer -- -- -- 1,829,783
Participants 3,334,129 876,072 855,438 29,978,674
Rollovers 948,487 193,738 105,738 3,675,087
------------ ----------- ------------ -------------
4,282,616 1,069,810 961,176 30,483,544
Net Inter-fund transfers (out) in 5,106,198 (80,036) (664,364) --
Administrative fees (13,127) (4,814) (4,295) (173,183)
Participant withdrawals (1,478,919) (682,915) (652,215) (36,335,734)
Transfer (to) from other plans (79,241) (380) (3,663) (1,048,753)
------------ ----------- ------------ -------------
3,534,911 (768,145) (1,324,537) (37,557,670)
------------ ----------- ------------ -------------
Net increase (decrease) 13,314,285 753,025 (253,842) 41,726,925
Net assets available for plan benefits,
beginning of year 17,512,873 9,235,453 8,587,107 323,835,742
------------ ----------- ------------ -------------
Net assets available for plan benefits,
end of year $ 30,827,158 $ 9,988,478 $ 8,333,265 $ 365,562,667
============ =========== ============ =============
</TABLE>
See accompanying notes.
5
<PAGE> 9
Lehman Brothers Holdings Inc.
Tax Deferred Savings Plan
Notes to Financial Statements
December 30, 1997 and 1996
1. DESCRIPTION OF THE PLAN
GENERAL
The Lehman Brothers Holdings Inc. Tax Deferred Savings Plan (the "Plan") is a
defined contribution plan. The Plan became effective January 1, 1984, was
amended and restated effective January 1, 1989 and was subsequently amended
through March 16, 1998. Under the terms of the Plan, qualified employees of
Lehman Brothers Holdings Inc. ("Lehman") and its participating subsidiaries
(collectively, the "Company") are eligible to become Plan participants as soon
as administratively possible upon employment. Prior to July 1, 1995, there was a
12 month service requirement for plan participants.
The Plan is subject to the provisions of the ERISA. A complete description of
the Plan is contained in the Plan document available to all participants from
the Plan Administrator.
CONTRIBUTIONS
Upon enrollment, a participant may elect to contribute, on a pre-tax basis,
between one and fifteen percent of the participant's annual compensation, as
defined in the Plan document. The Company may make a contribution, in Company
stock or cash, on behalf of eligible participants who have completed 12 months
of service and are employees on the last day of the Plan year. The amount of the
Company contribution, if any, will be determined by the Company's Board of
Directors. If a Company contribution is made it will be allocated as follows:
1. Participants whose compensation is below $37,800 per year and are not
Investment Representatives, Investment Representative Trainees, Branch
Managers, or Institutional Salespeople will receive a Company
contribution of $400 plus a matching contribution of 100 percent of the
first $600 of the employee's Before-Tax contributions.
2. Participants whose compensation is between $37,800 and $100,000 per year
will receive a matching contribution of up to 100 percent of the first
$1,000 of the employee's Before-Tax contributions. Company contributions
to participants whose compensation is between $37,800 and $100,000 per
year will be made only if there are funds remaining after contributions
are made for participants making less than $37,800 per year.
6
<PAGE> 10
Lehman Brothers Holdings Inc.
Tax Deferred Savings Plan
Notes to Financial Statements (continued)
1. DESCRIPTION OF THE PLAN-CONTINUED
3. Company contributions will not be made for participants whose compensation
exceeds $100,000 per year.
In 1997 and 1996, Company contributions were made in cash. Boston Safe Deposit &
Trust Company ("Boston Safe"), the Plan's custodian, used cash to purchase the
Company's common stock.
A participant's Before-Tax Contributions will not be subject to tax until
distribution. The Code provides that Before-Tax Contributions (and any elective
deferrals to other plans containing a cash or deferred arrangement) will be
included in a participant's gross income to the extent such contributions exceed
the statutory limitation, which is indexed for inflation. In both 1997 and 1996,
the maximum limitation amount was $9,500. For 1998 the maximum limitation amount
is $10,000. The Company's contributions on behalf of a participant, as well as
the income and appreciation on amounts invested in the investment funds offered
under the Plan, are not includable in the participant's taxable income until
distributed.
Rollover contributions arise from contributions to the Plan of certain assets
previously held on behalf of participants by other qualified plans.
VALUATION OF PARTICIPANT ACCOUNTS
Separate accounts are maintained for each participant whereby the participant's
account is credited for contributions and investment income and credited or
charged, as appropriate, for investment appreciation or depreciation.
Participant accounts are charged for withdrawals. The periodic allocation of
investment income and investment appreciation or depreciation is based upon the
participant's beneficial interest in each of the investment funds at the
valuation date.
INVESTMENTS
Participant's contributions can be invested in any of the funds listed below.
Investments of contributions among the investment funds can be made in
increments of 10%, with a maximum of 50% of contributions permitted to be
invested in the Lehman Brothers Holdings Inc. Common Stock Fund. Participants
can elect to change their contribution rate and investment direction of new
contributions on a monthly basis. Participants may also elect to transfer
existing fund balances among the investment funds on a monthly basis.
7
<PAGE> 11
Lehman Brothers Holdings Inc.
Tax Deferred Savings Plan
Notes to Financial Statements (continued)
1. DESCRIPTION OF THE PLAN-CONTINUED
The following is a general description of each investment fund in which the Plan
invested since January 1996, as directed by participants:
Fixed Income Fund: This fund invests its assets with one or more insurance
companies or financial institutions (collectively, "institutions") which
issue contracts ("contracts") providing for the repayment of principal with a
specified annual rate of interest for a specified period. The fund is
currently invested in contracts negotiated with the following institutions:
<TABLE>
<CAPTION>
CARRYING VALUE AT
MATURITY INTEREST DECEMBER 30,
DATE RATE (%) 1997 1996
-------- -------- ------------ ------------
Metropolitan Life Insurance Co.
<S> <C> <C> <C> <C>
Contract #24565 12/15/01 7.30 $ 11,140,578 $ 9,946,912
Contract #12865 03/31/97 8.10 - 5,401,713
Contract #13955 06/15/99 8.25 12,373,979 17,035,023
Allstate Life Insurance Company
Contract #GICGA5584 12/15/00 7.30 14,055,623 17,365,463
Contract #GICGA5806 07/05/00 6.81 7,081,548 8,792,551
John Hancock Mutual Life Insurance Co.
Contract #5565 09/30/97 9.60 - 5,488,257
Prudential Asset Management Group
Contract #7430-211 12/15/99 6.52 9,729,580 9,086,741
American International Life
Assurance Company of New York
Contract #18180T 10/01/98 5.45 14,120,693 13,332,607
People's Security Insurance Co.
Contract #BDA00473FR 08/15/01 8.20 12,693,416 11,655,780
Contract #BDA00568FR 12/15/01 6.85 11,200,343 10,425,516
Aetna Life Insurance Co.
Contract #014005 12/30/97 8.80 - 4,597,936
The Principal Financial Group
Contract #4-08804-01 12/15/00 6.15 5,360,200 5,024,934
Contract #4-08804-02 12/15/02 6.40 10,599,252 7,985,138
New York Life Insurance Company
Contract #30727 6/14/02 6.52 7,376,078 -
Transamerica Life Insurance Company
Contract #51499 12/15/02 6.02 5,053,009 -
------------ -------------
$120,784,299 $126,138,571
============ =============
</TABLE>
8
<PAGE> 12
Lehman Brothers Holdings Inc.
Tax Deferred Savings Plan
Notes to Financial Statements (continued)
1. DESCRIPTION OF THE PLAN-CONTINUED
The present value of the contracts approximates their fair value as of December
30, 1997 and 1996. Present value was estimated using an analysis based on the
Plan's current investment rate for a similar contract.
American Express Company Common Stock Fund: This fund invests solely in the
common stock of American Express. As of May 31, 1994, this fund has been closed
to any new contributions, dividend reinvestments, or transfers in from other
funds.
Lehman Brothers Holdings Inc. Common Stock Fund: This fund invests solely in the
common stock of the Company.
American Century Ultra Investors Fund (Formerly known as Twentieth Century Ultra
Investors Fund): The primary objective of this fund is to provide a high level
of capital appreciation by investing primarily in medium and small-sized
companies with above average growth potential.
Prime Value Obligations Fund : The objective of this short-term fixed income
money market fund is to provide current income and stability of principal. Prior
to November 15, 1996, this fund was called the Lehman Brothers Prime Value Money
Market Fund.
Templeton Foreign Fund: The primary objective of this fund is to provide
long-term growth of capital by investing primarily in securities of companies
located outside the United States.
Income Fund of America: The fund's objective is to provide current income by
investing in debt securities and capital appreciation by investing in equity
securities.
Fidelity Capital & Income Fund: The primary objective of this fund is to provide
a high total return of capital growth and income. The fund invests primarily in
lower rated debt securities and securities of companies with uncertain financial
position.
Vanguard Index Trust 500 Portfolio/S&P 500 Index Fund: This equity fund's
objective is to replicate the investment performance of the Standard & Poor's
500 Index.
9
<PAGE> 13
Lehman Brothers Holdings Inc.
Tax Deferred Savings Plan
Notes to Financial Statements (continued)
1. DESCRIPTION OF THE PLAN-CONTINUED
PIMCO Total Return Fund: This fund is an intermediate term, fixed income fund
whose objective is to provide a high level of current income with reasonable
risk by investing in a diversified portfolio of fixed income securities of
varying maturities.
Brandywine Blue Fund: This fund invests in high quality blue chip stocks with
the objective of providing long-term growth. This fund was established and began
accepting contributions on November 1, 1997.
Vanguard Fixed Income Long-Term Corporate Portfolio: This fund invests in a
diversified portfolio of long-term corporate and government bonds with the
objective of providing a high level of current income.
In addition to the funds described above, a short-term interest fund provides
overnight investments in money market funds of Boston Safe for temporarily
invested cash. While cash for withdrawals is disbursed from this fund,
withdrawals are recorded in the investment fund from which the participant
withdrew.
INVESTMENTS IN EXCESS OF 5% OF NET ASSETS AVAILABLE FOR PLAN BENEFITS
The following is a schedule of investments held in excess of 5% of the net
assets available for plan benefits at the end of 1997.
<TABLE>
<CAPTION>
PAR VALUE/ MARKET VALUE
NUMBER AT DECEMBER
FUNDS OF SHARES 30, 1997
- --------------------------------------------- ----------- -------------
<S> <C> <C>
American Express Company common stock 440,443 $ 38,593,823
Lehman Brothers Holdings Inc. common stock 703,642 35,138,123
American Century Ultra Investors Fund 2,329,416 63,499,886
Templeton Foreign Fund 3,713,252 36,946,857
Vanguard Index Trust 500 Portfolio 516,381 46,531,049
Income Fund of America 1,340,881 23,800,644
</TABLE>
10
<PAGE> 14
Lehman Brothers Holdings Inc.
Tax Deferred Savings Plan
Notes to Financial Statements (continued)
1. DESCRIPTION OF THE PLAN-CONTINUED
BENEFITS
A participant may elect, after attaining the age of 59-1/2, to withdraw all or
any portion of the value of his accounts, provided that each withdrawal is at
least $1,000 (or is 100% of the value of his account if less than $1,000).
Withdrawals by participants before the age of 59-1/2 are permitted only after
meeting specified financial hardship criteria and after obtaining approval by
the Employee Benefit Plans Committee of the Company. Effective April 1, 1996, a
participant can elect to withdraw all or a part of their rollover contribution
made to the Plan, as long as the partial withdrawal of their rollover
contribution is at least $1,000 (or is 100% of the value of his account if less
than $1,000). However a participant can elect to withdraw all or part of their
rollover contribution only once during any consecutive 12-month period.
Although hardship and rollover withdrawals are allowed, a participant may be
subject to an additional 10 percent tax imposed by the Code. If a participant's
employment with the Company terminates for a reason other than death, the
balance in the participant's account is paid to the participant in a lump-sum
payment. However, if the balance in his account exceeds $3,500 ($5,000,
effective 1/1/98), payment will not be made without the participant's consent.
Upon death of the participant, the balance in the participant's account is paid
to the designated beneficiary (as provided by the Plan) in a lump-sum payment.
BENEFITS PAYABLE
Benefits payable to those participants who have elected to withdraw from the
Plan but have not yet been paid was $5,173,739 and $4,508,758 in 1997 and 1996,
respectively.
VESTING
Plan participants are 100 percent vested in all amounts in their respective Plan
accounts.
11
<PAGE> 15
Lehman Brothers Holdings Inc.
Tax Deferred Savings Plan
Notes to Financial Statements (continued)
1. DESCRIPTION OF THE PLAN-CONTINUED
INCOME TAX STATUS
The Internal Revenue Service ("IRS") made a favorable determination in a letter
dated February 14, 1995 that the Plan is qualified under Sections 401(a) and
401(k) of the Code and that the related trust established as part of the Plan
is, therefore, exempt from federal income taxes under the provisions of Section
501(a) of the Code. It is not anticipated that amendments to the Plan after the
date of the IRS determination letter will affect the qualified and tax-exempt
status of the Plan and trust.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
VALUATION OF INVESTMENTS
Investments in mutual funds are valued at the quoted redemption prices on the
last business day of the Plan year; investments in the common stock of American
Express and the Company are valued at the quoted market price on the last
business day of the Plan year; short-term investments and deposits with
insurance companies in connection with contracts are valued at cost plus accrued
interest.
Purchase and sales of securities are reflected on a trade-date basis.
OTHER
Dividend income is recorded on the ex-dividend date. Income from other
investments is recorded on the accrual basis.
USE OF ESTIMATES
The preparation of financial statements in accordance with generally accepted
accounting principles requires the use of estimates and assumptions that affect
the amounts reported in the financial statements and accompanying notes. Actual
results may differ from those estimates.
12
<PAGE> 16
Lehman Brothers Holdings Inc.
Tax Deferred Savings Plan
Notes to Financial Statements (continued)
3. ADMINISTRATIVE FEES
Except to the extent paid by the Company, all expenses of the Plan are paid by
the Plan. In 1997 and 1996, the Plan was charged $360,794 and $173,183 for
administrative expenses incurred during the respective years. The Company paid
all expenses not directly relating to the administration of the Plan, as well as
all expenses paid to affiliated investment managers.
4. PLAN TERMINATION
While it has not expressed any intent to do so, the Company has the right to
terminate the Plan at any time subject to the provisions set forth in ERISA and
the Code.
5. RELATED PARTY TRANSACTIONS
On November 15, 1996, the Company sold the Lehman Brothers Prime Value Money
market Fund to Federated Investors.
6. TRANSFER TO OTHER PLAN
Prior to May 31, 1994, the Company was a subsidiary of the American Express
Company ("American Express"). On May 31, 1994, American Express completed the
distribution of a special dividend (the "Spin-off") to its shareholders of all
the common stock of the Company held by American Express. As a result of the
Spin-off, the Company was no longer a subsidiary of American Express. The
account balances associated with former employees of the company, who
transferred to American Express prior to May 31, 1994 were transferred to the
American Express Incentive Savings Plan in 1996.
13
<PAGE> 17
SUPPLEMENTAL INFORMATION
<PAGE> 18
Schedule I
Lehman Brothers Holdings Inc.
Tax Deferred Savings Plan
Schedule of Investments Held
December 30, 1997
<TABLE>
<CAPTION>
PAR VALUE/ CURRENT VALUE COST
NUMBER AT DECEMBER AT DECEMBER
OF SHARES 30, 1997 30, 1997
----------- ------------- ------------
<S> <C> <C> <C>
CONTRACTS ISSUED BY INSTITUTIONS
Metropolitan Life Insurance Co.
Contract #24565 11,140,578 $ 11,140,578 $ 11,140,578
Contract #13955 12,373,979 12,373,979 12,373,979
Allstate Life Insurance Co.
Contract #GICA5584 14,055,623 14,055,623 14,055,623
Contract #GICA5806 7,081,548 7,081,548 7,081,548
Prudential Asset Management Group
Contract #7430-211 9,729,580 9,729,580 9,729,580
American Internal Life Assurance Company of New York
Contract 18180T 14,120,693 14,120,693 14,120,693
People's Security Insurance Co.
Contract #BDA00473FR 12,693,416 12,693,416 12,693,416
Contract #BDA00568FR 11,200,343 11,200,343 11,200,343
The Principal Financial Group
Contract #4-08804-01 5,360,200 5,360,200 5,360,200
Contract #4-08804-02 10,599,252 10,599,252 10,599,252
New York Life Contract
Contract #30727 7,376,078 7,376,078 7,376,078
TransAmerica Life Insurance Co.
Contract #51499 5,053,009 5,053,009 5,053,009
------------- ------------
$120,784,299 $120,784,299
============= ============
STOCK FUNDS
American Express Company Common Stock Fund 440,443 $ 38,593,823* $ 10,122,019
Lehman Brothers Holdings Inc. Common Stock Fund 703,642 35,138,123* 15,659,963
------------- ------------
$ 73,731,946 $ 25,781,982
============= ============
MUTUAL FUNDS
American Century Ultra Investors Fund 2,329,416 $ 63,499,886* $ 56,928,938
Prime Value Obligations Fund 16,716,816 16,716,816 16,716,816
Templeton Foreign Fund 3,713,252 36,946,857* 36,051,442
Income Fund Of America 1,340,881 23,800,644* 20,187,646
Fidelity Capital & Income Fund 2,063,971 20,598,427 19,392,385
Vanguard Index Trust 500 Portfolio 516,381 46,531,049* 31,062,694
PIMCO Total Return Fund 972,301 10,539,748 9,938,846
Vanguard Fixed Income Long-Term Corporate Portfolio 1,063,658 9,881,380 9,218,984
Brandywine Blue Fund 79,718 2,105,351 2,300,525
------------- ------------
$230,620,158 $201,798,276
============= ============
</TABLE>
* Investment in excess of five percent of Net Assets Available for Plan Benefits
at end of Plan year.
14
<PAGE> 19
Schedule II
Lehman Brothers Holdings Inc.
Tax Deferred Savings Plan
Schedule of Series of Transactions in Excess of Five Percent of Net Assets
Available for Plan Benefits at Beginning of Year
For the year ended December 30, 1997
<TABLE>
<CAPTION>
CONTRACT COST OF PROCEEDS FROM
DESCRIPTION OF ASSET NUMBER PURCHASES SALES GAIN (LOSS)
- -------------------------------- ---------- ----------- ------------- -----------
<S> <C> <C> <C> <C>
American Century Ultra Investors $19,120,824
American Century Ultra Investors $ 8,104,234 $ 2,195,555
The Principal Financial Group 4-08804-02 $15,266,798
The Principal Financial Group 4-08804-02 $12,652,684 $ -
New York Life Contract 30727 $12,971,820
New York Life Contract 30727 $ 5,595,742 $ -
</TABLE>
15
<PAGE> 20
SIGNATURE
Pursuant to the requirements of the Securities and Exchange Act of
1934, the Lehman Brothers Holdings Inc. Employee Benefit Plans Committee has
duly caused this annual report to be signed on its behalf by the undersigned
hereunto duly authorized.
LEHMAN BROTHERS HOLDINGS INC.
TAX DEFERRED SAVINGS PLAN
By: /s/Wendy Kleinschmidt
---------------------------
Wendy Kleinschmidt
Lehman Brothers Holdings Inc.
Employee Benefit Plans Committee
June 29, 1998
<PAGE> 21
EXHIBIT INDEX
Exhibit No. Description
(23) Consent of Experts
<PAGE> 1
Exhibit 23
CONSENT OF INDEPENDENT AUDITORS
We consent to the incorporation by reference in the Registration Statement of
Lehman Brothers Holdings Inc. (Form S-8, File No. 333-07875), pertaining to the
Lehman Brothers Holdings Inc. Tax Deferred Savings Plan (the "Plan"), of our
report dated May 1, 1998, with respect to the financial statements and
supplemental schedules of the Plan included in the Plan's Annual Report (Form
11-K) for the year ended December 30, 1997.
/s/ Ernst & Young LLP
New York, New York
June 29, 1998
