-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, SVNoPK8PZWZMkS/KYKs7zjDm/yu2VasE1WhaEIiFI1co+bjXypwUpRa11T2ocESR Xj/utW9nvufx0a290icQUw== 0000806085-04-000046.txt : 20040315 0000806085-04-000046.hdr.sgml : 20040315 20040315170956 ACCESSION NUMBER: 0000806085-04-000046 CONFORMED SUBMISSION TYPE: 424B2 PUBLIC DOCUMENT COUNT: 1 FILED AS OF DATE: 20040315 FILER: COMPANY DATA: COMPANY CONFORMED NAME: LEHMAN BROTHERS HOLDINGS INC CENTRAL INDEX KEY: 0000806085 STANDARD INDUSTRIAL CLASSIFICATION: SECURITY BROKERS, DEALERS & FLOTATION COMPANIES [6211] IRS NUMBER: 133216325 STATE OF INCORPORATION: DE FISCAL YEAR END: 1130 FILING VALUES: FORM TYPE: 424B2 SEC ACT: 1933 Act SEC FILE NUMBER: 333-60474 FILM NUMBER: 04670363 BUSINESS ADDRESS: STREET 1: LEHMAN BROTHERS STREET 2: 745 SEVENTH AVENUE CITY: NEW YORK STATE: NY ZIP: 10019 BUSINESS PHONE: 2125267000 MAIL ADDRESS: STREET 1: LEHMAN BROTHERS STREET 2: 745 SEVENTH AVENUE CITY: NEW YORK STATE: NY ZIP: 10019 FORMER COMPANY: FORMER CONFORMED NAME: SHEARSON LEHMAN HUTTON HOLDINGS INC DATE OF NAME CHANGE: 19901017 424B2 1 mtng119.txt MTNG119 LADDER INVERSE FLOATER Rule 424(b)(2) Registration No. 333-60474 PRICING SUPPLEMENT NO. 119 dated March 11, 2004 to Prospectus Supplement dated June 14, 2001 and Prospectus dated June 14, 2001 LEHMAN BROTHERS HOLDINGS INC. Medium-Term Notes, Series G Due Nine Months or More From the Date of Issue CUSIP No.: 52517PWC1 ISIN: US52517PWC12 Specified Currency: US Dollars Principal Amount: US$3,000,000.00 Total Per Note Issue Price: US$3,000,000.00 100% Agent's Commission: US$ 0.00 0% Proceeds to Lehman Brothers Holdings: US$3,000,000.00 100% In addition, at the Original Issue Date specified below, Lehman Brothers Holdings may issue up to an additional $47,000,000.00 aggregate principal amount of Notes similar in all respects (including with respect to the Issue Price and the Agent's Commission specified above). Agent: Lehman Brothers Inc. Agent's Capacity: [ ] As agent [X ] As principal (See "Underwriting" below.) Trade Date: March 11, 2004 Original Issue Date: April 8, 2004 Stated Maturity Date: April 8, 2011; provided that if such day is not a Business Day, then such day will be the following Business Day unless such day falls in the following month in which case it will be the preceding Business Day. Amortizing Note: [ ] Yes [X ] No Amortization Schedule: Not applicable [ ] Fixed Rate Note [X ] Floating Rate Note [ ] CD Rate [ ] Commercial Paper Rate [ ] Federal Funds Rate [ ] LIBOR Telerate [ ] LIBOR Reuters [ ] Treasury Rate: Constant Maturity [ ] Yes [ ] No [ ] Prime Rate [ ] J.J. Kenny Rate [ ] Eleventh District Cost of Funds Rate [X ] Other: See "Interest Rate per Annum" below Interest Rate per Annum: From the Original Issue Date through July 8, 2004, 8.70%. From July 8, 2004, through the Stated Maturity Date, the greater of: * 0%, or * the Interest Rate per Annum relating to the immediately preceding Interest Payment Date, plus the applicable Spread, minus 12-Month LIBOR. Spread: From July 8, 2004 through April 7, 2005: 1.5%. From April 8, 2005 through April 7, 2006: 2.0%. From April 8, 2006 through April 7, 2007: 3.0%. From April 8, 2007 through April 7, 2008: 3.5%. From April 8, 2008 through April 7, 2009: 4.0%. From April 8, 2009 through April 7, 2010: 4.5%. From April 8, 2010 through the Stated Maturity Date: 5.0%. 12-Month LIBOR: For any LIBOR Determination Date, the offered rates for deposits in U.S. dollars for a period of twelve months, commencing on such LIBOR Determination Date, which appears on Moneyline Telerate, on page 3750 (or any successor service or page for the purpose of displaying the London interbank offered rates of major banks) as of 11:00 a.m., London time, on that LIBOR Determination Date. If 12-Month LIBOR cannot be determined on a LIBOR Determination Date as described above, then the Interest Rate Calculation Agent will determine 12-Month LIBOR based on quotations from five reference banks in the manner described in the Prospectus Supplement for deposits in U.S. dollars for a period of twelve months, commencing on such LIBOR Determination Date. LIBOR Determination Dates: Two London Business Days prior to each Interest Reset Date. Interest Reset Dates: Each Interest Payment Date. Interest Payment Dates: Each April 8, July 8, October 8, and January 8, commencing on July 8, 2004; provided that if such day is not a Business Day, then such day will be the following Business Day unless such day falls in the following month in which case it will be the preceding Business Day, and provided further that the final Interest Payment Date for any Notes shall be the applicable maturity date. London Business Day: Any day that is 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. Business Day: Any day that is 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 and that is not a Saturday or Sunday and that, in New York City, is not a day on which banking institutions generally are authorized or obligated by law or executive order to be closed. Interest Computation: Interest will be computed on the assumption that there are thirty days in each month. "Accrue to Pay": [ ] Yes [X ] No Interest Rate Calculation Agent: Citibank, N.A. Optional Redemption: The Notes may be redeemed at the option of Lehman Brothers Holdings in whole or in part at a price equal to 100% of the principal amount being redeemed, from time to time on each Interest Payment Date, commencing on July 8, 2004. Notice of redemption will be given not less than five Business Days prior to the redemption date. Optional Repayment: Not applicable. Extension of Maturity: Not applicable. Form of Note: [X ] Book-entry only (global) [ ] Certificated Depository: The Depository Trust Company Authorized Denominations: $10,000 or any larger whole multiple Issuer Rating: Long-term senior unsecured debt of Lehman Brothers Holdings is currently rated A by Standard & Poors, A1 by Moodys Investors Service and A+ by Fitch IBCA. RISK FACTORS An investment in the Notes entails certain risks not associated with an investment in conventional fixed or floating rate medium-term notes. See "Risk Factors" generally in the Prospectus Supplement. You should consider the risk that the Interest Rate calculation provisions applicable to the Notes may result in less interest being payable on the Notes than on a conventional fixed rate debt security issued by Lehman Brothers Holdings at the same time. You should consider the risk that the interest rate you receive will decrease as 12-Month LIBOR increases, and increase as 12-Month LIBOR decreases, because the interest rates on the Notes after the first Interest Payment Date will be determined by adding a spread to the interest rate relating to the previous Interest Payment Date and subtracting 12-Month LIBOR. Generally, as market rates increase, the market value of fixed rate debt instruments will decrease. Because the interest rate on the Notes will decrease as 12-Month LIBOR increases and may decrease to zero, the market value of the Notes can be expected to decrease to a much greater extent than the market rate of fixed rate notes if interest rates increase. The secondary market for, and the market value of, the Notes will be affected by a number of factors independent of the creditworthiness of Lehman Brothers Holdings, including the level and direction of interest rates, the anticipated level and potential volatility of 12-Month LIBOR, the method of calculating 12-Month LIBOR, the time remaining to the maturity of the Notes, the right of Lehman Brothers Holdings to redeem all or a portion of the Notes from time to time, the availability of comparable instruments and the aggregate principal amount of the Notes. The level of 12-Month LIBOR depends on a number of interrelated factors, including economic, financial and political events, over which Lehman Brothers Holdings has no control. The following table, showing the historical level of 12-Month LIBOR in effect for the hypothetical Interest Reset Dates listed below, illustrates the variability of that rate: Historical Levels of 12-Month LIBOR Hypothetical LIBOR Hypothetical LIBOR Observation Date 12-Month LIBOR Observation Date 12-Month LIBOR January 8, 1987 6.062 October 9, 1995 5.875 April 8, 1987 6.875 January 8, 1996 5.375 July 8, 1987 7.500 April 8, 1996 5.875 October 8, 1987 9.188 July 8, 1996 6.312 January 8, 1988 7.938 October 8, 1996 5.812 April 8, 1988 7.688 January 8, 1997 5.875 July 8, 1988 8.562 April 8, 1997 6.344 October 10, 1988 8.875 July 8, 1997 6.000 January 9, 1989 9.812 October 8, 1997 5.906 April 10, 1989 10.812 January 8, 1998 5.750 July 10, 1989 8.688 April 8, 1998 5.781 October 9, 1989 8.938 July 8, 1998 5.812 January 9, 1990 8.375 October 8, 1998 4.922 April 9, 1990 8.750 January 8, 1999 5.090 July 9, 1990 8.562 April 8, 1999 5.246 October 8, 1990 8.250 July 8, 1999 5.785 January 8, 1991 7.625 October 8, 1999 6.208 April 8, 1991 6.750 January 10, 2000 6.574 July 8, 1991 7.000 April 10, 2000 6.870 October 8, 1991 5.562 July 10, 2000 7.040 January 8, 1992 4.188 October 10, 2000 6.800 April 8, 1992 4.750 January 8, 2001 5.302 July 8, 1992 3.812 April 9, 2001 4.461 October 8, 1992 3.500 July 9, 2001 4.066 January 8, 1993 4.125 October 9, 2001 2.470 April 8, 1993 3.625 January 8, 2002 2.345 July 8, 1993 3.750 April 8, 2002 2.860 October 8, 1993 3.500 July 8, 2002 2.290 January 10, 1994 3.750 October 8, 2002 1.760 April 8, 1994 4.938 January 8, 2003 1.510 July 8, 1994 5.875 April 8, 2003 1.366 October 10, 1994 6.375 July 8, 2003 1.185 January 9, 1995 7.688 October 8, 2003 1.340 April 10, 1995 6.688 January 8, 2004 1.470 The historical experience of 12-Month LIBOR should not be taken as an indication of the future performance of 12-Month LIBOR during the term of the Notes. Fluctuations in the level of 12-Month LIBOR make the Notes' effective interest rate difficult to predict and can result in effective interest rates to investors that are lower than anticipated. In addition, historical interest rates are not necessarily indicative of future interest rates. Fluctuations in interest rates and interest rate trends that have occurred in the past are not necessarily indicative of fluctuations that may occur in the future, which may be wider or narrower than those that have occurred historically. CERTAIN UNITED STATES FEDERAL INCOME TAX CONSEQUENCES Treatment of Notes as Contingent Payment Debt Instruments Lehman Brothers Holdings intends to treat the Notes as "contingent payment debt instruments." As such, Lehman Brothers Holdings intends to report interest deductions with respect to the Notes based on this treatment and will, upon written request, provide holders of Notes with a projected payment schedule. Under such characterization, holders of the Notes will accrue original issue discount based on the "comparable yield" of the Notes (generally, the rate at which Lehman Brothers Holdings would issue a fixed rate debt instrument with terms and conditions similar to the Notes), and if the actual payments made on the Notes differ from the projected payments, positive or negative adjustments will be made for such differences for tax purposes. In addition, any gain or loss on the sale, exchange or retirement of the Notes generally will be treated as ordinary income or loss. Based on the current interest rate environment, Lehman Brothers Holdings estimates that the comparable yield of the Notes would be an annual rate of approximately 4.23%, compounded quarterly. Lehman Brothers Holdings will not determine the actual comparable yield of the Notes, however, until they are issued. Any positive adjustment, for the amount by which an actual payment exceeds a projected contingent payment, will be treated as additional interest. Negative adjustments will be treated as follows: (i) first, any negative adjustment will reduce the amount of interest required to be accrued in the current year, (ii) 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 the holder's total interest inclusions exceed the total amount of net negative adjustments treated as ordinary loss in prior taxable years, and (iii) third, any excess negative adjustments will be carried forward to offset future income or amount realized on disposition. Holders of Notes can obtain the comparable yield of the Notes and the projected payment schedule by submitting a written request for them to Lehman Brothers Holdings at the following address (which replaces the address provided in the accompanying Prospectus): Controllers Office Lehman Brothers Holdings Inc. 745 Seventh Avenue New York, New York 10019 (212) 526-7000 By purchasing a Note, a holder agrees to be bound by the determination of Lehman Brothers Holdings of the comparable yield and the projected payment schedule. For United States federal income tax purposes, a holder of Notes must use the comparable yield and projected payment schedule in determining its original issue discount accruals, and the adjustments thereto described above, in respect of the Notes. The comparable yield and projected payment schedule are not provided for any purpose other than the determination of a holder's original issue discount and adjustments thereof in respect of the Notes and do not constitute a projection or representation regarding the actual amount of the payments on a Note. For a general discussion of the tax consequences associated with contingent payment debt instruments, see "United States Federal Income Tax Consequences- Debt Securities-Consequences to United States Holders-Contingent Payment Debt Securities" in the Prospectus. It is possible that the Notes may be taxed in some manner other than that described above. A different treatment from that described above could affect the amount, timing and character of income, gain or loss in respect of an investment in the Notes. Investors should consult their own tax advisors regarding the tax consequences of the purchase, ownership and disposition of the Notes, including the tax consequences under state, local, foreign and other tax laws. Certain Other United States Federal Income Tax Consequences A summary of certain United States federal income tax consequences that will apply to holders of debt securities is set forth under "United States Federal Income Tax Consequences-Debt Securities" in the Prospectus. Holders should note that the backup withholding tax rate of 31% referenced in the Prospectus under "United States Federal Income Tax Consequences-Debt Securities-Information Reporting and Backup Withholding-United States Holders" has been reduced to 28% for payments made through 2010, after which time the rate will revert back to 31% absent Congressional action. In addition, the sections below replace the summaries set forth in the Prospectus under "United States Federal Income Tax Consequences-Debt Securities-Consequences to Non-United States Holders-United States Federal Estate Tax" and "United States Federal Income Tax Consequences-Debt Securities-Information Reporting and Backup Withholding-Non-United States Holders." Consequences to Non-United States Holders 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: * any payment to you on the debt securities would be eligible for exemption from the 30% United States federal withholding tax under the rules described in the bullet points under "United States Federal Income Tax Consequences- Debt Securities-Consequences to Non-United States Holders-United States Federal Withholding Tax," without regard to the certification requirements of the fourth bullet point; and * 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. Information Reporting and Backup Withholding Non-United States Holders If you are a non-United States holder of debt securities, we must report annually to the IRS and to you the amount of payments we make to you and the tax withheld with respect to such payments, regardless of whether withholding was required. Copies of the information returns reporting such payments and withholding may also be made available to the tax authorities in the country in which you reside under the provisions of an applicable income tax treaty. You will not be subject to backup withholding regarding payments we make to you provided that we do not have actual knowledge or reason to know that you are a United States person and we have received from you the statement described above in the fourth bullet point under "United States Federal Income Tax Consequences-Debt Securities-Consequences to Non-United States Holders-United States Federal Withholding Tax." In addition, you will be subject to information reporting and, depending on the circumstances, backup withholding regarding the proceeds of the sale of a debt security made within the United States or conducted through United States- related intermediaries, unless the payor receives the statement described above and does not have actual knowledge or reason to know that you are a United States person, or you otherwise establish an exemption. 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. UNDERWRITING Lehman Brothers Holdings has agreed to sell to Lehman Brothers Inc. (the "Agent"), and the Agent has agreed to purchase, the principal amount of the Notes. The Agent is committed to take and pay for all of the Notes, if any are taken. The Agent proposes to offer the Notes initially at a public offering price equal to the Issue Price set forth above and to certain dealers at such price. After the initial public offering, the public offering price and other selling terms may from time to time be varied by the Agent. The Notes are a new issue of securities with no established trading market. Lehman Brothers Holdings has been advised by the Agent that it intends to make a market in the Notes, but it is not obligated to do so and may discontinue market making at any time without notice. No assurance can be given as to the liquidity of the trading market for the Notes. The Agent has agreed that it will, to the best of its knowledge, only offer or sell the Notes in compliance with the laws and regulations in any jurisdiction applicable to such offer or sale and it has not taken and will not take any action in any jurisdiction, other than the United States, that would permit a public offering of the Notes, or possession or distribution of any prospectus or any amendment or supplement thereto or any offering or publicity material relating to the Notes, in any country or jurisdiction where action for that purpose is required. The Agent has represented and agreed that: * it and each of its affiliates have not offered or sold and will not offer or sell any Notes to persons in the United Kingdom prior to the expiry of the period of six months from the issue date of the Notes 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 of 1995; * it and each of its affiliates have only communicated or caused to be communicated and will only communicate or cause to be communicated any invitation or inducement to engage in investment activity (within the meaning of Section 21 of the Financial Services and Markets Act 2000 (the "FSMA") received by it in connection with the issue or sale of any Notes in circumstances in which Section 21(1) of the FSMA does not apply to Lehman Brothers Holdings; and * it and each of its affiliates have complied and will comply with all applicable provisions of the FSMA with respect to anything done by it in relation to the Notes in, from or otherwise involving the United Kingdom. The Agent has separately further agreed that the Notes may not be offered, sold, transferred or delivered in or from The Netherlands, as part of their initial distribution or as part of any re-offering, and neither this prospectus supplement, the accompanying prospectus nor any other document in respect of the offering may be distributed or circulated in The Netherlands, other than to individuals or legal entities which include, but are not limited to, banks, brokers, dealers, institutional investors and undertakings with a treasury department, who or which trade or invest in securities in the conduct of a business or profession. Lehman Brothers Holdings has agreed to indemnify the Agent against certain liabilities under the Securities Act of 1933, as amended, as described in the accompanying Prospectus Supplement. Capitalized terms used herein without definition have the meanings ascribed to them in the Prospectus Supplement and Prospectus. Lehman Brothers Holdings Inc. By: /s/ Paolo Tonucci Name: Paolo Tonucci Title: Authorized Officer -----END PRIVACY-ENHANCED MESSAGE-----