<PAGE>
Filed Pursuant to Rule 424(b)5
Registration No. 333-75723
PROSPECTUS SUPPLEMENT
(To prospectus dated April 30, 1999)
$500,000,000
LEHMAN BROTHERS HOLDINGS INC.
FLOATING RATE NOTES DUE 2005
---------------------------------------------------------------------------
This is an offering by Lehman Brothers Holdings Inc. of $500,000,000 of its
Floating Rate Notes due 2005. Interest will be payable on September 28,
December 28, March 28 and June 28 of each year beginning December 28, 2000. The
annual interest rate for each quarterly interest period will be reset quarterly
based on the three-month LIBOR rate plus 0.50%.
The Notes are unsecured and unsubordinated debt securities, are not
redeemable prior to maturity (except in the case of a tax event, as explained on
page S-8) or subject to a sinking fund, and are not convertible or exchangeable.
Application has been made to list the Notes on the Luxembourg Stock
Exchange.
The Notes should be delivered on or about September 28, 2000 through the
book-entry facilities of The Depository Trust Company, Clearstream Banking,
societe anonyme, Luxembourg and Euroclear.
<TABLE>
<CAPTION>
PER NOTE TOTAL
--------- ------------
<S> <C> <C>
Public offering price....................................... 99.789% $498,945,000
Underwriting discount....................................... .350% $ 1,750,000
Proceeds to Lehman Brothers Holdings Inc.................... 99.439% $497,195,000
</TABLE>
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities or determined that
this prospectus supplement or the attached prospectus is truthful or complete.
Any representation to the contrary is a criminal offense.
--------------------------------------------------------------------------------
LEHMAN BROTHERS
<TABLE>
<S> <C>
ABN AMRO BANC OF AMERICA SECURITIES LLC
BARCLAYS CAPITAL CREDIT LYONNAIS
HSBC ING BARINGS/BBL
THE ROYAL BANK OF SCOTLAND, FINANCIAL MARKETS
WESTDEUTSCHE LANDESBANK GIROZENTRALE
</TABLE>
September 21, 2000
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
--------
<S> <C>
Prospectus Supplement
Ratio of Earnings to Fixed Charges.......................... S-3
Capitalization.............................................. S-3
Selected Financial Data..................................... S-4
Use of Proceeds............................................. S-4
Directors and Principal Executive Officers.................. S-5
Description of the Notes.................................... S-6
Book-Entry Procedures and Settlement........................ S-10
Underwriting................................................ S-11
General Information......................................... S-12
Prospectus
Prospectus Summary.......................................... 2
Use of Proceeds and Hedging................................. 6
Ratio of Earnings to Fixed Charges and of Earnings to
Combined Fixed Charges and Preferred Stock Dividends...... 7
European Monetary Union..................................... 7
Description of Debt Securities.............................. 8
Description of Outstanding Preferred Stock.................. 14
Description of Offered Preferred Stock...................... 15
Description of Depositary Shares............................ 18
Book-Entry Procedures and Settlement........................ 20
United States Federal Income Tax Consequences............... 22
Plan of Distribution........................................ 32
ERISA Considerations........................................ 34
Legal Matters............................................... 34
Experts..................................................... 34
</TABLE>
------------------------
You should rely only on the information contained or incorporated by
reference in this prospectus supplement and the attached prospectus. No one has
been authorized to provide you with different information. You should not assume
that the information contained in this prospectus supplement or the attached
prospectus is accurate as of any date other than the date on the front cover of
the document. Securities are not being offered in any state or jurisdiction
where the offer is not permitted.
Lehman Brothers Holdings Inc. ("Holdings") accepts responsibility for the
information contained in the prospectus supplement and prospectus.
Holdings undertakes to provide you, without charge, a copy of any and all of
the documents incorporated by reference in the attached prospectus (other than
exhibits to such documents unless such exhibits are specifically incorporated by
reference into such prospectus). Written or oral requests for such copies should
be directed to the Controller's Office, Lehman Brothers Holdings Inc., 3 World
Financial Center, New York, New York 10285, USA (212) 526-0660.
The prospectus supplement and prospectus, together with the documents
incorporated by reference herein, will be available free of charge at the office
of Kredietbank S.A., Luxembourgeoise, 43, Boulevard Royal, L-2955 Luxembourg.
Notices to holders of the Notes will be published in a leading daily
newspaper in The City of New York, in London, and, so long as the Notes are
listed on the Luxembourg Stock Exchange, in Luxembourg. It is expected that
publication will be made in The City of New York in THE WALL STREET JOURNAL, in
London in the FINANCIAL TIMES, and in Luxembourg in the LUXEMBOURGER WORT. Any
such notice shall be deemed to have been given on the date of such publication
or, if published more than once, on the date of the first such publication.
S-2
<PAGE>
RATIO OF EARNINGS TO FIXED CHARGES
<TABLE>
<CAPTION>
SIX MONTHS
YEAR ENDED NOVEMBER 30, ENDED
---------------------------------------------------- MAY 31,
1995 1996 1997 1998 1999 2000
-------- -------- -------- -------- -------- ----------
<S> <C> <C> <C> <C> <C> <C>
Ratio of Earnings to Fixed Charges.................... 1.03 1.06 1.07 1.07 1.12 1.15
</TABLE>
CAPITALIZATION
The following table presents the consolidated capitalization of Holdings and
its subsidiaries at November 30, 1999 and May 31, 2000.
<TABLE>
<CAPTION>
AT NOVEMBER 30, 1999 AT MAY 31, 2000
-------------------- ----------------
(IN MILLIONS OF U.S. DOLLARS)
<S> <C> <C>
COMMERCIAL PAPER AND SHORT-TERM DEBT...................... $ 5,476 $ 5,912
LONG-TERM DEBT:
Senior notes(1)......................................... 27,375 30,214
Subordinated debt(1).................................... 3,316 3,319
------- -------
TOTAL LONG-TERM DEBT.................................... 30,691 33,533
------- -------
TOTAL COMMERCIAL PAPER, SHORT- AND LONG-TERM DEBT....... 36,167 39,445
------- -------
Trust preferred securities subject to mandatory
redemption............................................ 710 710
STOCKHOLDERS' EQUITY:
Preferred Stock......................................... 688 850
Common Stock: $0.10 par value; 300,000,000 shares
authorized; shares issued: 122,619,460 at
November 30, 1999 and 124,383,837 at May 31, 2000;
shares outstanding: 119,912,810 at November 30, 1999
and 121,708,431 at May 31, 2000....................... 12 12
Additional paid-in capital.............................. 3,387 3,377
Accumulated other comprehensive income (net of tax)..... (2) (10)
Retained earnings....................................... 2,094 2,916
Other stockholders' equity, net......................... 254 167
Common stock in treasury at cost:
2,706,650 shares in 1999 and 2,675,406 shares in
2000.................................................. (150) (216)
------- -------
TOTAL STOCKHOLDERS' EQUITY.............................. 6,283 7,096
------- -------
TOTAL COMMERCIAL PAPER, SHORT- AND LONG-TERM DEBT, TRUST
PREFERRED SECURITIES AND STOCKHOLDERS' EQUITY........... $43,160 $47,251
======= =======
</TABLE>
--------------------------
(1) Long-term debt at May 31, 2000 was as follows:
<TABLE>
<CAPTION>
U.S. DOLLAR NON-U.S. DOLLAR
------------------- ------------------- TOTAL AT
FIXED FLOATING FIXED FLOATING MAY 31,
RATE RATE RATE RATE 2000
-------- -------- -------- -------- ---------
(IN MILLIONS OF U.S. DOLLARS)
<S> <C> <C> <C> <C> <C>
Senior notes
Maturing in fiscal 2000......................... $ 1,676 $1,339 $ 216 $ 54 $ 3,285
Maturing in fiscal 2001......................... 1,481 3,057 823 341 5,702
Maturing in fiscal 2002......................... 1,670 2,178 654 894 5,396
Maturing in fiscal 2003......................... 2,335 1,255 433 464 4,487
Maturing in fiscal 2004......................... 1,954 317 970 42 3,283
December 1, 2004 and thereafter................. 5,519 145 1,664 733 8,061
------- ------ ------ ------ -------
Total senior notes.............................. 14,635 8,291 4,760 2,528 30,214
Subordinated debt
Maturing in fiscal 2000......................... 192 0 0 0 192
Maturing in fiscal 2001......................... 194 6 0 0 200
Maturing in fiscal 2002......................... 450 84 0 0 534
Maturing in fiscal 2003......................... 475 0 0 0 475
Maturing in fiscal 2004......................... 191 0 0 0 191
December 1, 2004 and thereafter................. 1,608 104 15 0 1,727
------- ------ ------ ------ -------
Total subordinated debt......................... 3,110 194 15 0 3,319
Total long-term debt.............................. $17,745 $8,485 $4,775 $2,528 $33,533
</TABLE>
There has been no material change in the capitalization of Holdings since
May 31, 1999 to the date of this document. All of the outstanding common stock
of Holdings is fully paid and non-assessable.
S-3
<PAGE>
SELECTED FINANCIAL DATA
The following table presents selected consolidated financial data of
Holdings and its subsidiaries for the periods specified.
<TABLE>
<CAPTION>
SIX
MONTHS
YEAR ENDED ENDED
NOVEMBER 30, MAY 31,
------------------- ---------
1998 1999 2000
-------- -------- ---------
(IN MILLIONS OF U.S. DOLLARS)
<S> <C> <C> <C>
OPERATING RESULTS
Revenues.................................................... $ 19,894 $18,989 $ 12,674
Net revenues................................................ 4,113 5,340 3,957
Total non-interest expense.................................. 3,061 3,709 2,605
Income before taxes and dividends on trust preferred
securities................................................ 1,052 1,631 1,352
Net income.................................................. 736 1,132 919
BALANCE SHEET
ASSETS:
Cash and cash equivalents................................... 3,055 5,186 3,968
Securities and other financial instruments owned............ 77,000 89,059 97,440
Collateralized short-term agreements........................ 58,722 81,619 113,115
Receivables................................................. 11,965 12,360 14,157
Property, equipment and leasehold improvements (net of
accumulated depreciation and amortization)................ 505 485 491
Other assets................................................ 1,297 1,408 1,365
Total assets................................................ 153,890 192,244 233,433
LIABILITIES AND STOCKHOLDERS' EQUITY:
Securities and other financial instruments sold but not yet
purchased................................................. 28,803 46,610 52,674
Collateralized short-term financing......................... 70,895 85,651 110,475
Payables.................................................... 10,525 12,155 17,056
Accrued liabilities and other payables...................... 4,256 4,668 5,977
Long-term debt.............................................. 27,341 30,691 33,533
Total liabilities........................................... 148,477 185,251 225,627
Trust preferred securities subject to mandatory
redemption................................................ 0 710 710
Total stockholders' equity.................................. 5,413 6,283 7,096
</TABLE>
USE OF PROCEEDS
We estimate that the net proceeds from the sale of the Notes will be
approximately $496,945,000 after underwriting discounts and payment of
transaction expenses. We will use the net proceeds for working capital and
general corporate purposes.
INCORPORATION BY REFERENCE
The consolidated financial statements and financial statement schedule of
Holdings as of and for the fiscal year ended November 30, 1999 and 1998 have
been audited by Ernst & Young LLP, independent certified public accountants, as
set forth in their report on the consolidated financial statements and are
incorporated by reference in this prospectus supplement. The unaudited
consolidated financial statements of Holdings as of and for the six months ended
May 31, 2000 are incorporated by reference in this prospectus supplement. For a
further discussion of documents incorporated by reference in this prospectus
supplement see "Prospectus Summary--Where You Can Find More Information" in the
attached prospectus. The documents incorporated by reference herein are
available free of charge at the offices of Kredietbank S.A. in Luxembourg.
S-4
<PAGE>
DIRECTORS AND PRINCIPAL EXECUTIVE OFFICERS
The directors and principal executive officers of Holdings are as follows:
<TABLE>
<CAPTION>
PRINCIPAL OCCUPATION
--------------------
<S> <C>
DIRECTORS
Richard S. Fuld, Jr.................. Chairman and Chief Executive Officer
Michael L. Ainslie................... Former President and Chief Executive Officer, Sotheby's
Holdings
John F. Akers........................ Retired Chairman, International Business Machines
Corporation
Roger S. Berlind..................... Theatrical Producer
Thomas H. Cruikshank................. Retired Chairman and Chief Executive Officer, Halliburton
Company
Dr. Henry Kaufman.................... President, Henry Kaufman & Company, Inc.
John D. Macomber..................... Principal, JDM Investment Group
Dina Merrill......................... Director and Vice Chairman, RKO Pictures, Inc.
EXECUTIVE OFFICERS
Richard S. Fuld, Jr.................. Chairman and Chief Executive Officer
David Goldfarb....................... Chief Financial Officer and Senior Vice President
Joseph M. Gregory.................... Chief Administrative Officer and Senior Vice President
Bradley H. Jack...................... Head of Investment Banking Division and Senior Vice
President
Stephen M. Lessing................... Co-Head of Capital Markets Division and Senior Vice
President
Michael F. McKeever.................. Head of Private Equity Division and Senior Vice President
Jeffrey Vanderbeek................... Co-Head of Capital Markets Division and Senior Vice
President
</TABLE>
S-5
<PAGE>
DESCRIPTION OF THE NOTES
THE FOLLOWING DESCRIPTION OF THE PARTICULAR TERMS OF THE NOTES BEING OFFERED
PURSUANT TO THIS PROSPECTUS SUPPLEMENT SUPPLEMENTS THE MORE GENERAL TERMS AND
PROVISIONS OF LEHMAN BROTHERS' DEBT SECURITIES SET FORTH IN THE ATTACHED
PROSPECTUS.
Holdings is offering Notes which will constitute senior unsecured debt and
will be issued under Holdings' senior indenture. The Notes will rank PARI PASSU
among themselves and with all other present and future senior unsecured
obligations of Holdings. The Notes will mature on September 28, 2005 at 100% of
their principal amount, are not redeemable prior to maturity (except in the case
of a tax event, as explained below) or subject to a sinking fund, and are not
convertible or exchangeable.
The Notes initially will be limited to $500,000,000 aggregage principal
amount. Holdings may, without the consent of the holders of the Notes, create
and issue additional notes ranking equally with the Notes and otherwise similar
in all respects so that such further notes shall be consolidated and form a
single series with the Notes. No additional notes can be issued if an Event of
Default has occurred with respect to the Notes.
The senior indenture and the Notes are governed by New York law. Holdings is
subject to the exclusive jurisdiction of the New York State or United States
federal court sitting in The City and County of New York over any suit, action
or proceeding rising out of or relating to the Notes or the senior indenture.
Definitions of certain capitalized terms used below can be found at the end
of this section.
INTEREST
Interest will be payable quarterly on September 28, December 28, March 28
and June 28 of each year, commencing on December 28, 2000. Interest will accrue
from the issue date of September 28, 2000 and will be payable to the person in
whose name such Note is registered at the close of business on the fifteenth
calendar day prior to such payment date. In the event that any payment date is
not a Business Day, payment will be made on the next Business Day, except that
if such Business Day is in the next succeeding calendar month, payment will be
made on the next preceding Business Day. Interest on the Notes will be computed
for each interest period on the basis of the actual number of days for which
interest is payable in that interest period, divided by 360.
The Notes will bear interest for each quarterly interest period at a per
annum rate determined by the Calculation Agent, subject to the maximum interest
rate permitted by New York or other applicable state law, as such law may be
modified by United States law of general application. The interest rate
applicable during each quarterly interest period will be equal to LIBOR on the
Interest Determination Date for such Interest Period plus 0.50%. Promptly upon
such determination, the Calculation Agent will notify Holdings and the trustee,
if the trustee is not then serving as the Calculation Agent, of the interest
rate for the new interest period. The interest rate determined by the
Calculation Agent, absent manifest error, shall be binding and conclusive upon
the beneficial owners and holders of the Notes, Holdings and the trustee. The
Luxembourg Stock Exchange will be notified, by the Calculation Agent, of the
interest amount, interest period and interest rate no later than the
commencement date of each new interest period.
If the following circumstances exist on any Interest Determination Date, the
Calculation Agent shall determine the interest rate for the Notes as follows:
- In the event no Reported Rate appears on Telerate Page 3750 as of
approximately 11:00 a.m., London time, on an Interest Determination Date,
the Calculation Agent shall request the principal London offices of each
of four major banks in the London interbank market selected by the
Calculation Agent (after consultation with Holdings) to provide a
quotation of the rate (the "Rate Quotation") at which three month
deposits, in amounts of not less than $1,000,000 are offered by it to
prime banks in the London interbank market, as of approximately 11:00
a.m., London time, on such Interest Determination Date, that is
representative of single transactions at such time (the "Representative
Amounts"). If at least two Rate Quotations are provided, the interest rate
will be the arithmetic mean of the Rate Quotations obtained by the
Calculation Agent, plus .50%.
S-6
<PAGE>
- In the event no Reported Rate appears on Telerate Page 3750 as of
approximately 11:00 a.m., London time, on an Interest Determination Date
and there are fewer than two Rate Quotations, the interest rate will be
the arithmetic mean of the rates quoted at approximately 11:00 a.m., New
York City time, on such Interest Determination Date, by three major banks
in New York City selected by the Calculation Agent (after consultation
with Holdings), for loans in Representative Amounts in U.S. dollars to
leading European banks, having an index maturity of three months for a
period commencing on the second London Business Day immediately following
such Interest Determination Date, plus .50%, provided however, that if
fewer than three banks selected by the Calculation Agent are quoting such
rates, the interest rate for the applicable interest period will be the
same as the interest rate in effect for the immediately preceding interest
period.
Upon the request of a holder of the Notes, the Calculation Agent will
provide to such holder the interest rate in effect on the date of such request
and, if determined, the interest rate for the next interest period.
SAME-DAY SETTLEMENT AND PAYMENT
Holdings will make all payments of principal and interest in immediately
available funds. The Notes will trade in DTC's same-day funds settlement system
until maturity; purchases of Notes in secondary market trading must therefore be
in immediately available funds.
PAYMENT OF ADDITIONAL AMOUNTS
Holdings will pay to the holder of any Note who is a United States Alien (as
defined below) such additional amounts as may be necessary so that every net
payment of principal of and interest on such Note, after deduction or
withholding for or on account of any present or future tax, assessment or other
governmental charge imposed upon such holder by the United States or any taxing
authority thereof or therein, will not be less than the amount provided in such
Note to be then due and payable. Holdings will not be required, however, to make
any payment of additional amounts for or on account of;
(a) any tax, assessment or other governmental charge that would not have
been imposed but for (i) the existence of any present or former connection
between such holder (or between a fiduciary, settlor, beneficiary of, member
or shareholder of, or possessor of a power over, such holder, if such holder
is an estate, trust, partnership or corporation) and the United States
including, without limitation, such holder (or such fiduciary, settlor,
beneficiary, member, shareholder or possessor) being or having been a
citizen or resident or treated as a resident thereof or being or having been
engaged in trade or business or present therein, or (ii) the presentation of
a Note for payment on a date more than 10 days after the date on which such
payment becomes due and payable or the date on which payment thereof is duly
provided for, whichever occurs later;
(b) any estate, inheritance, gift, sales, transfer, excise, personal
property or similar tax, assessment or other governmental charge;
(c) any tax, assessment or other governmental charge imposed by reason
of such holder's past or present status as a passive foreign investment
company, a controlled foreign corporation, a personal holding company or
foreign personal holding company with respect to the United States, or as a
corporation which accumulates earnings to avoid United States federal income
tax;
(d) any tax, assessment or other governmental charge which is payable
otherwise than by withholding from payment of principal of, or interest on,
such Note;
(e) any tax, assessment or other governmental charge required to be
withheld by any paying agent from any payment of principal of, or interest
on, any Note if such payment can be made without withholding by any other
paying agent;
(f) any tax, assessment or other governmental charge which would not
have been imposed but for the failure to comply with certification,
information, documentation or other reporting requirements
S-7
<PAGE>
concerning the nationality, residence, identity or connections with the
United States of the holder or beneficial owner of such Note, if such
compliance is required by statute or by regulation of the United States
Treasury Department as a precondition to relief or exemption from such tax,
assessment or other governmental charge;
(g) any tax, assessment or other governmental charge imposed on interest
received by (i) a 10% shareholder (as defined in Section 871 (h) (3) (B) of
the United States Internal Revenue Code of 1986, as amended (the "Code"),
and the regulations that may be promulgated thereunder) of Holdings or
(ii) a controlled foreign corporation with respect to Holdings within the
meaning of the Code; or
(h) any combinations of items (a),(b),(c),(d), (e), (f) and (g);
nor shall any additional amounts be paid to any holder who is a fiduciary or
partnership or other than the sole beneficial owner of such Note to the extent
that a beneficiary or settlor with respect to such fiduciary, or a member of
such partnership or a beneficial owner thereof would not have been entitled to
the payment of such additional amounts had such beneficiary, settlor, member or
beneficial owner been the holder of the Note.
The term "United States Alien" means any corporation, partnership,
individual or fiduciary that is, as to the United States, a foreign corporation,
a nonresident alien individual, a nonresident fiduciary of a foreign estate of
trust, or a foreign partnership one or more of the members of which is, as to
the United States, a foreign corporation, a nonresident alien individual or a
nonresident fiduciary of a foreign estate or trust.
REDEMPTION UPON A TAX EVENT
The Notes may be redeemed at the option of Holdings in whole, but not in
part, on not more than 60 days' and not less than 30 days' notice, at a
redemption price equal to 100% of their principal amount, if Holdings determines
that as a result of any change in or amendment to the laws, treaties,
regulations or rulings of the United States or any political subdivision or
taxing authority thereof, or any proposed change in such laws, treaties,
regulations or rulings, or any change in the official application, enforcement
or interpretation of such laws, treaties, regulations or rulings (including a
holding by a court of competent jurisdiction in the United States) or any other
action (other than an action predicated on law generally known on or before
September 28, 2000 except for proposals before the Congress before such date)
taken by any taxing authority or a court of competent jurisdiction in the United
States, or the official proposal of any such action, whether or not such action
or proposal was taken or made with respect to Holdings, (A) Holdings has or will
become obligated to pay additional amounts as described under the heading
"--Payment of Additional Amounts" on any Note or (B) there is a substantial
possibility that Holdings will be required to pay such additional amounts. Prior
to the publication of any notice of redemption, Holdings shall deliver to the
Trustee (i) an officers' certificate stating that Holdings is entitled to effect
such redemption and setting forth a statement of facts showing that the
conditions precedent to the right of Holdings so to redeem have occurred, and
(ii) an opinion of counsel to such effect based on such statement of facts.
CERTAIN DEFINITIONS
Set forth below are definitions of some of the terms used in this prospectus
supplement.
"Business Day" means any day that is not a day on which banking institutions
in New York City are authorized or required by law or regulation to close.
"Calculation Agent" means Citibank, N.A., or its successor appointed by the
issuer, acting as calculation agent.
"Interest Determination Date" means the second London Business Day
immediately preceding the first day of the relevant interest period.
"LIBOR" for any Interest Determination Date means the Reported Rate at
approximately 11:00 a.m., London time, on the Interest Determination Date.
S-8
<PAGE>
"London Business Day" means a day other than a Saturday or Sunday that is
not a day on which banking institutions in New York, New York are authorized or
obligated by law or executive order to be closed and a day on which dealings in
deposits in U.S. dollars are transacted, or with respect to any future date are
expected to be transacted, in the London interbank market.
"Reported Rate" for any Interest Determination Date means the offered rate
for deposits in U.S. dollars having an index maturity of three months for a
period commencing on the second London Business Day immediately following the
Interest Determination Date in amounts of not less than $1,000,000 as such rate
appears on Telerate Page 3750 or a successor reporter of such rates selected by
the Calculation Agent and acceptable to Holdings.
"Telerate Page 3750" means the display designated on page 3750 on Dow Jones
Markets Limited (or such other page as may replace the 3750 page on that service
or such other service as may be nominated by the British Bankers' Association
for the purpose of displaying London interbank offered rates for U.S. dollar
deposits).
S-9
<PAGE>
BOOK-ENTRY PROCEDURES AND SETTLEMENT
THE FOLLOWING DESCRIPTION OF BOOK-ENTRY PROCEDURES AND SETTLEMENT
SUPPLEMENTS THE INFORMATION UNDER "BOOK-ENTRY PROCEDURES AND SETTLEMENT" IN THE
ATTACHED PROSPECTUS.
Links have been established among DTC, Clearstream Banking, societe anonyme,
Luxembourg ("Clearstream Banking SA") and Euroclear (two international clearing
systems that perform functions similar to those that DTC performs in the U.S.),
to facilitate the initial issuance of the Notes and cross-market transfers of
the Notes associated with secondary market trading.
Although DTC, Clearstream Banking SA and Euroclear have agreed to the
procedures provided below in order to facilitate transfers, they are under no
obligation to perform such procedures, and the procedures may be modified or
discontinued at any time.
Clearstream Banking SA and Euroclear will record the ownership interests of
their participants in much the same way as DTC, and DTC will record the
aggregate ownership of each of the U.S. agents of Clearstream Banking SA and
Euroclear, as participants in DTC.
When Notes are to be transferred from the account of a DTC participant to
the account of a Clearstream Banking SA participant or a Euroclear participant,
the purchaser must send instructions to Clearstream Banking SA or Euroclear
through a participant at least one business day prior to settlement. Clearstream
Banking SA or Euroclear, as the case may be, will instruct its U.S. agent to
receive Notes against payment. After settlement, Clearstream Banking SA or
Euroclear will credit its participant's account. Credit for the Notes will
appear on the next day (European time).
Because settlement is taking place during New York business hours, DTC
participants can employ their usual procedures for sending Notes to the relevant
U.S. agent acting for the benefit of Clearstream Banking SA or Euroclear
participants. The sale proceeds will be available to the DTC seller on the
settlement date. Thus, to the DTC participant, a cross-market transaction will
settle no differently than a trade between two DTC participants.
When a Clearstream Banking SA or Euroclear participant wishes to transfer
Notes to a DTC participant, the seller must send instructions to Clearstream
Banking SA or Euroclear through a participant at least one business day prior to
settlement. In these cases, Clearstream Banking SA or Euroclear will instruct
its U.S. agent to transfer Notes against payment. The payment will then be
reflected in the account of the Clearstream Banking SA or Euroclear participant
the following day, with the proceeds back-valued to the value date (which would
be the preceding day, when settlement occurs in New York). If settlement is not
completed on the intended value date (i.e., the trade fails), proceeds credited
to the Clearstream Banking SA or Euroclear participant's account would instead
be valued as of the actual settlement date.
S-10
<PAGE>
UNDERWRITING
Subject to the terms and conditions of the underwriting agreement, dated as
of September 21, 2000, a form of which was filed as an exhibit to the SEC
registration statement under which the Notes are being offered and sold,
Holdings has agreed to sell to each of the underwriters named below, the
principal amount of Notes set forth opposite its name:
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT OF
UNDERWRITER NOTES
----------- ------------
<S> <C>
Lehman Brothers Inc......................................... $440,000,000
ABN AMRO Bank N.V........................................... 7,500,000
Banc of America Securities LLC.............................. 7,500,000
Banque Bruxelles Lambert S.A................................ 7,500,000
Barclays Bank PLC........................................... 7,500,000
Credit Lyonnais............................................. 7,500,000
HSBC Bank PLC............................................... 7,500,000
The Royal Bank of Scotland plc.............................. 7,500,000
Westdeutsche Landesbank Girozentrale........................ 7,500,000
------------
Total................................................... $500,000,000
============
</TABLE>
The underwriters have advised Holdings that they propose to initially offer
the Notes to the public at the public offering price set forth on the cover page
of this prospectus supplement; they may also offer Notes to certain dealers at
such price less a concession not in excess of 0.200% of the principal amount.
After the initial public offering of the Notes is completed, the public offering
price and such concessions may be changed.
In connection with the offering, the rules of the SEC permit the
underwriters to engage in certain transactions that stabilize the price of the
Notes; such transactions may consist of bids or purchases for the purpose of
pegging, fixing or maintaining the price of the Notes. If the underwriters
create a short position in the Notes in connection with the offering (that is,
if they sell a larger principal amount of the Notes than is set forth on the
cover page of this prospectus supplement), the underwriters may reduce that
short position by purchasing Notes in the open market.
In general, purchases of a security for the purpose of stabilization or to
reduce a short position could cause the price of the security to be higher than
it might otherwise be in the absence of such purchases. Neither Holdings nor any
of the underwriters can make any representation or prediction as to the
direction or magnitude of any effect that the transactions described above may
have on the price of the Notes. In addition, neither Holdings nor any of the
underwriters make any representation that the underwriters will in fact engage
in such transactions, or that such transactions, once begun, will not be
discontinued without notice.
Certain of the underwriters of the Notes are affiliated with commercial
banking institutions that may from time to time in the ordinary course of their
business loan money to and have other customary banking relationships with
Holdings and its affiliates.
Holdings will pay certain expenses, expected to be approximately $250,000,
associated with the offer and sale of the Notes.
Holdings has agreed to indemnify the underwriters against certain
liabilities, including liabilities under the Securities Act of 1933.
The underwriting arrangements for this offering comply with the requirements
of Rule 2720 of the NASD regarding an NASD member firm underwriting securities
of its affiliate.
S-11
<PAGE>
UNITED KINGDOM SELLING RESTRICTIONS
Each underwriter has represented and agreed that (i) it has not offered or
sold and prior to the date six months after the date of issue of the Notes will
not offer or sell Notes in the United Kingdom except to persons whose ordinary
activities involve them in acquiring, holding, managing or disposing of
investments (as principal or agent) for the purposes of their businesses or
otherwise in circumstances which have not resulted and will not result in an
offer to the public in the United Kingdom within the meaning of the Public
Offers of Securities Regulations 1995; (ii) it has complied and will comply with
all applicable provisions of the Financial Services Act 1986 with respect to
anything done by it in relation to the Notes in, from or otherwise involving the
United Kingdom; and (iii) it has only issued or passed on, and will only issue
or pass on, in the United Kingdom any document received by it in connection with
the issue of the Notes to a person who is of a kind described in Article 11(3)
of the Financial Services Act 1986 (Investment Advertisement) (Exemptions) Order
1996 (as amended) or is a person to whom the document may otherwise lawfully be
issued or passed on.
GENERAL INFORMATION
Application has been made to list the Notes on the Luxembourg Stock
Exchange. In connection with the listing application, the Certificate of
Incorporation and the By-Laws of Holdings and a legal notice relating to the
issuance of the Notes have been deposited prior to listing with GREFFIER EN CHEF
DU TRIBUNAL D'ARRONDISSEMENT DE ET A LUXEMBOURG, where copies thereof may be
obtained upon request. Copies of the above documents together with this
prospectus supplement and the accompanying prospectus, the Indenture and
Holdings' current annual and quarterly reports, as well as all future annual
reports and quarterly reports, so long as any of the Notes are outstanding, will
be made available for inspection at the main office of Kredietbank S.A.
Luxembourg, in Luxembourg. The audited financial statements of Holdings and its
consolidated subsidiaries for the year ended November 30, 2000 will be made
available on or about March 1, 2001. Kredietbank S.A. in Luxembourg will act as
intermediary between the Luxembourg Stock Exchange and Holdings and the holders
of the Notes. In addition, copies of the annual reports and quarterly reports of
Holdings may be obtained free of charge at that office.
Except as disclosed or contemplated in this prospectus supplement or
prospectus (including the documents incorporated therein by reference), there
has been no material adverse change in the financial position of Holdings since
November 30, 1999.
The independent auditors of Holdings are Ernst & Young LLP, New York, New
York.
Neither Holdings nor any of its subsidiaries is involved in litigation,
arbitration, or administrative proceedings relating to claims or amounts that
are material in the context of the issue of the Notes. Holdings is not aware of
any such litigation, arbitration, or administrative proceedings pending or
threatened.
Resolutions relating to the issue and sale of the Notes were adopted by
Holdings' Board of Directors on March 31, 1999.
The Notes have been accepted for clearance through Euroclear and Clearstream
Banking SA and have been assigned Common Code No. 011840060, International
Security Identification Number (ISIN) US524908CR90 and CUSIP No. 524908 CR 9.
S-12
<PAGE>
PROSPECTUS
$15,000,000,000
LEHMAN BROTHERS HOLDINGS INC.
MAY OFFER--
DEBT SECURITIES
PREFERRED STOCK
DEPOSITARY SHARES
----------------
Lehman Brothers Holdings will provide the specific terms of these securities
in supplements to this prospectus. You should read this prospectus and the
accompanying prospectus supplement carefully before you invest.
The securities offered pursuant to this prospectus are offered in an
aggregate principal amount of up to $15,000,000,000 subject to reduction as a
result of the sale under certain circumstances of other securities.
---------------------
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities or determined if this
prospectus or any accompanying prospectus supplement is truthful or complete.
Any representation to the contrary is a criminal offense.
---------------------
April 30, 1999
<PAGE>
PROSPECTUS SUMMARY
This summary provides a brief overview of the key aspects of Lehman Brothers
Holdings and all material terms of the offered securities that are known as of
the date of this prospectus. For a more complete understanding of the terms of
the offered securities, before making your investment decision, you should
carefully read:
- this prospectus, which explains the general terms of the securities that
Lehman Brothers Holdings may offer,
- the accompanying prospectus supplement, which (1) explains the specific
terms of the securities being offered and (2) updates and changes
information in this prospectus, and
- the documents referred to in "Where You Can Find More Information" on page
5 for information about Lehman Brothers Holdings, including its financial
statements.
LEHMAN BROTHERS HOLDINGS INC.
Lehman Brothers Holdings is one of the leading global investment banks,
serving institutional, corporate, government and high net worth clients and
customers. The company's worldwide headquarters in New York and regional
headquarters in London and Tokyo are complemented by offices in additional
locations in the United States, Europe, the Middle East, Latin America and the
Asia Pacific region.
The company's business includes capital raising for clients through
securities underwriting and direct placements, corporate finance and strategic
advisory services, merchant banking, securities sales and trading, asset
management, research, and the trading of foreign exchange, derivative products
and certain commodities. Through one or more subsidiaries, the company acts as a
market maker in all major equity and fixed income products in both the domestic
and international markets. The company is a member of all principal securities
and commodities exchanges in the United States, as well as the National
Association of Securities Dealers, Inc., and holds memberships or associate
memberships on several principal international securities and commodities
exchanges, including the London, Tokyo, Hong Kong, Frankfurt and Milan stock
exchanges.
Lehman Brothers Holdings' principal executive office is at 3 World Financial
Center, New York, New York 10285, and its telephone number is (212) 526-7000.
THE SECURITIES LEHMAN BROTHERS HOLDINGS MAY OFFER
Lehman Brothers Holdings may use this prospectus to offer up to
$15,000,000,000 of:
- debt securities,
- preferred stock, and
- depositary shares.
A prospectus supplement will describe the specific types, amounts, prices,
and detailed terms of any of these offered securities.
DEBT SECURITIES
Debt securities are unsecured general obligations of Lehman Brothers
Holdings in the form of senior or subordinated debt. Senior debt includes Lehman
Brothers Holdings' notes, debt and guarantees and any other debt for money
borrowed that is not subordinated. Subordinated debt, so designated at the time
it is issued, would not be entitled to interest and principal payments if
payments on the senior debt were not made.
The senior and subordinated debt will be issued under separate indentures
between Lehman Brothers Holdings and a trustee. Below are summaries of the
general features of the debt securities from these indentures. For a more
detailed description of these features, see "Description of Debt Securities"
below. You are also encouraged to read the indentures, which are incorporated by
reference in or filed as exhibits to Lehman Brothers Holdings' registration
statement no. 333-75723. You can receive copies of these documents by following
the directions on page 5.
2
<PAGE>
GENERAL INDENTURE PROVISIONS THAT APPLY TO SENIOR AND SUBORDINATED DEBT
- Neither indenture limits the amount of debt that Lehman Brothers Holdings
may issue or provides holders any protection should there be a highly
leveraged transaction involving Lehman Brothers Holdings, although the
indentures do limit Lehman Brothers Holdings' ability to pledge the stock
of any subsidiary that meets the financial thresholds in the indenture.
These thresholds are described below under "Description of Debt
Securities." Each indenture allows for different types of debt securities,
including indexed securities, to be issued in series.
- The indentures allow Lehman Brothers Holdings to merge or to consolidate
with another company, or sell all or substantially all of its assets to
another company. If any of these events occur, the other company would be
required to assume Lehman Brothers Holdings' responsibilities for the
debt. Unless the transaction resulted in an event of default, Lehman
Brothers Holdings would be released from all liabilities and obligations
under the debt securities when the other company assumed its
responsibilities.
- The indentures provide that holders of 66 2/3% of the principal amount of
the debt securities outstanding in any series may vote to change Lehman
Brothers Holdings' obligations or your rights concerning those securities.
However, changes to the financial terms of that security, including
changes in the payment of principal or interest on that security or the
currency of payment, cannot be made unless every holder of that security
consents to the change.
- Lehman Brothers Holdings may satisfy its obligations under the debt
securities or be released from its obligation to comply with the
limitations discussed above at any time by depositing sufficient amounts
of cash or U.S. government securities with the trustee to pay Lehman
Brothers Holdings' obligations under the particular securities when due.
- The indentures govern the actions of the trustee with regard to the debt
securities, including when the trustee is required to give notices to
holders of the securities and when lost or stolen debt securities may be
replaced.
EVENTS OF DEFAULT
The events of default specified in the indentures include:
- failure to pay principal when due,
- failure to pay required interest for 30 days,
- failure to make a required scheduled installment payment for 30 days,
- failure to perform other covenants for 90 days after notice, and
- certain events of insolvency or bankruptcy, whether voluntary or not.
REMEDIES
If there were a default, the trustee or holders of 25% of the principal
amount of debt securities outstanding in a series could demand that the
principal be paid immediately. However, holders of a majority in principal
amount of the securities in that series could rescind that acceleration of the
debt securities.
PREFERRED STOCK
Lehman Brothers Holdings may issue preferred stock with various terms to be
established by its board of directors or a committee designated by the board.
Each series of preferred stock will be more fully described in the particular
prospectus supplement that will accompany this prospectus, including redemption
provisions, rights in the event of liquidation, dissolution or winding up of
Lehman Brothers Holdings, voting rights and conversion rights.
3
<PAGE>
Generally, each series of preferred stock will rank on an equal basis with
each other series of preferred stock and will rank prior to Lehman Brothers
Holdings' common stock. The prospectus supplement will also describe how and
when dividends will be paid on the series of preferred stock.
DEPOSITARY SHARES
Lehman Brothers Holdings may issue depositary shares representing fractional
shares of preferred stock. Each particular series of depositary shares will be
more fully described in the prospectus supplement that will accompany this
prospectus.
These depositary shares will be evidenced by depositary receipts and issued
under a deposit agreement between Lehman Brothers Holdings and a bank or trust
company. You are encouraged to read the standard form of the deposit agreement,
which is incorporated by reference in Lehman Brothers Holdings' registration
statement no. 333-75723. You can receive copies of this document by following
the directions on page 5.
USE OF PROCEEDS
Lehman Brothers Holdings will use the net proceeds it receives from any
offering of these securities for general corporate purposes, primarily to fund
its operating units and subsidiaries. Lehman Brothers Holdings may use some of
the proceeds to refinance or extend the maturity of existing debt obligations.
Lehman Brothers Holdings may use a portion of the proceeds from the sale of
indexed notes to hedge its exposure to payments that it may have to make on such
indexed notes as described below under "Use of Proceeds and Hedging."
PLAN OF DISTRIBUTION
Lehman Brothers Holdings may sell the offered securities in any of the
following ways:
- to or through underwriters or dealers,
- by itself directly,
- through agents, or
- through a combination of any of these methods of sale.
The prospectus supplement will explain the ways Lehman Brothers Holdings
sells specific securities, including the names of any underwriters and details
of the pricing of the securities, as well as the commissions, concessions or
discounts Lehman Brothers Holdings is granting the underwriters, dealers or
agents.
If Lehman Brothers Holdings uses underwriters in any sale, the underwriters
will buy the securities for their own account and may resell the securities from
time to time in one or more transactions, at a fixed public offering price or at
varying prices determined at the time of sale. In connection with an offering,
underwriters and selling group members and their affiliates may engage in
transactions to stabilize, maintain or otherwise affect the market price of the
securities, in accordance with applicable law.
Lehman Brothers Holdings expects that the underwriters for any offering will
include its broker-dealer subsidiary, Lehman Brothers Inc. Lehman Brothers Inc.
also expects to offer and sell previously issued offered securities as part of
its business, and may act as a principal or agent in such transactions. Lehman
Brothers Holdings or Lehman Brothers Inc. may use this prospectus and the
related prospectus supplements and pricing supplements in connection with these
activities.
4
<PAGE>
WHERE YOU CAN FIND MORE INFORMATION
As required by the Securities Act of 1933, Lehman Brothers Holdings filed a
registration statement (No. 333-75723) relating to the securities offered by
this prospectus with the Securities and Exchange Commission. This prospectus is
a part of that registration statement, which includes additional information.
Lehman Brothers Holdings files annual, quarterly and current reports, proxy
statements and other information with the SEC. You may read and copy any
document Lehman Brothers Holdings files at the SEC's public reference rooms in
Washington, D.C., New York, New York and Chicago, Illinois. You can also request
copies of the documents, upon payment of a duplicating fee, by writing the
Public Reference Section of the SEC. Please call the SEC at 1-800-SEC-0330 for
further information on the public reference rooms. These SEC filings are also
available to the public from the SEC's web site at http://www.sec.gov.
The SEC allows Lehman Brothers Holdings to "incorporate by reference" the
information it files with the SEC, which means that it can disclose important
information to you by referring you to those documents. The information
incorporated by reference is considered to be part of this prospectus.
Information that Lehman Brothers Holdings files later with the SEC will
automatically update information in this prospectus. In all cases, you should
rely on the later information over different information included in this
prospectus or the prospectus supplement. Lehman Brothers Holdings incorporates
by reference the documents listed below and any future filings made with the SEC
under Section 13(a), 13(c), 14, or 15(d) of the Securities Exchange Act of 1934:
- Amended Annual Report on Form 10-K for the year ended November 30, 1998,
filed with the SEC on March 5, 1999;
- Quarterly Report on Form 10-Q for the quarter ended February 28, 1999,
filed with the SEC on April 14, 1999; and
- Current Reports on Form 8-K, filed with the SEC on January 7, January 27,
March 19 and April 20, 1999.
All documents Lehman Brothers Holdings files pursuant to Section 13(a),
13(c), 14 or 15(d) of the Exchange Act after the date of this prospectus and
before the later of (1) the completion of the offering of the securities
described in this prospectus and (2) the date Lehman Brothers Inc. stops
offering securities pursuant to this prospectus shall be incorporated by
reference in this prospectus from the date of filing of such documents.
You may request a copy of these filings, at no cost, by writing or
telephoning Lehman Brothers Holdings at the following address:
Controller's Office
Lehman Brothers Holdings Inc.
3 World Financial Center
New York, New York 10285
(212) 526-0660
---------------------
YOU SHOULD RELY ONLY ON THE INFORMATION PROVIDED IN THIS PROSPECTUS AND THE
PROSPECTUS SUPPLEMENT, AS WELL AS THE INFORMATION INCORPORATED BY REFERENCE.
LEHMAN BROTHERS HOLDINGS HAS NOT AUTHORIZED ANYONE TO PROVIDE YOU WITH DIFFERENT
INFORMATION. LEHMAN BROTHERS HOLDINGS IS NOT MAKING AN OFFER OF THESE SECURITIES
IN ANY JURISDICTION WHERE THE OFFER IS NOT PERMITTED. YOU SHOULD NOT ASSUME THAT
THE INFORMATION IN THIS PROSPECTUS, THE PROSPECTUS SUPPLEMENT OR ANY DOCUMENTS
INCORPORATED BY REFERENCE IS ACCURATE AS OF ANY DATE OTHER THAN THE DATE OF THE
APPLICABLE DOCUMENT.
5
<PAGE>
USE OF PROCEEDS AND HEDGING
GENERAL. Lehman Brothers Holdings will use the proceeds it receives from
the sale of the offered securities for general corporate purposes, principally
to:
- fund the business of its operating units,
- fund investments in, or extensions of credit or capital contributions to,
its subsidiaries, and
- lengthen the average maturity of liabilities, which means that it could
reduce its short-term liabilities or refund maturing indebtedness.
Lehman Brothers Holdings expects to incur additional indebtedness in the
future to fund its businesses. Lehman Brothers Holdings or an affiliate may
enter into a swap agreement in connection with the sale of the offered
securities and may earn additional income from that transaction.
USE OF PROCEEDS RELATING TO INDEXED NOTES. Lehman Brothers Holdings or one
or more of its subsidiaries may use all or some of the proceeds received from
the sale of indexed notes to purchase or maintain positions in the assets that
are used to determine the relevant index or indices. Lehman Brothers Holdings or
one or more of its subsidiaries may also purchase or maintain positions in
options, futures contracts, forward contracts or swaps, or options on such
securities, or other derivative or similar instruments relating to the relevant
index or underlying assets. Lehman Brothers Holdings may also use the proceeds
to pay the costs and expenses of hedging any currency, interest rate or other
index-related risk relating to such indexed notes.
Lehman Brothers Holdings expects that it or one or more of its subsidiaries
will increase or decrease their initial hedging position over time using
techniques which help evaluate the size of any hedge based upon a variety of
factors affecting the value of the underlying instrument. These factors may
include the history of price changes in that underlying instrument and the time
remaining to maturity. Lehman Brothers Holdings may take long or short positions
in the index, the underlying assets, options, futures contracts, forward
contracts, swaps, or other derivative or similar instruments related to the
index and the underlying assets. These other hedging activities may occur from
time to time before the indexed notes mature and will depend on market
conditions and the value of the index and the underlying assets.
In addition, Lehman Brothers Holdings or one or more of its subsidiaries may
purchase or otherwise acquire a long or short position in indexed notes from
time to time and may, in their sole discretion, hold, resell, exercise, cancel
or retire such offered securities. Lehman Brothers Holdings or one or more of
its subsidiaries may also take hedging positions in other types of appropriate
financial instruments that may become available in the future.
If Lehman Brothers Holdings or one or more of its subsidiaries has a long
hedge position in, options contracts in, or other derivative or similar
instruments related to, the underlying assets or index, Lehman Brothers Holdings
or one or more of its subsidiaries may liquidate all or a portion of its
holdings at or about the time of the maturity of the indexed notes. The
aggregate amount and type of such positions are likely to vary over time
depending on future market conditions and other factors. Lehman Brothers
Holdings is only able to determine profits or losses from any such position when
the position is closed out and any offsetting position or positions are taken
into account.
Lehman Brothers Holdings has no reason to believe that its hedging activity
will have a material impact on the price of such options, swaps, futures
contracts, options on the foregoing, or other derivative or similar instruments,
or on the value of the index or the underlying assets. However, Lehman Brothers
Holdings cannot guarantee you that its hedging activities will not affect such
prices or value. Lehman Brothers Holdings will use the remainder of the proceeds
from the sale of indexed notes for the general corporate purposes described
above.
6
<PAGE>
RATIO OF EARNINGS TO FIXED CHARGES AND OF EARNINGS TO COMBINED FIXED CHARGES AND
PREFERRED STOCK DIVIDENDS
<TABLE>
<CAPTION>
ELEVEN THREE
MONTHS MONTHS
ENDED YEAR ENDED NOVEMBER 30, ENDED
NOVEMBER 30, ----------------------------------------- FEBRUARY 28,
1994 1995 1996 1997 1998 1999
------------- -------- -------- -------- -------- ------------
<S> <C> <C> <C> <C> <C> <C>
Ratio of Earnings to Fixed Charges......... 1.03 1.03 1.06 1.07 1.07 1.08
Ratio of Earnings to Combined Fixed Charges
and Preferred Stock Dividends............ 1.02 1.03 1.05 1.06 1.06 1.08
</TABLE>
In computing the ratios above, "earnings" consist of earnings from
continuing operations before income taxes and fixed charges; "fixed charges"
consist principally of interest expense and one-third of office rentals and
one-fifth of equipment rentals, which are deemed to be representative of the
interest factor.
EUROPEAN MONETARY UNION
The foreign currencies in which debt securities may be denominated or by
which amounts due on the offered securities may be calculated could be issued by
countries participating in Stage III of the European Economic and Monetary
Union.
Stage III began on January 1, 1999 for the eleven participating member
states of the European Union that satisfied the economic convergence criteria in
the Treaty on European Union: Austria, Belgium, Finland, France, Germany,
Ireland, Italy, Luxembourg, The Netherlands, Portugal and Spain. Other member
states of the European Union may still become participating member states after
January 1, 1999.
Stage III includes the introduction of the Euro, which, along with the
present national currency of each participating member state, is legal tender in
the participating member states. It is currently anticipated that on and after
January 1, 2002, the national currencies of participating member states will
cease to exist and the sole legal tender in such states will be the Euro. The
European Union has adopted regulations providing specific rules for the
introduction of the Euro in substitution for the respective current national
currencies of such member states, and may adopt additional regulations or
legislation in the future relating to the Euro. It is anticipated that these
regulations or legislation will be supplemented by legislation of the individual
member states.
Pursuant to European Council Regulation No. 2866/98 of December 31, 1998,
one Euro equals:
- 13.7603 Austrian schillings,
- 40.3399 Belgian francs,
- 5.94573 Finnish marks,
- 6.55957 French francs,
- 1.95583 German marks,
- 0.787564 Irish pounds,
- 1,936.27 Italian lire,
- 40.3399 Luxembourg francs,
- 2.20371 Dutch guilders,
- 200.482 Portuguese escudos, or
- 166.386 Spanish pesetas.
7
<PAGE>
DESCRIPTION OF DEBT SECURITIES
The debt securities offered by this prospectus will be unsecured obligations
of Lehman Brothers Holdings and will be either senior or subordinated debt.
Senior debt will be issued under a senior debt indenture. Subordinated debt will
be issued under a subordinated debt indenture. The senior debt indenture and the
subordinated debt indenture are sometimes referred to in this prospectus
individually as an "indenture" and collectively as the "indentures." The
indentures (including all amendments and a separate related document containing
standard multiple series indenture provisions) have been filed with the SEC and
are incorporated by reference in the registration statement of which this
prospectus forms a part.
The following briefly summarizes the material provisions of the indentures
and the debt securities, other than pricing and related terms disclosed in the
accompanying prospectus supplement. You should read the more detailed provisions
of the applicable indenture, including the defined terms, for provisions that
may be important to you. You should also read the particular terms of a series
of debt securities, which will be described in more detail in the applicable
prospectus supplement. Copies of the indentures may be obtained from Lehman
Brothers Holdings or the applicable trustee. So that you may easily locate the
more detailed provisions, the numbers in parentheses below refer to sections in
the applicable indenture or, if no indenture is specified, to sections in each
of the indentures. Wherever particular sections or defined terms of the
applicable indenture are referred to, such sections or defined terms are
incorporated into this prospectus by reference, and the statement in this
prospectus is qualified by that reference.
Unless otherwise provided in the applicable prospectus supplement, the
trustee under the senior debt indenture will be Citibank, N.A., and the trustee
under the subordinated debt indenture will be The Chase Manhattan Bank (formerly
known as Chemical Bank).
GENERAL
The indentures provide that unsecured senior or subordinated debt securities
of Lehman Brothers Holdings may be issued in one or more series, with different
terms, in each case as authorized from time to time by Lehman Brothers Holdings.
Lehman Brothers Holdings also has the right to "reopen" a previous issue of a
series of debt securities by issuing additional debt securities of such series.
Federal income tax consequences and other special considerations applicable
to any debt securities issued by Lehman Brothers Holdings at a discount will be
described in the applicable prospectus supplement.
Because Lehman Brothers Holdings is a holding company, the claims of
creditors of Lehman Brothers Holdings' subsidiaries will have a priority over
Lehman Brothers Holdings' equity rights and the rights of Lehman Brothers
Holdings' creditors, including the holders of debt securities, to participate in
the assets of the subsidiary upon the subsidiary's liquidation.
The applicable prospectus supplement relating to any series of debt
securities will describe the following terms, where applicable:
- the title of the debt securities,
- whether the debt securities will be senior or subordinated debt,
- the total principal amount of the debt securities,
- the percentage of the principal amount at which the debt securities will
be sold and, if applicable, the method of determining the price,
- the maturity date or dates,
- the interest rate or the method of computing the interest rate,
- the date or dates from which any interest will accrue, or how such date or
dates will be determined, and the interest payment date or dates and any
related record dates,
8
<PAGE>
- if other than in United States dollars, the currency or currency unit in
which payment will be made,
- any provisions for the payment of additional amounts for taxes,
- the denominations in which the currency or currency unit of any debt
securities will be issuable if other than denominations of $1,000 and any
integral multiple thereof,
- the location where payments on the debt securities will be made,
- the terms and conditions on which the debt securities may be redeemed at
the option of Lehman Brothers Holdings,
- any obligation of Lehman Brothers Holdings to redeem, purchase or repay
the debt securities at the option of a holder upon the happening of any
event and the terms and conditions of redemption, purchase or repayment,
- any provisions for the discharge of Lehman Brothers Holdings' obligations
relating to the debt securities by deposit of funds or United States
government obligations,
- whether the debt securities are to trade in book-entry form and the terms
and any conditions for exchanging the global security in whole or in part
for paper certificates,
- any material provisions of the applicable indenture described in this
prospectus that do not apply to the debt securities, and
- any other specific terms of the debt securities.
The terms on which a series of debt securities may be convertible into or
exchangeable for other securities of Lehman Brothers Holdings will be set forth
in the prospectus supplement relating to such series. Such terms will include
provisions as to whether conversion or exchange is mandatory, at the option of
the holder or at the option of Lehman Brothers Holdings. The terms may include
provisions pursuant to which the number of other securities of Lehman Brothers
Holdings to be received by the holders of such series of debt securities may be
adjusted.
The debt securities will be issued only in registered form. As currently
anticipated, debt securities of a series will trade in book-entry form, and
global notes will be issued in physical (paper) form, as described below under
"Book-Entry Procedures and Settlement." Unless otherwise provided in the
accompanying prospectus supplement, debt securities denominated in United States
dollars will be issued only in denominations of $1,000 and whole multiples of
$1,000. The prospectus supplement relating to offered securities denominated in
a foreign or composite currency will specify the denomination of the offered
securities.
The debt securities may be presented for exchange, and debt securities other
than a global security may be presented for registration of transfer, at the
principal corporate trust office of the relevant trustee in New York City.
Holders will not have to pay any service charge for any registration of transfer
or exchange of debt securities, but Lehman Brothers Holdings may require payment
of a sum sufficient to cover any tax or other governmental charge payable in
connection with such registration of transfer (Section 305).
PAYMENT AND PAYING AGENTS
Distributions on the debt securities other than those represented by global
notes will be made in the designated currency against surrender of the debt
securities at the principal corporate trust office of the relevant trustee in
New York City. Payment will be made to the registered holder at the close of
business on the record date for such payment. Interest payments will be made at
the principal corporate trust office of the relevant trustee in New York City,
or by a check mailed to the holder at his registered address. Payments in any
other manner will be specified in the prospectus supplement (Sections 307
and 1002).
9
<PAGE>
SENIOR DEBT
The senior debt securities will be issued under the senior debt indenture
and will rank on an equal basis with all other unsecured debt of Lehman Brothers
Holdings except subordinated debt.
SUBORDINATED DEBT
The subordinated debt securities will be issued under the subordinated debt
indenture and will rank subordinated and junior in right of payment, to the
extent set forth in the subordinated debt indenture, to all "senior debt" (as
defined below) of Lehman Brothers Holdings.
If Lehman Brothers Holdings defaults in the payment of any principal of, or
premium, if any, or interest on any senior debt when it becomes due and payable
after any applicable grace period, then, unless and until the default is cured
or waived or ceases to exist, Lehman Brothers Holdings cannot make a payment on
account of or redeem or otherwise acquire the subordinated debt securities.
If there is any insolvency, bankruptcy, liquidation or other similar
proceeding relating to Lehman Brothers Holdings, its creditors or its property,
then all senior debt must be paid in full before any payment may be made to any
holders of subordinated debt securities.
Furthermore, if Lehman Brothers Holdings defaults in the payment of the
principal of and accrued interest on any subordinated debt securities that is
declared due and payable upon an event of default under the subordinated debt
indenture, holders of all senior debt will first be entitled to receive payment
in full in cash before holders of such debt can receive any payments.
"Senior debt" means:
(1) the principal, premium, if any, and interest in respect of
(A) indebtedness of Lehman Brothers Holdings for money borrowed and
(B) indebtedness evidenced by securities, notes, debentures, bonds or
other similar instruments issued by Lehman Brothers Holdings, including
the senior debt securities,
(2) all capitalized lease obligations of Lehman Brothers Holdings,
(3) all obligations of Lehman Brothers Holdings representing the deferred
purchase price of property, and
(4) all deferrals, renewals, extensions and refundings of obligations of the
type referred to in clauses (1) through (3),
but senior debt does not include:
(a) subordinated debt securities,
(b) any indebtedness that by its terms is subordinated to, or ranks on an
equal basis with, subordinated debt securities,
(c) indebtedness for goods or materials purchased in the ordinary course of
business or for services obtained in the ordinary course of business or
indebtedness consisting of trade payables, and
(d) indebtedness that is subordinated to an obligation of Lehman Brothers
Holdings of the type specified in clauses (1) through (4) above
(Subordinated Debt Indenture, Section 1401).
The effect of clause (d) is that Lehman Brothers Holdings may not issue,
assume or guarantee any indebtedness for money borrowed which is junior to the
senior debt securities and senior to the subordinated debt securities.
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COVENANTS
LIMITATIONS ON LIENS. The indentures provide that Lehman Brothers Holdings
will not, and will not permit any designated subsidiary to, incur, issue, assume
or guarantee any indebtedness for money borrowed if such indebtedness is secured
by a pledge of, lien on, or security interest in any shares of common stock of
any designated subsidiary, without providing that each series of debt securities
and, at Lehman Brothers Holdings' option, any other indebtedness ranking equally
and ratably with such indebtedness, is secured equally and ratably with (or
prior to) such other secured indebtedness (Section 1005).
"Designated subsidiary" means any subsidiary of Lehman Brothers Holdings,
the consolidated net worth of which represents at least 5% of the consolidated
net worth of Lehman Brothers Holdings. As of February 28, 1999, the designated
subsidiaries were Global Thai Property Fund, Lehman Brothers Inc., Lehman
Brothers Holdings Plc, Lehman Brothers (International) Europe, Lehman Brothers
Japan Inc., Lehman Brothers U.K. Holdings (Delaware) Inc., Lehman Brothers UK
Holdings Ltd., Lehman Commercial Paper Inc., Lehman Re Ltd. and Structured Asset
Securities Corp. (Section 101).
LIMITATIONS ON MERGERS AND SALES OF ASSETS. The indentures provide that
Lehman Brothers Holdings will not merge or consolidate or transfer or lease all
or substantially all its assets, and another person may not transfer or lease
all or substantially all of its assets to Lehman Brothers Holdings unless:
- either (1) Lehman Brothers Holdings is the continuing corporation, or
(2) the successor corporation, if other than Lehman Brothers Holdings, is
a U.S. corporation and expressly assumes by supplemental indenture the
obligations evidenced by the securities issued pursuant to the indenture,
and
- immediately after the transaction, there would not be any default in the
performance of any covenant or condition of the indenture (Section 801).
Other than the restrictions described above, the indentures do not contain
any covenants or provisions that would protect holders of the debt securities in
the event of a highly leveraged transaction.
MODIFICATION OF THE INDENTURES
Under the indentures, Lehman Brothers Holdings and the relevant trustee can
enter into supplemental indentures to establish the form and terms of any new
series of debt securities without obtaining the consent of any holder of debt
securities (Section 901).
Lehman Brothers Holdings and the trustee may, with the consent of the
holders of at least 66 2/3% in aggregate principal amount of the debt securities
of a series, modify the applicable indenture or the rights of the holders of the
securities of such series to be affected.
No such modification may, without the consent of the holder of each security
so affected:
- extend the fixed maturity of any such securities,
- reduce the rate or change the time of payment of interest on such
securities,
- reduce the principal amount of such securities or the premium, if any, on
such securities,
- change any obligation of Lehman Brothers Holdings to pay additional
amounts,
- reduce the amount of the principal payable on acceleration of any
securities issued originally at a discount,
- adversely affect the right of repayment or repurchase at the option of the
holder,
- reduce or postpone any sinking fund or similar provision,
- change the currency or currency unit in which any such securities are
payable or the right of selection thereof,
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- impair the right to sue for the enforcement of any such payment on or
after the maturity of such securities,
- reduce the percentage of securities referred to above whose holders need
to consent to the modification or a waiver without the consent of such
holders, or
- change any obligation of Lehman Brothers Holdings to maintain an office or
agency (Section 902).
DEFAULTS
Each indenture provides that events of default regarding any series of debt
securities will be:
- failure to pay required interest on any debt security of such series for
30 days,
- failure to pay principal or premium, if any, on any debt security of such
series when due,
- failure to make any required scheduled installment payment for 30 days on
debt securities of such series,
- failure to perform for 90 days after notice any other covenant in the
relevant indenture other than a covenant included in the relevant
indenture solely for the benefit of a series of debt securities other than
such series, and
- certain events of bankruptcy or insolvency, whether voluntary or not
(Section 501).
If an event of default regarding debt securities of any series issued under
the indentures should occur and be continuing, either the trustee or the holders
of 25% in the principal amount of outstanding debt securities of such series may
declare each debt security of that series due and payable. Lehman Brothers
Holdings is required to file annually with the trustee a statement of an officer
as to the fulfillment by Lehman Brothers Holdings of its obligations under the
indenture during the preceding year (Section 1006).
No event of default regarding one series of debt securities issued under an
indenture is necessarily an event of default regarding any other series of debt
securities.
Holders of a majority in principal amount of the outstanding debt securities
of any series will be entitled to control certain actions of the trustee under
the indentures and to waive past defaults regarding such series (Sections 502
and 512). The trustee generally will not be requested, ordered or directed by
any of the holders of debt securities, unless one or more of such holders shall
have offered to the trustee reasonable security or indemnity (Section 603).
If an event of default occurs and is continuing regarding a series of debt
securities, the trustee may use any sums that it holds under the relevant
indenture for its own reasonable compensation and expenses incurred prior to
paying the holders of debt securities of such series (Section 506).
Before any holder of any series of debt securities may institute action for
any remedy, except payment on such holder's debt security when due, the holders
of not less than 25% in principal amount of the debt securities of that series
outstanding must request the trustee to take action. Holders must also offer and
give the satisfactory security and indemnity against liabilities incurred by the
trustee for taking such action (Sections 502, 507 and 603).
DEFEASANCE
Except as may otherwise be set forth in an accompanying prospectus
supplement, after Lehman Brothers Holdings has deposited with the trustee, cash
or government securities, in trust for the benefit of the holders
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sufficient to pay the principal of, premium, if any, and interest on the debt
securities of such series when due, then:
- if the terms of the debt securities so provide, Lehman Brothers Holdings
will be deemed to have paid and satisfied its obligations on all
outstanding debt securities of such series, which is known as "defeasance
and discharge" (Section 401), or
- Lehman Brothers Holdings will cease to be under any obligation, other than
to pay when due the principal of, premium, if any, and interest on such
debt securities, relating to the debt securities of such series, which is
known as "covenant defeasance" (Section 1009).
When there is a defeasance and discharge, (1) the applicable indenture will
no longer govern the debt securities of such series, (2) Lehman Brothers
Holdings will no longer be liable for payment and (3) the holders of such debt
securities will be entitled only to the deposited funds. When there is a
covenant defeasance, however, Lehman Brothers Holdings will continue to be
obligated to make payments when due if the deposited funds are not sufficient.
For a discussion of the principal United States federal income tax
consequences of covenant defeasance and defeasance and discharge, see "United
States Federal Income Tax Consequences--Tax Consequences of Defeasance" below.
CONCERNING THE TRUSTEES
Lehman Brothers Holdings has had and may continue to have banking
relationships with the trustees in the ordinary course of business.
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DESCRIPTION OF OUTSTANDING PREFERRED STOCK
As of the date of this prospectus, Lehman Brothers Holdings' authorized
capital stock includes 38 million shares of preferred stock. The following
briefly summarizes the material terms of Lehman Brothers Holdings' outstanding
preferred stock. You should read the more detailed provisions of Lehman Brothers
Holdings' certificate of incorporation or the certificate of designation
relating to a series of preferred stock for provisions that may be important to
you.
The general terms of Lehman Brothers Holdings' preferred stock are described
below under "Description of Offered Preferred Stock."
As of February 28, 1999, Lehman Brothers Holdings had outstanding the
following series of preferred stock with the following terms:
<TABLE>
<CAPTION>
DATE NEXT
REDEEMABLE
NUMBER OF REDEMPTION BY LEHMAN GENERAL
SHARES DIVIDENDS PRICE PER BROTHERS VOTING
TITLE OF SERIES OUTSTANDING PER YEAR SHARE HOLDINGS RIGHTS
--------------- ----------- --------- ---------- ---------- --------
<S> <C> <C> <C> <C> <C>
Redeemable Voting Preferred
Stock......................... 1,000 Variable(2) $ 1.00 Variable(3) Yes(5)
Cumulative Convertible Voting
Preferred Stock, Series A..... 2,300(1) $ 1.955 $ 39.10 Variable(4) Yes(5)
Cumulative Convertible Voting
Preferred Stock, Series B..... 9,161,384(1) $ 1.955 $ 39.10 Variable(4) Yes(5)
5.94% Cumulative Preferred
Stock, Series C............... 500,000 $ 29.70 $ 500.00 05/31/08 No
5.67% Cumulative Preferred
Stock, Series D............... 40,000 $283.50 $5,000.00 08/31/08 No
</TABLE>
Where the above table indicates that the holders of the preferred stock have
no general voting rights, this means that they do not vote on matters submitted
to a vote of the common stockholders. However, the holders of this preferred
stock do have other special voting rights (1) that are required by law,
(2) that apply if there is a default in paying dividends for the equivalent of
six calendar quarters, and (3) when Lehman Brothers Holdings wants to create any
class of stock having a preference as to dividends or distributions of assets
over such series or alter or change the provisions of the certificate of
incorporation so as to adversely affect the powers, preferences or rights of the
holders of such series. Some or all of these special voting rights apply to each
series of preferred stock listed above. In the event of a default in paying
dividends for the equivalent of six calendar quarters, the holders of the
Redeemable Voting Preferred Stock, the 5.94% Cumulative Preferred Stock,
Series C, and the 5.67% Cumulative Preferred Stock, Series D have the right
collectively to elect two additional directors to Lehman Brothers Holdings'
board of directors until such dividends are paid.
------------------------
(1) Each share of Cumulative Convertible Voting Preferred Stock, Series A and B,
is convertible at the holder's option into 0.3178313 of a share of common
stock, subject to anti-dilution adjustment.
(2) The holders of the Redeemable Voting Preferred Stock (as of the date of this
prospectus, The American Express Company and Nippon Life Insurance Company)
are entitled to 50% of the amount by which Lehman Brothers Holdings' net
income for a fiscal year exceeds $400 million, to a maximum of $50 million
per year (prorated for the final dividend period, which runs from
December 1, 2001 to May 31, 2002).
(3) Redemption is mandatory on May 31, 2002. The holders also have the right to
require Lehman Brothers Holdings to redeem the Redeemable Voting Preferred
Stock if a Designated Event (as defined in Lehman Brothers Holdings'
certificate of incorporation) occurs, for an aggregate redemption payment of
$150 million if such event occurs prior to November 30, 1999, declining
$50 million per year thereafter.
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(4) Redeemable at any time that there is a public market for Lehman Brothers
Holdings' common stock and the average market price per share thereof
exceeds the conversion price (at the date of this prospectus) of
$123.0212380.
(5) Holders of shares of Redeemable Voting Preferred Stock are entitled to 1,059
votes per share, and holders of shares of Cumulative Convertible Voting
Preferred Stock, Series A and B, are entitled to the number of votes per
share equal to the quotient obtained by dividing $39.10 by the conversion
price (at the date of this prospectus) of $123.0212380, when voting as a
class with the common stock, subject to anti-dilution adjustment. American
Express has agreed that as long as it holds Redeemable Voting Preferred
Stock, it will vote it in the same proportion as the common stock holders on
matters voted on generally.
DESCRIPTION OF OFFERED PREFERRED STOCK
The following briefly summarizes the material terms of Lehman Brothers
Holdings' preferred stock, other than pricing and related terms disclosed in the
accompanying prospectus supplement. You should read the particular terms of any
series of preferred stock offered by Lehman Brothers Holdings which will be
described in more detail in any prospectus supplement relating to such series,
together with the more detailed provisions of Lehman Brothers Holdings' restated
certificate of incorporation and the certificate of designation relating to each
particular series of preferred stock for provisions that may be important to
you. The certificate of designation relating to the particular series of
preferred stock offered by the accompanying prospectus supplement and this
prospectus will be filed as an exhibit to a document incorporated by reference
in the registration statement. The prospectus supplement will also state whether
any of the terms summarized below do not apply to the series of preferred stock
being offered. For a description of Lehman Brothers Holdings' outstanding
preferred stock, see "Description of Outstanding Preferred Stock."
GENERAL
Under Lehman Brothers Holdings' certificate of incorporation, the board of
directors of Lehman Brothers Holdings is authorized to issue shares of preferred
stock in one or more series, and to establish from time to time a series of
preferred stock with the following terms specified:
- the number of shares to be included in the series,
- the designation, powers, preferences and rights of the shares of the
series, and
- the qualifications, limitations or restrictions of such series, except as
otherwise stated in the certificate of incorporation.
Prior to the issuance of any series of preferred stock, the board of
directors of Lehman Brothers Holdings will adopt resolutions creating and
designating the series as a series of preferred stock and the resolutions will
be filed in a certificate of designation as an amendment to the certificate of
incorporation. The term "board of directors of Lehman Brothers Holdings"
includes any duly authorized committee.
The rights of holders of the preferred stock offered may be adversely
affected by the rights of holders of any shares of preferred stock that may be
issued in the future. The board of directors may cause shares of preferred stock
to be issued in public or private transactions for any proper corporate purpose.
Examples of proper corporate purposes include issuances to obtain additional
financing in connection with acquisitions or otherwise, and issuances to
officers, directors and employees of Lehman Brothers Holdings and its
subsidiaries pursuant to benefit plans or otherwise. Shares of preferred stock
issued by Lehman Brothers Holdings may have the effect of rendering more
difficult or discouraging an acquisition of Lehman Brothers Holdings deemed
undesirable by the board of directors of Lehman Brothers Holdings.
The preferred stock will be, when issued, fully paid and nonassessable.
Holders of preferred stock will not have any preemptive or subscription rights
to acquire more stock of Lehman Brothers Holdings.
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The transfer agent, registrar, dividend disbursing agent and redemption
agent for shares of each series of preferred stock will be named in the
prospectus supplement relating to such series.
RANK
Unless otherwise specified in the prospectus supplement relating to the
shares of any series of preferred stock, such shares will rank on an equal basis
with each other series of preferred stock and prior to the common stock as to
dividends and distributions of assets.
DIVIDENDS
Holders of each series of preferred stock will be entitled to receive cash
dividends, when, as and if declared by the board of directors of Lehman Brothers
Holdings out of funds legally available for dividends. The rates and dates of
payment of dividends will be set forth in the prospectus supplement relating to
each series of preferred stock. Dividends will be payable to holders of record
of preferred stock as they appear on the books of Lehman Brothers Holdings or,
if applicable, the records of the depositary referred to below under
"Description of Depositary Shares," on the record dates fixed by the board of
directors. Dividends on any series of preferred stock may be cumulative or
noncumulative.
Lehman Brothers Holdings may not declare, pay or set apart for payment
dividends on the preferred stock unless full dividends on any other series of
preferred stock that ranks on an equal or senior basis have been paid or
sufficient funds have been set apart for payment for
- all prior dividend periods of the other series of preferred stock that pay
dividends on a cumulative basis, or
- the immediately preceding dividend period of the other series of preferred
stock that pay dividends on a noncumulative basis.
Partial dividends declared on shares of preferred stock and any other series
of preferred stock ranking on an equal basis as to dividends will be declared
pro rata. A pro rata declaration means that the ratio of dividends declared per
share to accrued dividends per share will be the same for both series of
preferred stock.
Similarly, Lehman Brothers Holdings may not declare, pay or set apart for
payment non-stock dividends or make other payments on the common stock or any
other stock of Lehman Brothers Holdings ranking junior to the preferred stock
until full dividends on the preferred stock have been paid or set apart for
payment for
- all prior dividend periods if the preferred stock pays dividends on a
cumulative basis, or
- the immediately preceding dividend period if the preferred stock pays
dividends on a noncumulative basis.
CONVERSION AND EXCHANGE
The prospectus supplement for any series of preferred stock will state the
terms, if any, on which shares of that series are convertible into or
exchangeable for shares of Lehman Brothers Holdings' common stock.
REDEMPTION
If so specified in the applicable prospectus supplement, a series of
preferred stock may be redeemable at any time, in whole or in part, at the
option of Lehman Brothers Holdings or the holder thereof and may be mandatorily
redeemed.
Any partial redemptions of preferred stock will be made in a way that the
board of directors decides is equitable.
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<PAGE>
Unless Lehman Brothers Holdings defaults in the payment of the redemption
price, dividends will cease to accrue after the redemption date on shares of
preferred stock called for redemption and all rights of holders of such shares
will terminate except for the right to receive the redemption price.
LIQUIDATION PREFERENCE
Upon any voluntary or involuntary liquidation, dissolution or winding up of
Lehman Brothers Holdings, holders of each series of preferred stock will be
entitled to receive distributions upon liquidation in the amount set forth in
the prospectus supplement relating to such series of preferred stock, plus an
amount equal to any accrued and unpaid dividends. Such distributions will be
made before any distribution is made on any securities ranking junior relating
to liquidation, including common stock.
If the liquidation amounts payable relating to the preferred stock of any
series and any other securities ranking on a parity regarding liquidation rights
are not paid in full, the holders of the preferred stock of such series and such
other securities will share in any such distribution of available assets of
Lehman Brothers Holdings on a ratable basis in proportion to the full
liquidation preferences. Holders of such series of preferred stock will not be
entitled to any other amounts from Lehman Brothers Holdings after they have
received their full liquidation preference.
VOTING RIGHTS
The holders of shares of preferred stock will have no voting rights, except:
- as otherwise stated in the prospectus supplement,
- as otherwise stated in the certificate of designation establishing such
series, or
- as required by applicable law.
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<PAGE>
DESCRIPTION OF DEPOSITARY SHARES
The following briefly summarizes the material provisions of the deposit
agreement and of the depositary shares and depositary receipts, other than
pricing and related terms disclosed in the accompanying prospectus supplement.
You should read the particular terms of any depositary shares and any depositary
receipts that are offered by Lehman Brothers Holdings and any deposit agreement
relating to a particular series of preferred stock which will be described in
more detail in a prospectus supplement. The prospectus supplement will also
state whether any of the generalized provisions summarized below do not apply to
the depositary shares or depositary receipts being offered. A copy of the form
of deposit agreement, including the form of depositary receipt, is incorporated
by reference as an exhibit in the registration statement of which this
prospectus forms a part. You should read the more detailed provisions of the
deposit agreement and the form of depositary receipt for provisions that may be
important to you.
GENERAL
Lehman Brothers Holdings may, at its option, elect to offer fractional
shares of preferred stock, rather than full shares of preferred stock. In such
event, Lehman Brothers Holdings will issue receipts for depositary shares, each
of which will represent a fraction of a share of a particular series of
preferred stock.
The shares of any series of preferred stock represented by depositary shares
will be deposited under a deposit agreement between Lehman Brothers Holdings and
a bank or trust company selected by Lehman Brothers Holdings having its
principal office in the United States and having a combined capital and surplus
of at least $50,000,000, as preferred stock depositary. Each owner of a
depositary share will be entitled to all the rights and preferences of the
underlying preferred stock, including dividend, voting, redemption, conversion
and liquidation rights, in proportion to the applicable fraction of a share of
preferred stock represented by such depositary share.
The depositary shares will be evidenced by depositary receipts issued
pursuant to the deposit agreement. Depositary receipts will be distributed to
those persons purchasing the fractional shares of preferred stock in accordance
with the terms of the applicable prospectus supplement.
DIVIDENDS AND OTHER DISTRIBUTIONS
The preferred stock depositary will distribute all cash dividends or other
cash distributions received in respect of the deposited preferred stock to the
record holders of depositary shares relating to such preferred stock in
proportion to the number of such depositary shares owned by such holders.
The preferred stock depositary will distribute any property received by it
other than cash to the record holders of depositary shares entitled thereto. If
the preferred stock depositary determines that it is not feasible to make such
distribution, it may, with the approval of Lehman Brothers Holdings, sell such
property and distribute the net proceeds from such sale to such holders.
REDEMPTION OF PREFERRED STOCK
If a series of preferred stock represented by depositary shares is to be
redeemed, the depositary shares will be redeemed from the proceeds received by
the preferred stock depositary resulting from the redemption, in whole or in
part, of such series of preferred stock. The depositary shares will be redeemed
by the preferred stock depositary at a price per depositary share equal to the
applicable fraction of the redemption price per share payable in respect of the
shares of preferred stock so redeemed.
Whenever Lehman Brothers Holdings redeems shares of preferred stock held by
the preferred stock depositary, the preferred stock depositary will redeem as of
the same date the number of depositary shares representing shares of preferred
stock so redeemed. If fewer than all the depositary shares are to be redeemed,
the depositary shares to be redeemed will be selected by the preferred stock
depositary by lot or ratably or by any other equitable method as the preferred
stock depositary may decide.
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VOTING DEPOSITED PREFERRED STOCK
Upon receipt of notice of any meeting at which the holders of any series of
deposited preferred stock are entitled to vote, the preferred stock depositary
will mail the information contained in such notice of meeting to the record
holders of the depositary shares relating to such series of preferred stock.
Each record holder of such depositary shares on the record date will be entitled
to instruct the preferred stock depositary to vote the amount of the preferred
stock represented by such holder's depositary shares. The preferred stock
depositary will try to vote the amount of such series of preferred stock
represented by such depositary shares in accordance with such instructions.
Lehman Brothers Holdings will agree to take all actions that the preferred
stock depositary determines as necessary to enable the preferred stock
depositary to vote as instructed. The preferred stock depositary will abstain
from voting shares of any series of preferred stock held by it for which it does
not receive specific instructions from the holders of depositary shares
representing such shares.
AMENDMENT AND TERMINATION OF THE DEPOSIT AGREEMENT
The form of depositary receipt evidencing the depositary shares and any
provision of the deposit agreement may at any time be amended by agreement
between Lehman Brothers Holdings and the preferred stock depositary. However,
any amendment that materially and adversely alters any existing right of the
holders of depositary shares will not be effective unless such amendment has
been approved by the holders of at least a majority of the depositary shares
then outstanding. Every holder of an outstanding depositary receipt at the time
any such amendment becomes effective shall be deemed, by continuing to hold such
depositary receipt, to consent and agree to such amendment and to be bound by
the deposit agreement, which has been amended thereby. The deposit agreement may
be terminated only if:
- all outstanding depositary shares have been redeemed, or
- a final distribution in respect of the preferred stock has been made to
the holders of depositary shares in connection with any liquidation,
dissolution or winding up of Lehman Brothers Holdings.
CHARGES OF PREFERRED STOCK DEPOSITARY; TAXES AND OTHER GOVERNMENTAL CHARGES
Lehman Brothers Holdings will pay all transfer and other taxes and
governmental charges arising solely from the existence of the depositary
arrangements. Lehman Brothers Holdings also will pay charges of the depositary
in connection with the initial deposit of preferred stock and any redemption of
preferred stock. Holders of depositary receipts will pay other transfer and
other taxes and governmental charges and such other charges, including a fee for
the withdrawal of shares of preferred stock upon surrender of depositary
receipts, as are expressly provided in the deposit agreement to be for their
accounts.
RESIGNATION AND REMOVAL OF DEPOSITARY
The preferred stock depositary may resign at any time by delivering to
Lehman Brothers Holdings notice of its intent to do so, and Lehman Brothers
Holdings may at any time remove the preferred stock depositary, any such
resignation or removal to take effect upon the appointment of a successor
preferred stock depositary and its acceptance of such appointment. Such
successor preferred stock depositary must be appointed within 60 days after
delivery of the notice of resignation or removal and must be a bank or trust
company having its principal office in the United States and having a combined
capital and surplus of at least $50,000,000.
MISCELLANEOUS
The preferred stock depositary will forward all reports and communications
from Lehman Brothers Holdings which are delivered to the preferred stock
depositary and which Lehman Brothers Holdings is required to furnish to the
holders of the deposited preferred stock.
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Neither the preferred stock depositary nor Lehman Brothers Holdings will be
liable if it is prevented or delayed by law or any circumstances beyond its
control in performing its obligations under the deposit agreement. The
obligations of Lehman Brothers Holdings and the preferred stock depositary under
the deposit agreement will be limited to performance in good faith of their
duties thereunder and they will not be obligated to prosecute or defend any
legal proceeding in respect of any depositary shares, depositary receipts or
shares of preferred stock unless satisfactory indemnity is furnished. Lehman
Brothers Holdings and the preferred stock depositary may rely upon written
advice of counsel or accountants, or upon information provided by holders of
depositary receipts or other persons believed to be competent and on documents
believed to be genuine.
BOOK-ENTRY PROCEDURES AND SETTLEMENT
Most debt securities will be book-entry securities. Upon issuance, all
book-entry securities will be represented by one or more fully registered global
securities, without coupons. Each global security will be deposited with, or on
behalf of, The Depository Trust Company, a securities depository, and will be
registered in the name of DTC or a nominee of DTC. DTC will thus be the only
registered holder of these securities.
Purchasers of securities may only hold interests in the global notes through
DTC if they are participants in the DTC system. Purchasers may also hold
interests through a securities intermediary--banks, brokerage houses and other
institutions that maintain securities accounts for customers--that has an
account with DTC or its nominee. DTC will maintain accounts showing the security
holdings of its participants, and these participants will in turn maintain
accounts showing the security holdings of their customers. Some of these
customers may themselves be securities intermediaries holding securities for
their customers. Thus, each beneficial owner of a book-entry security will hold
that security indirectly through a hierarchy of intermediaries, with DTC at the
"top" and the beneficial owner's own securities intermediary at the "bottom."
The securities of each beneficial owner of a book-entry security will be
evidenced solely by entries on the books of the beneficial owner's securities
intermediary. The actual purchaser of the securities will generally not be
entitled to have the securities represented by the global securities registered
in its name and will not be considered the owner under the declaration. In most
cases, a beneficial owner will also not be able to obtain a paper certificate
evidencing the holder's ownership of securities. The book-entry system for
holding securities eliminates the need for physical movement of certificates and
is the system through which most publicly traded common stock is held in the
United States. However, the laws of some jurisdictions require some purchasers
of securities to take physical delivery of their securities in definitive form.
These laws may impair the ability to transfer book-entry securities.
A beneficial owner of book-entry securities represented by a global security
may exchange the securities for definitive (paper) securities only if:
- DTC is unwilling or unable to continue as depositary for such global
security and Lehman Brothers Holdings does not appoint a qualified
replacement for DTC within 90 days, or
- Lehman Brothers Holdings in its sole discretion decides to allow some or
all book-entry securities to be exchangeable for definitive securities in
registered form.
Unless we indicate otherwise, any global security that is exchangeable will
be exchangeable in whole for definitive securities in registered form, with the
same terms and of an equal aggregate principal amount. Definitive securities
will be registered in the name or names of the person or persons specified by
DTC in a written instruction to the registrar of the securities. DTC may base
its written instruction upon directions that it receives from its participants.
In this prospectus, for book-entry securities, references to actions taken
by security holders will mean actions taken by DTC upon instructions from its
participants, and references to payments and notices of
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redemption to security holders will mean payments and notices of redemption to
DTC as the registered holder of the securities for distribution to participants
in accordance with DTC's procedures.
DTC is a limited purpose trust company organized under the laws of the State
of New York, a member of the Federal Reserve System, a "clearing corporation"
within the meaning of the New York Uniform Commercial Code and a "clearing
agency" registered under section 17A of the Securities Exchange Act of 1934. The
rules applicable to DTC and its participants are on file with the SEC.
DTC's management is aware that some computer applications, systems, and the
like for processing dates that are dependent upon calendar dates, including
dates before, on, and after January 1, 2000, may encounter "Year 2000 problems."
DTC has informed its participants and other members of the financial community
that it has developed and is implementing a program so that its systems, as they
relate to the timely payment of distributions to securityholders, book-entry
deliveries, and settlement of trades within DTC, continue to function
appropriately. This program includes a technical assessment and a remediation
plan, each of which is complete. Additionally, DTC's plan includes a testing
phase, which is expected to be completed within appropriate time frames.
Lehman Brothers Holdings will not have any responsibility or liability for
any aspect of the records relating to, or payments made on account of,
beneficial ownership interest in the book-entry securities or for maintaining,
supervising or reviewing any records relating to the beneficial ownership
interests.
DTC may discontinue providing its services as securities depositary at any
time by giving reasonable notice. Under such circumstances, in the event that a
successor securities depositary is not obtained, securities certificates are
required to be printed and delivered. Additionally, Lehman Brothers Holdings may
decide to discontinue use of the system of book-entry transfers through DTC or
any successor depositary with respect to the preferred securities. In that
event, certificates for the securities will be printed and delivered.
The information in this section concerning DTC and DTC's book-entry system
has been obtained from sources that Lehman Brothers Holdings believes to be
reliable, but Lehman Brothers Holdings does not take responsibility for the
accuracy thereof.
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UNITED STATES FEDERAL INCOME TAX CONSEQUENCES
In the opinion of Simpson Thacher & Bartlett, our special United States tax
counsel, the following discussion is an accurate summary of the material United
States federal income tax consequences of the purchase, ownership and
disposition of debt securities as of the date hereof. Except where noted, this
summary deals only with debt securities held as capital assets by United States
holders and does not deal with special situations. For example, this summary
does not address:
- tax consequences to holders who may be subject to special tax treatment,
such as dealers in securities or currencies, financial institutions,
tax-exempt entities or life insurance companies,
- tax consequences to persons holding debt securities as part of a hedging,
integrated, constructive sale or conversion transaction or a straddle,
- tax consequences to holders of debt securities whose "functional currency"
is not the U.S. dollar,
- alternative minimum tax consequences, if any, or
- any state, local or foreign tax consequences.
The discussion below is based upon the provisions of the Internal Revenue
Code of 1986, as amended, and regulations, rulings and judicial decisions as of
the date of this hereof. Those authorities may be changed, perhaps
retroactively, so as to result in United States federal income tax consequences
different from those discussed below. We will summarize any special United
States federal tax considerations relevant to a particular issue of the debt
securities in the applicable prospectus supplement. We will also summarize
certain federal income tax consequences, if any, applicable to any offering of
preferred stock or depositary shares in the applicable prospectus supplement.
IF YOU ARE CONSIDERING THE PURCHASE OF DEBT SECURITIES, YOU SHOULD CONSULT
YOUR OWN TAX ADVISORS CONCERNING THE FEDERAL INCOME TAX CONSEQUENCES TO YOU AND
ANY CONSEQUENCES ARISING UNDER THE LAWS OF ANY OTHER TAXING JURISDICTION.
CONSEQUENCES TO UNITED STATES HOLDERS
The following is a summary of certain United States federal tax consequences
that will apply to you if you are a United States holder of debt securities.
Certain consequences to "non-United States holders" of debt securities are
described under "--Non-United States Holders" below.
"United States holder" means a beneficial owner of a debt security that is:
- a citizen or resident of the United States,
- a corporation or partnership created or organized in or under the laws of
the United States or any political subdivision of the United States,
- an estate the income of which is subject to United States federal income
taxation regardless of its source, or
- a trust that (x) is subject to the supervision of a court within the
United States and the control of one or more United States persons or
(y) has a valid election in effect under applicable United States Treasury
regulations to be treated as a United States person.
PAYMENTS OF INTEREST
Except as set forth below, interest on a debt security will generally be
taxable to you as ordinary income from domestic sources at the time it is paid
or accrued in accordance with your method of accounting for tax purposes.
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ORIGINAL ISSUE DISCOUNT
If you own debt securities issued with original issue discount ("OID"), you
will be subject to special tax accounting rules, as described in greater detail
below. In that case, you should be aware that you generally must include OID in
gross income in advance of the receipt of cash attributable to that income.
However, you generally will not be required to include separately in income cash
payments received on the debt securities, even if denominated as interest, to
the extent those payments do not constitute qualified stated interest, as
defined below. Notice will be given in the applicable prospectus supplement when
we determine that a particular debt security will be an original issue discount
debt security.
A debt security with an issue price that is less than the "stated redemption
price at maturity" (the sum of all payments to be made on the debt security
other than "qualified stated interest") generally will be issued with OID if
that difference is at least 0.25% of the stated redemption price at maturity
multiplied by the number of complete years to maturity. The "issue price" of
each debt security in a particular offering will be the first price at which a
substantial amount of that particular offering is sold to the public. The term
"qualified stated interest" means stated interest that is unconditionally
payable in cash or in property, other than debt instruments of the issuer, and
the interest to be paid meets all of the following conditions:
- it is payable at least once per year,
- it is payable over the entire term of the debt security, and
- it is payable at a single fixed rate or, subject to certain conditions,
based on one or more interest indices.
We will give you notice in the applicable prospectus supplement when we
determine that a particular debt security will bear interest that is not
qualified stated interest.
If you own a debt security issued with "DE MINIMIS" OID, which is discount
that is not OID because it is less than 0.25% of the stated redemption price at
maturity multiplied by the number of complete years to maturity, you generally
must include the DE MINIMIS OID in income at the time payments, other than
qualified stated interest, on the debt securities are made in proportion to the
amount paid. Any amount of DE MINIMIS OID that you have included in income will
be treated as capital gain.
Certain of the debt securities may contain provisions permitting them to be
redeemed prior to their stated maturity at our option and/or at your option.
Original issue discount debt securities containing those features may be subject
to rules that differ from the general rules discussed herein. If you are
considering the purchase of original issue discount debt securities with those
features, you should carefully examine the applicable prospectus supplement and
should consult your own tax advisors with respect to those features since the
tax consequences to you with respect to OID will depend, in part, on the
particular terms and features of the debt securities.
If you own original issue discount debt securities with a maturity upon
issuance of more than one year you generally must include OID in income in
advance of the receipt of some or all of the related cash payments using the
"constant yield method" described in the following paragraph. This method takes
into account the compounding of interest. The accruals of OID on an original
issue discount debt security will generally be less in the early years and more
in the later years.
The amount of OID that you must include in income if you are the initial
United States holder of an original issue discount debt security is the sum of
the "daily portions" of OID with respect to the debt security for each day
during the taxable year or portion of the taxable year in which you held that
debt security ("accrued OID"). The daily portion is determined by allocating to
each day in any "accrual period" a pro rata portion of the OID allocable to that
accrual period. The "accrual period" for an original issue discount debt
security may be of any length and may vary in length over the term of the debt
security, provided that each accrual period is no longer than one year and each
scheduled payment of principal or
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interest occurs on the first day or the final day of an accrual period. The
amount of OID allocable to any accrual period is an amount equal to the excess,
if any, of:
- the debt security's adjusted issue price at the beginning of the accrual
period multiplied by its yield to maturity, determined on the basis of
compounding at the close of each accrual period and properly adjusted for
the length of the accrual period, over
- the aggregate of all qualified stated interest allocable to the accrual
period.
OID allocable to a final accrual period is the difference between the amount
payable at maturity, other than a payment of qualified stated interest, and the
adjusted issue price at the beginning of the final accrual period. The "adjusted
issue price" of a debt security at the beginning of any accrual period is equal
to its issue price increased by the accrued OID for each prior accrual period,
determined without regard to the amortization of any acquisition or bond
premium, as described below, and reduced by any payments made on the debt
security (other than qualified stated interest) on or before the first day of
the accrual period. Under these rules, you will have to include in income
increasingly greater amounts of OID in successive accrual periods. We are
required to provide information returns stating the amount of OID accrued on
debt securities held of record by persons other than corporations and other
exempt holders.
Floating rate debt securities are subject to special OID rules. In the case
of an original issue discount debt security that is a floating rate debt
security, both the "yield to maturity" and "qualified stated interest" will be
determined solely for purposes of calculating the accrual of OID as though the
debt security will bear interest in all periods at a fixed rate generally equal
to the rate that would be applicable to interest payments on the debt security
on its date of issue or, in the case of certain floating rate debt securities,
the rate that reflects the yield to maturity that is reasonably expected for the
debt security. Additional rules may apply if:
- the interest on a floating rate debt security is based on more than one
interest index, or
- the principal amount of the debt security is indexed in any manner.
This discussion does not address the tax rules applicable to debt securities
with an indexed principal amount. If you are considering the purchase of
floating rate original issue discount debt securities or securities with indexed
principal amounts, you should carefully examine the applicable prospectus
supplement and should consult your own tax advisors regarding the United States
federal income tax consequences to you of holding and disposing of those debt
securities.
You may elect to treat all interest on any debt security as OID and
calculate the amount includible in gross income under the constant yield method
described above. For purposes of this election, interest includes stated
interest, acquisition discount, OID, DE MINIMIS OID, market discount, DE MINIMIS
market discount and unstated interest, as adjusted by any amortizable bond
premium or acquisition premium. You must make this election for the taxable year
in which you acquired the debt security, and you may not revoke the election
without the consent of the Internal Revenue Service. You should consult with
your own tax advisors about this election.
SHORT-TERM DEBT SECURITIES
In the case of debt securities having a term of one year or less, all
payments, including all stated interest, will be included in the stated
redemption price at maturity and will not be qualified stated interest. As a
result, you will generally be taxed on the discount instead of stated interest.
The discount will be equal to the excess of the stated redemption price at
maturity over the issue price of a short-term debt security, unless you elect to
compute this discount using tax basis instead of issue price. In general,
individual and certain other cash method United States holders of short-term
debt securities are not required to include accrued discount in their income
currently unless they elect to do so, but may be required to include stated
interest in income as the income is received. United States holders that report
income for United States federal income tax purposes on the accrual method and
certain other United States holders are required to accrue discount on
short-term debt securities (as ordinary income) on a straight-line basis, unless
an election is made to accrue the discount according to a constant yield method
based on daily compounding. If you are not required, and
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do not elect, to include discount in income currently, any gain you realize on
the sale, exchange or retirement of a short-term debt security will generally be
ordinary income to you to the extent of the discount accrued by you through the
date of sale, exchange or retirement. In addition, if you do not elect to
currently include accrued discount in income you may be required to defer
deductions for a portion of your interest expense with respect to any
indebtedness attributable to the short-term debt securities.
MARKET DISCOUNT
If you purchase a debt security, other than an original issue discount debt
security, for an amount that is less than its stated redemption price at
maturity, or, in the case of an original issue discount debt security, its
adjusted issue price, the amount of the difference will be treated as "market
discount" for United States federal income tax purposes, unless that difference
is less than a specified DE MINIMIS amount. Under the market discount rules, you
will be required to treat any payment, other than qualified stated interest, on,
or any gain on the sale, exchange, retirement or other disposition of, a debt
security as ordinary income to the extent of the market discount that you have
not previously included in income and are treated as having accrued on the debt
security at the time of its payment or disposition. In addition, you may be
required to defer, until the maturity of the debt security or its earlier
disposition in a taxable transaction, the deduction of all or a portion of the
interest expense on any indebtedness attributable to the debt security.
Any market discount will be considered to accrue ratably during the period
from the date of acquisition to the maturity date of the debt security, unless
you elect to accrue on a constant interest method. You may elect to include
market discount in income currently as it accrues, on either a ratable or
constant interest method, in which case the rule described above regarding
deferral of interest deductions will not apply. Your election to include market
discount in income currently, once made, applies to all market discount
obligations acquired by you on or after the first taxable year to which your
election applies and may not be revoked without the consent of the IRS. You
should consult your own tax advisor before making this election.
ACQUISITION PREMIUM, AMORTIZABLE BOND PREMIUM
If you purchase an original issue discount debt security for an amount that
is greater than its adjusted issue price but equal to or less than the sum of
all amounts payable on the debt security after the purchase date other than
payments of qualified stated interest, you will be considered to have purchased
that debt security at an "acquisition premium." Under the acquisition premium
rules, the amount of OID that you must include in gross income with respect to
the debt security for any taxable year will be reduced by the portion of the
acquisition premium properly allocable to that year.
If you purchase a debt security (including an original issue discount debt
security) for an amount in excess of the sum of all amounts payable on the debt
security after the purchase date other than qualified stated interest, you will
be considered to have purchased the debt security at a "premium" and, if it is
an original issue discount debt security, you will not be required to include
any OID in income. You generally may elect to amortize the premium over the
remaining term of the debt security on a constant yield method as an offset to
interest when includible in income under your regular accounting method. In the
case of instruments that provide for alternative payment schedules, bond premium
is calculated by assuming that (a) you will exercise or not exercise options in
a manner that maximizes your yield, and (b) we will exercise or not exercise
options in a manner that minimizes your yield (except that we will be assumed to
exercise call options in a manner that maximizes your yield). If you do not
elect to amortize bond premium, that premium will decrease the gain or increase
the loss you would otherwise recognize on disposition of the debt security. Your
election to amortize premium on a constant yield method will also apply to all
debt obligations held or subsequently acquired by you on or after the first day
of the first taxable year to which the election applies. You may not revoke the
election without the consent of the IRS. You should consult your own tax advisor
before making this election.
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SALE, EXCHANGE AND RETIREMENT OF DEBT SECURITIES
Your tax basis in a debt security will, in general, be your cost for that
debt security, increased by OID, market discount or any discount with respect to
a short-term debt security that you previously included in income, and reduced
by any amortized premium and any cash payments on the debt security other than
qualified stated interest. Upon the sale, exchange, retirement or other
disposition of a debt security, you will recognize gain or loss equal to the
difference between the amount you realize upon the sale, exchange, retirement or
other disposition (less an amount equal to any accrued qualified stated interest
that you did not previously include in income, which will be taxable as such)
and the adjusted tax basis of the debt security. Except as described above with
respect to certain short-term debt securities or with respect to market
discounts, that gain or loss will be capital gain or loss. Capital gains of
individuals derived in respect of capital assets held for more than one year are
eligible for reduced rates of taxation. The deductibility of capital losses is
subject to limitations.
TAX CONSEQUENCES OF DEFEASANCE
We may discharge our obligations under the debt securities as more fully
described under "Description of Debt Securities--Defeasance" above. Such a
discharge would generally for United States federal income tax purposes
constitute the retirement of the debt securities and the issuance of new
obligations. As a result, you would realize gain or loss (if any) on this
exchange, which would be recognized subject to certain possible exceptions.
Even though federal income tax on the deemed exchange may be imposed on you,
you would not receive any cash until the maturity or an earlier redemption of
the debt securities, except for any current interest payments.
Any gain realized would generally not be taxable to Non-United States
holders under the circumstances outlined below. Furthermore, following
discharge, the debt securities might be subject to withholding, backup
withholding and/or information reporting and might be issued with OID.
Under current federal income tax law, a covenant defeasance would not be
treated as a taxable exchange of the debt securities. You should consult your
own tax advisor as to the tax consequences of a defeasance and discharge and a
covenant defeasance, including the applicability and effect of tax laws other
than the federal income tax law.
EXTENDIBLE DEBT SECURITIES, RENEWABLE DEBT SECURITIES AND RESET DEBT
SECURITIES
If so specified in an applicable prospectus supplement relating to a debt
security, we may have the option to extend the maturity of a debt security. In
addition, we may have the option to reset the interest rate, the spread or the
spread multiplier.
The United States federal income tax treatment of a debt security with
respect to which such an option has been exercised is unclear and will depend,
in part, on the terms established for such debt securities by us pursuant to the
exercise of the option. You may be treated for federal income tax purposes as
having exchanged your debt securities for new debt securities with revised
terms. If this is the case, you would realize gain or loss equal to the
difference between the issue price of the new debt securities and your tax basis
in the old debt securities, and the other consequences described above under
"Tax Consequences of Defeasance" would also apply.
If the exercise of the option is not treated as an exchange of old debt
securities for new debt securities, you will not recognize gain or loss as a
result of such exchange.
ORIGINAL ISSUE DISCOUNT. The presence of such options may also affect the
calculation of OID, among other things. Solely for purposes of the accrual of
OID, if we issue a debt security and have an option or combination of options to
extend the term of the debt security, we will be presumed to exercise such
option or options in a manner that minimizes the yield on the debt security.
Conversely, if you are treated as having a put option, such an option will be
presumed to be exercised in a manner that maximizes the yield on the
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debt security. If we exercise such option or options to extend the term of the
debt security, or your option to put does not occur (contrary to the assumptions
made), then solely for purposes of the accrual of OID, the debt security will be
treated as reissued on the date of the change in circumstances for an amount
equal to its adjusted issue price on the date.
You should carefully examine the applicable prospectus supplement and should
consult your own tax advisor regarding the United States federal income tax
consequences of the holding and disposition of such debt securities.
FOREIGN CURRENCY DEBT SECURITIES
PAYMENTS OF INTEREST. If you receive interest payments made in a foreign
currency and you use the cash basis method of accounting, you will be required
to include in income the U.S. dollar value of the amount received, determined by
translating the foreign currency received at the "spot rate" for such foreign
currency on the date such payment is received regardless of whether the payment
is in fact converted into U.S. dollars. You will not recognize exchange gain or
loss with respect to the receipt of such payment.
If you use the accrual method of accounting, you may determine the amount of
income recognized with respect to such interest in accordance with either of two
methods. Under the first method, you will be required to include in income for
each taxable year the U.S. dollar value of the interest that has accrued during
such year, determined by translating such interest at the average rate of
exchange for the period or periods during which such interest accrued. Under the
second method, you may elect to translate interest income at the spot rate on:
- the last day of the accrual period,
- the last day of the taxable year if the accrual period straddles your
taxable year, or
- on the date the interest payment is received if such date is within five
days of the end of the accrual period.
Upon receipt of an interest payment on such debt security, you will
recognize ordinary gain or loss in an amount equal to the difference between the
U.S. dollar value of such payment (determined by translating the foreign
currency received at the "spot rate" for such foreign currency on the date such
payment is received) and the U.S. dollar value of the interest income you
previously included in income with respect to such payment.
ORIGINAL ISSUE DISCOUNT. OID on a debt security that is also a foreign
currency debt security will be determined for any accrual period in the
applicable foreign currency and then translated into U.S. dollars, in the same
manner as interest income accrued by a holder on the accrual basis, as described
above. You will recognize exchange gain or loss when OID is paid to the extent
of the difference between the U.S. dollar value of the accrued OID (determined
in the same manner as for accrued interest) and the U.S. dollar value of such
payment (determined by translating the foreign currency received at the "spot
rate" for such foreign currency on the date such payment is received). For these
purposes, all receipts on a debt security will be viewed:
- first, as the receipt of any stated interest payments called for under the
terms of the debt security,
- second, as receipts of previously accrued OID (to the extent thereof),
with payments considered made for the earliest accrual periods first, and
- third, as the receipt of principal.
MARKET DISCOUNT AND BOND PREMIUM. The amount of market discount on foreign
currency debt securities includible in income will generally be determined by
translating the market discount determined in the foreign currency into U.S.
dollars at the spot rate on the date the foreign currency debt security is
retired or otherwise disposed of. If you have elected to accrue market discount
currently, then the amount which accrues is determined in the foreign currency
and then translated into U.S. dollars on the basis of the average exchange rate
in effect during such accrual period. You will recognize exchange gain or loss
with respect to
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market discount which is accrued currently using the approach applicable to the
accrual of interest income as described above.
Bond premium on a foreign currency debt security will be computed in the
applicable foreign currency. If you have elected to amortize the premium, the
amortizable bond premium will reduce interest income in the applicable foreign
currency. At the time bond premium is amortized, exchange gain or loss, which is
generally ordinary gain or loss, will be realized based on the difference
between spot rates at such time and the time of acquisition of the foreign
currency debt security.
If you elect not to amortize bond premium, you must translate the bond
premium computed in the foreign currency into U.S. dollars at the spot rate on
the maturity date and such bond premium will constitute a capital loss which may
be offset or eliminated by exchange gain.
SALE, EXCHANGE OR RETIREMENT. Your tax basis in a foreign currency debt
security will be the U.S. dollar value of the foreign currency amount paid for
such foreign currency debt security determined at the time of your purchase. If
you purchased the foreign currency debt security with previously owned foreign
currency, you will recognize exchange gain or loss at the time of the purchase
attributable to the difference at the time of purchase, if any, between your tax
basis in the foreign currency and the fair market value of the debt security in
U.S. dollars on the date of purchase. Such gain or loss will be ordinary income
or loss.
For purposes of determining the amount of any gain or loss you recognize on
the sale, exchange retirement or other disposition of a foreign currency debt
security, the amount realized on such sale, exchange, retirement or other
disposition will be the U.S. dollar value of the amount realized in foreign
currency (other than amounts attributable to accrued but unpaid interest not
previously included in your income), determined at the time of the sale,
exchange, retirement or other disposition.
You may also recognize exchange gain or loss attributable to the movement in
exchange rates between the time of purchase and the time of disposition
(including the sale, exchange, retirement or other disposition) of a foreign
currency debt security. Such gain or loss will be treated as ordinary income or
loss. The realization of such gain or loss will be limited to the amount of
overall gain or loss realized on the disposition of a foreign currency debt
security.
Under proposed Treasury Regulations issued on March 17, 1992, if a foreign
currency debt security is denominated in one of certain hyperinflationary
currencies, generally:
- exchange gain or loss would be realized with respect to movements in the
exchange rate between the beginning and end of each taxable year (or such
shorter period) the debt security was held, and
- such exchange gain or loss would be treated as an addition or offset,
respectively, to the accrued interest income on, and an adjustment to the
holder's tax basis in, the foreign currency debt security.
Your tax basis in foreign currency received as interest on (or OID with
respect to), or received on the sale, exchange, retirement or other disposition
of, a foreign currency debt security will be the U.S. dollar value thereof at
the spot rate at the time you receive such foreign currency. Any gain or loss
recognized by you on a sale, exchange or other disposition of foreign currency
will be ordinary income or loss and will not be treated as interest income or
expense, except to the extent provided in Treasury Regulations or administrative
pronouncements of the IRS.
DUAL CURRENCY DEBT SECURITIES. If so specified in an applicable prospectus
supplement relating to a foreign currency debt security, we may have the option
to make all payments of principal and interest scheduled after the exercise of
such option in a currency other than the specified currency. The United States
federal income tax treatment of dual currency debt securities is uncertain.
Treasury Regulations currently in effect do not address the tax treatment of
dual currency debt securities.
Under the approach of proposed Treasury Regulations issued on March 17,
1992, a dual currency debt security would be bifurcated into two hypothetical
instruments:
- a zero coupon bond denominated in the currency of the stated redemption
price at maturity, and
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- an installment obligation denominated in the currency of the qualified
stated interest payments.
The proposed Treasury regulations are effective only for debt securities
issued or transactions occurring after final regulations are published. If you
are considering purchasing dual currency debt securities, you should carefully
examine the applicable prospectus supplement and should consult your own tax
advisors regarding the United States federal income tax consequences of the
holding and disposition of such debt securities.
If we exercise such an option, you may be considered to have exchanged your
debt security denominated in the specified currency for a debt security
denominated in the optional payment currency. If the exercise is treated as a
taxable exchange, you will recognize gain or loss if any, equal to the
difference between your basis in the debt security denominated in the specified
currency and the value of the debt security denominated in the optional payment
currency. If the exercise of the option is not treated as an exchange, you will
not recognize gain or loss and your basis in the debt security will be
unchanged.
CONTINGENT PAYMENT DEBT SECURITIES
The OID Regulations contain special rules for determining the timing and
amount of OID to be accrued with respect to certain debt securities providing
for one or more contingent payments. Under these rules, you will accrue OID each
year based on the "comparable yield" of the debt securities. The comparable
yield of the debt securities will generally be the rate at which we would issue
a fixed rate debt instrument with terms and conditions similar to the debt
securities.
We are required to provide the comparable yield to you and, solely for tax
purposes, are also required to provide a projected payment schedule that
includes the actual interest payments on the debt securities and estimates the
amount and timing of contingent payments on the debt securities. We will give
notice in the applicable prospectus supplement when we determine that a
particular debt security will be treated as contingent debt.
The amount of OID on a contingent payment debt security for each accrual
period is determined by multiplying the comparable yield of the contingent
payment debt security (adjusted for the length of the accrual period) by the
debt security's adjusted issue price at the beginning of the accrual period
(determined in accordance with the rules set forth in the OID Regulations
relating to contingent payment debt instruments). The amount of OID so
determined will then be allocated on a ratable basis to each day in the accrual
period that you hold the contingent payment debt security.
If the actual payments made on the contingent payment debt securities in a
taxable year differ from the projected contingent payments, adjustments will be
made for such differences. A positive adjustment, for the amount by which an
actual payment exceeds a projected contingent payment, will be treated as
additional interest. A negative adjustment will:
- first, reduce the amount of interest required to be accrued in the current
year,
- second, any negative adjustments that exceed the amount of interest
accrued in the current year will be treated as ordinary loss to the extent
that your total interest inclusions exceed the total amount of net
negative adjustments treated as ordinary loss in prior taxable years, and
- third, any excess negative adjustments will be carried forward to offset
future income or amount realized on disposition.
Gain on the sale, exchange or retirement of a contingent payment debt
security generally will be treated as ordinary income. Loss from the disposition
of a contingent payment debt security will be treated as ordinary loss to the
extent your prior net interest inclusions (reduced by the total net negative
adjustments previously allowed as an ordinary loss). Any loss in excess of such
amount will be treated as capital loss.
You are generally bound by the comparable yield and projected payment
schedule provided by us. However, if you believe that our projected payment
schedule is unreasonable, you may set your own projected payment schedule so
long as you explicitly disclose the use of such schedule and the reason
therefor. Unless
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otherwise prescribed by the Commissioner of the IRS, such disclosure must be
made in a statement attached to your timely filed federal income tax return for
the taxable year in which the debt security is acquired.
For special treatment of foreign currency debt securities or dual currency
debt securities that are also contingent payment debt securities, see the
applicable prospectus supplement.
The rules regarding contingent payment debt securities are complex. If you
are considering the purchase of debt securities providing for one or more
contingent payments, you should carefully examine the applicable prospectus
supplement and consult your own tax advisors regarding the United States federal
income tax consequences of the holding and disposition of such debt securities.
CONSEQUENCES TO NON-UNITED STATES HOLDERS
The following is a summary of certain United States federal income tax
consequences that will apply to you if you are a non-United States holder of
debt securities.
UNITED STATES FEDERAL WITHHOLDING TAX
The 30% United States federal withholding tax will not apply to any payment
of principal or interest, including OID, on debt securities provided that:
- you do not actually or constructively own 10% or more of the total
combined voting power of all classes of our voting stock within the
meaning of the Code and United States Treasury Regulations,
- you are not a controlled foreign corporation that is related to us through
stock ownership,
- you are not a bank whose receipt of interest on the debt securities is
described in section 881(c)(3)(A) of the Code, and
- either (a) you provide your name and address on an IRS Form W-8, and
certify, under penalty of perjury, that you are not a United States person
or (b) a financial institution holding the debt securities on your behalf
certifies, under penalty of perjury, that it has received an IRS Form W-8
from you as the beneficial owner and provides us with a copy.
If you cannot satisfy the requirements described above, payments of premium,
if any, and interest, including OID, made to you will be subject to the 30%
United States federal withholding tax, unless you provide us with a properly
executed
- IRS Form 1001 claiming an exemption from, or reduction in, withholding
under the benefit of a tax treaty, or
- IRS Form 4224 stating that interest paid on the debt securities is not
subject to withholding tax because it is effectively connected with your
conduct of a trade or business in the United States.
Except as discussed below, the 30% United States federal withholding tax
will not apply to any gain or income that you realize on the sale, exchange,
retirement or other disposition of debt securities.
UNITED STATES FEDERAL ESTATE TAX
Your estate will not be subject to United States federal estate tax on debt
securities beneficially owned by you at the time of your death, provided that
(1) you do not own 10% or more of the total combined voting power of all classes
of our voting stock, within the meaning of the Code and United States Treasury
Regulations, and (2) interest on those debt securities would not have been, if
received at the time of your death, effectively connected with the conduct by
you of a trade or business in the United States.
UNITED STATES FEDERAL INCOME TAX
If you are engaged in a trade or business in the United States and premium,
if any, or interest, including OID, on the debt securities is effectively
connected with the conduct of that trade or business, you will be subject to
United States federal income tax on that interest and OID on a net income basis
(although exempt from the 30% withholding tax) in the same manner as if you were
a United States holder. In addition, if you
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are a foreign corporation, you may be subject to a branch profits tax equal to
30% (or lower applicable treaty rate) of your earnings and profits for the
taxable year, subject to adjustments. For this purpose, any premium and
interest, including OID, on debt securities will be included in your earnings
and profits.
You will generally not be subject to United States federal income tax on the
disposition of a debt security unless:
- the gain is effectively connected with your conduct of a trade or business
in the United States, or
- you are an individual who is present in the United States for 183 days or
more in the taxable year of that disposition, and certain other conditions
are met.
INFORMATION REPORTING AND BACKUP WITHHOLDING
UNITED STATES HOLDERS
In general, information reporting requirements will apply to certain
payments of principal, interest, OID and premium paid on debt securities and to
the proceeds of sale of a debt security made to you (unless you are an exempt
recipient such as a corporation). A 31% backup withholding tax will apply to
such payments if you fail to provide a taxpayer identification number, a
certification of exempt status, or fail to report in full dividend and interest
income.
NON-UNITED STATES HOLDERS
In general, you will not be required to provide information reporting and
backup withholding regarding payments that we make to you provided that we do
not have actual knowledge that you are a United States person and we have
received from you the statement described above under "United States Federal
Withholding Tax."
In addition, you will not be required to pay backup withholding and provide
information reporting regarding the proceeds of the sale of a debt security made
within the United States or conducted through certain United States related
financial intermediaries, if the payor receives the statement described above
and does not have actual knowledge that you are a United States person or you
otherwise establish an exemption.
Final United States Treasury regulations generally modify the information
reporting and backup withholding rules applicable to certain payments made after
December 31, 1999. In general, the new United States Treasury Regulations would
not significantly alter the present rules discussed above, except in certain
special situations.
Any amounts withheld under the backup withholding rules will be allowed as a
refund or a credit against your United States federal income tax liability
provided the required information is furnished to the IRS.
PREFERRED STOCK AND DEPOSITARY SHARES
If you are considering the purchase of preferred stock or depositary shares,
you should carefully examine the applicable prospectus supplement regarding the
United States federal income tax consequences of the holding and disposition of
such preferred stock or depositary shares.
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PLAN OF DISTRIBUTION
Lehman Brothers Holdings may offer the offered securities in one or more of
the following ways from time to time:
- to or through underwriters or dealers,
- by itself directly,
- through agents, or
- through a combination of any of these methods of sale.
Any such underwriters, dealers or agents may include Lehman Brothers Inc.
The prospectus supplement relating to an offering of offered securities will
set forth the terms of such offering, including:
- the name or names of any underwriters, dealers or agents,
- the purchase price of the offered securities and the proceeds to Lehman
Brothers Holdings from such sale,
- any underwriting discounts and commissions or agency fees and other items
constituting underwriters' or agents' compensation,
- the initial public offering price,
- any discounts or concessions to be allowed or reallowed or paid to
dealers, and
- any securities exchanges on which such offered securities may be listed.
Any initial public offering prices, discounts or concessions allowed or
reallowed or paid to dealers may be changed from time to time.
If underwriters are used in an offering of offered securities, such offered
securities will be acquired by the underwriters for their own account and may be
resold from time to time in one or more transactions, including negotiated
transactions, at a fixed public offering price or at varying prices determined
at the time of sale. The securities may be either offered to the public through
underwriting syndicates represented by one or more managing underwriters or by
one or more underwriters without a syndicate. Unless otherwise set forth in the
prospectus supplement, the underwriters will not be obligated to purchase
offered securities unless specified conditions are satisfied, and if the
underwriters do purchase any offered securities, they will purchase all offered
securities.
In connection with underwritten offerings of the offered securities and in
accordance with applicable law and industry practice, underwriters may
over-allot or effect transactions that stabilize, maintain or otherwise affect
the market price of the offered securities at levels above those that might
otherwise prevail in the open market, including by entering stabilizing bids,
effecting syndicate covering transactions or imposing penalty bids, each of
which is described below.
- A stabilizing bid means the placing of any bid, or the effecting of any
purchase, for the purpose of pegging, fixing or maintaining the price of a
security.
- A syndicate covering transaction means the placing of any bid on behalf of
the underwriting syndicate or the effecting of any purchase to reduce a
short position created in connection with the offering.
- A penalty bid means an arrangement that permits the managing underwriter
to reclaim a selling concession from a syndicate member in connection with
the offering when offered securities originally sold by the syndicate
member are purchased in syndicate covering transactions.
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These transactions may be effected on the NYSE, in the over-the-counter
market, or otherwise. Underwriters are not required to engage in any of these
activities, or to continue such activities if commenced.
If dealers are utilized in the sale of offered securities, Lehman Brothers
Holdings will sell such offered securities to the dealers as principals. The
dealers may then resell such offered securities to the public at varying prices
to be determined by such dealers at the time of resale. The names of the dealers
and the terms of the transaction will be set forth in the prospectus supplement
relating to that transaction.
Offered securities may be sold directly by Lehman Brothers Holdings to one
or more institutional purchasers, or through agents designated by Lehman
Brothers Holdings from time to time, at a fixed price or prices, which may be
changed, or at varying prices determined at the time of sale. Any agent involved
in the offer or sale of the offered securities in respect of which this
prospectus is delivered will be named, and any commissions payable by Lehman
Brothers Holdings to such agent will be set forth, in the prospectus supplement
relating to that offering. Unless otherwise indicated in such prospectus
supplement, any such agent will be acting on a best efforts basis for the period
of its appointment.
If so indicated in the applicable prospectus supplement, Lehman Brothers
Holdings will authorize agents, underwriters or dealers to solicit offers from
certain types of institutions to purchase offered securities from Lehman
Brothers Holdings at the public offering price set forth in such prospectus
supplement pursuant to delayed delivery contracts providing for payment and
delivery on a specified date in the future. Such contracts will be subject only
to those conditions set forth in the prospectus supplement and the prospectus
supplement will set forth the commission payable for solicitation of such
contracts.
Lehman Brothers Inc., the broker-dealer subsidiary of Lehman Brothers
Holdings, is a member of the National Association of Securities Dealers, Inc.
and may participate in distributions of the offered securities. Accordingly,
offerings of offered securities in which Lehman Brothers Inc. participates will
conform to the requirements set forth in Rule 2720 of the Conduct Rules of the
NASD. Furthermore, any underwriters offering the offered securities will not
confirm sales to any accounts over which they exercise discretionary authority
without the prior approval of the customer.
This prospectus together with any applicable prospectus supplement may also
be used by Lehman Brothers Inc. in connection with offers and sales of the
offered securities in market-making transactions at negotiated prices related to
prevailing market prices at the time of sale. Lehman Brothers Inc. may act as
principal or agent in such transactions. Lehman Brothers Inc. has no obligation
to make a market in any of the offered securities and may discontinue any
market-making activities at any time without notice, at its sole discretion.
Underwriters, dealers and agents may be entitled, under agreements with
Lehman Brothers Holdings, to indemnification by Lehman Brothers Holdings
relating to material misstatements and omissions. Underwriters, dealers and
agents may be customers of, engage in transactions with, or perform services
for, Lehman Brothers Holdings and affiliates of Lehman Brothers Holdings in the
ordinary course of business.
Each series of offered securities will be a new issue of securities and will
have no established trading market. Any underwriters to whom offered securities
are sold for public offering and sale may make a market in such offered
securities, but such underwriters will not be obligated to do so and may
discontinue any market making at any time without notice. The offered securities
may or may not be listed on a national securities exchange. No assurance can be
given that there will be a market for the offered securities.
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ERISA CONSIDERATIONS
Lehman Brothers Holdings has subsidiaries, including Lehman Brothers Inc.,
that provide services to many employee benefit plans. Lehman Brothers Holdings
and any direct or indirect subsidiary of Lehman Brothers Holdings may each be
considered a "party in interest" within the meaning of the Employee Retirement
Income Security Act of 1974, and a "disqualified person" under corresponding
provisions of the Internal Revenue Code of 1986, relating to many employee
benefit plans. "Prohibited transactions" within the meaning of ERISA and the
Code may result if any offered securities are acquired by an employee benefit
plan relating to which Lehman Brothers Holdings or any direct or indirect
subsidiary of Lehman Brothers Holdings is a party in interest, unless such
offered securities are acquired pursuant to an applicable exemption. Any
employee benefit plan or other entity subject to which such provisions of ERISA
or the Code apply proposing to acquire the offered securities should consult
with its legal counsel.
LEGAL MATTERS
Karen M. Muller, Esq., Deputy General Counsel of Lehman Brothers Holdings,
or other counsel identified in the applicable prospectus supplement, will act as
legal counsel to Lehman Brothers Holdings. Ms. Muller beneficially owns, or has
rights to acquire under Lehman Brothers Holdings' employee benefit plans, an
aggregate of less than 1% of Lehman Brothers Holdings' common stock. Simpson
Thacher & Bartlett, New York, New York, or other counsel identified in the
applicable prospectus supplement, will act as legal counsel to the underwriters.
Simpson Thacher & Bartlett has from time to time acted as counsel for Lehman
Brothers Holdings and its subsidiaries and may do so in the future.
EXPERTS
The consolidated financial statements and financial statement schedule of
Lehman Brothers Holdings Inc. as of November 30, 1998 and 1997, and for each of
the years in the three-year period ended November 30, 1998, have been audited by
Ernst & Young LLP, independent certified public accountants, as set forth in
their report on the consolidated financial statements. The consolidated
financial statements and such report are incorporated by reference in Lehman
Brothers Holdings' annual report on Form 10-K for the year ended November 30,
1998, and incorporated by reference in this prospectus. The consolidated
financial statements of Lehman Brothers Holdings referred to above are
incorporated by reference in this prospectus in reliance upon such report given
on the authority of said firm as experts in accounting and auditing. To the
extent that Ernst & Young LLP audits and reports on consolidated financial
statements of Lehman Brothers Holdings issued at future dates, and consents to
the use of their report thereon, such consolidated financial statements also
will be incorporated by reference in the registration statement in reliance upon
their report given on said authority.
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PRINCIPAL EXECUTIVE OFFICE OF HOLDINGS
Lehman Brothers Holdings Inc.
3 World Financial Center
New York, New York 10285
TRUSTEE
Citibank, N.A.
Corporate Trust Office
111 Wall Street
New York, New York 10043
LUXEMBOURG STOCK EXCHANGE LISTING AND PAYING AGENT
Kredietbank S.A. Luxembourgeoise
43, Boulevard Royal
L-2955 Luxembourg
LEGAL ADVISERS TO THE UNDERWRITERS
Simpson Thacher & Bartlett
425 Lexington Avenue
New York, New York 10017
INDEPENDENT AUDITORS
Ernst & Young LLP
787 Seventh Avenue
New York, New York 10019
<PAGE>
$500,000,000
LEHMAN BROTHERS HOLDINGS INC.
FLOATING RATE NOTES DUE 2005
------------------
PROSPECTUS SUPPLEMENT
SEPTEMBER 21, 2000
(INCLUDING PROSPECTUS DATED
APRIL 30, 1999)
------------------------
LEHMAN BROTHERS
ABN AMRO BANC OF AMERICA SECURITIES LLC
BARCLAYS CAPITAL CREDIT LYONNAIS
HSBC ING BARINGS/BBL
THE ROYAL BANK OF SCOTLAND, FINANCIAL MARKETS
WESTDEUTSCHE LANDESBANK GIROZENTRALE
