-----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, CN2zXp450nZLHBf7z28RkvYJ0MC8B8kdr+UnLrQNKM4ajg7ChpdfmrgLvYIfUtkB BaiuIAf1F3ohe9e71QdKjA== 0000950136-05-001468.txt : 20050318 0000950136-05-001468.hdr.sgml : 20050318 20050318172453 ACCESSION NUMBER: 0000950136-05-001468 CONFORMED SUBMISSION TYPE: 424B5 PUBLIC DOCUMENT COUNT: 1 FILED AS OF DATE: 20050318 DATE AS OF CHANGE: 20050318 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: 424B5 SEC ACT: 1933 Act SEC FILE NUMBER: 333-60474 FILM NUMBER: 05692539 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 424B5 1 file001.htm DEFINITIVE MATERIALS

Filed Pursuant to Rule 424(b)5
Registration No. 333-60474

PRICING SUPPLEMENT No. 21
to Prospectus Supplement dated August 20, 2003
to Prospectus Supplement dated June 14, 2001
and Prospectus dated June 14, 2001

$100,000,000
LEHMAN BROTHERS HOLDINGS INC.
MEDIUM-TERM NOTES, SERIES G
1.50% Notes Due March 23, 2012
Performance Linked to a Basket of Six Media Stocks

Because these notes are part of a series of Lehman Brothers Holdings' debt
securities called Medium-Term Notes, Series G, this pricing supplement and the
accompanying prospectus supplement, dated August 20, 2003 (the "prospectus
supplement") should also be read with the accompanying prospectus supplement,
dated June 14, 2001 (the "MTN prospectus supplement") and the accompanying
prospectus dated June 14, 2001 (the "base prospectus"). Terms used here have the
meanings given them in the prospectus supplement, the MTN prospectus supplement
or the base prospectus, unless the context requires otherwise.

o REFERENCE EQUITY: An equal-dollar weighted basket of common stocks of the
following six companies: Clear Channel Communications, Inc., Comcast
Corporation, News Corporation, Time Warner Inc., Viacom Inc. and The Walt
Disney Company. These companies are not involved in this offering and have
no obligation with respect to the notes.
o STATED MATURITY DATE: March 23, 2012, subject to postponement if a market
disruption event occurs on the valuation date.
o VALUATION DATE: March 16, 2012, subject to postponement if a market
disruption event occurs, as described on page SS-17 of the prospectus
supplement, as supplemented by "Market Disruption Events; Postponement of
Valuation Date Because of a Market Disruption Event" on page PS-4 of this
pricing supplement.
o INTEREST RATE: 1.50% per annum.
o INTEREST PAYMENT DATES: March 23 and September 23 of each year, beginning
on September 23, 2005.
o INTEREST PAYMENT RECORD DATES: 15 calendar days prior to each interest
payment date.
o THRESHOLD VALUE: $115.65, which represents 115.65% of $100.00. $100.00 is
the initial level of the basket.
o EARLIEST REDEMPTION DATE: March 16, 2008.
o REDEMPTION NOTICE PERIOD: 30 calendar days.
o REPURCHASE OPTION: As described on page SS-13 of the prospectus supplement.
o OPTIONAL REPURCHASE NOTICE PERIOD: Eight business days.
o DETERMINATION PERIOD: Five business days.
o MULTIPLIERS: The initial multiplier is 0.48714 for the Clear Channel common
stock, 0.49540 for the Comcast common stock, 0.96189 for the News Corp.
common stock, 0.91605 for the Time Warner common stock, 0.48369 for the
Viacom common stock and 0.58171 for the Walt Disney common stock. In
addition to adjustments to the multipliers described in the prospectus
supplement on page SS-14 under "Description of the Notes--Adjustments to
multipliers and to securities included in the calculation of the settlement
value", the applicable multiplier is subject to adjustment if any of Clear
Channel, News Corp., Viacom or Walt Disney changes the per share amount of
dividends it pays on its respective common stock or if either Comcast or
Time Warner pays dividends on its respective common stock. Any such
adjustments may potentially decrease or increase the amount you may receive
upon maturity or upon repurchase or redemption. See "Additional Adjustments
to the Multipliers" on page PS-3 of this pricing supplement.
o STOCK SETTLEMENT OPTION: No.
o LISTING: The notes will not be listed on any exchange.

Investing in the notes involves risks. Risk Factors begin on pages PS-2 of this
pricing supplement and SS-7 of the prospectus supplement.

Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities or determined if this
pricing supplement, any accompanying prospectus supplement or any accompanying
prospectus is truthful or complete. Any representation to the contrary is a
criminal offense.

----------------------

Per Note Total
-------------- -----------------
Public offering price..................... 100.00% $100,000,000
Underwriting discount..................... 0.25% $250,000
Proceeds to Lehman Brothers Holdings...... 99.75% $99,750,000

----------------------

Lehman Brothers Holdings has granted the underwriter an option to purchase,
within 13 days of the original issuance, up to an additional $15,000,000
aggregate principal amount of notes on the same terms and conditions set forth
above solely to cover over-allotments, if any.

The notes are expected to be ready for delivery in book-entry form only through
The Depository Trust Company on or about March 23, 2005.

----------------------
LEHMAN BROTHERS

March 16, 2005

ADDITIONAL RISK FACTORS

THE INCLUSION OF COMMISSIONS AND PROJECTED PROFIT FROM HEDGING IN THE PUBLIC
OFFERING PRICE IS LIKELY TO ADVERSELY AFFECT SECONDARY MARKET PRICES.

Assuming no change in market conditions or any other relevant factors, the
price, if any, at which Lehman Brothers Inc. is willing to purchase the notes in
secondary market transactions will likely be lower than the public offering
price, since the public offering price included, and secondary market prices are
likely to exclude, commissions paid with respect to the notes, as well as the
projected profit included in the cost of hedging the obligations of Lehman
Brothers Holdings under the notes. In addition, any such prices may differ from
values determined by pricing models used by Lehman Brothers Inc., as a result of
dealer discounts, mark-ups or other transaction costs.

THE NOTES MAY NOT BE ACTIVELY TRADED.

The notes are not listed on any securities exchange. There may be little or no
secondary market for the notes. Even if there is a secondary market, it may not
provide significant liquidity. Lehman Brothers Inc. currently intends to act as
a market maker for the notes, but it is not required to do so.

YOU HAVE NO SHAREHOLDER RIGHTS.

Investing in the notes is not equivalent to investing in the component stocks of
the basket. As an investor in the notes, you will not have voting rights or
rights to receive dividends or other distributions (although the multiplier will
be adjusted to reflect any payment or any changes in the rate of dividends on
the shares of the common stocks included in the basket) or any other rights with
respect to the common stocks included in the basket.

CHANGES IN THE VALUE OF ONE OR MORE OF THE COMMON STOCKS COMPRISING THE BASKET
MAY OFFSET EACH OTHER.

Price movements in the common stocks comprising the basket may not correlate
with each other. At a time when the value of one or more of the common stocks
included in the basket increases, the value of one or more of the other common
stocks included in the basket may not increase as much or may even decline in
value. Therefore, in calculating the closing level of the basket on the
valuation date, increases in the value of one or more of the common stocks
included in the basket may be moderated, or wholly offset, by lesser increases
or declines in the value of one or more of the other common stocks included in
the basket. You can review the historical prices of each of the common stocks in
the basket for each fiscal quarter in the period from January 1, 2002 through
March 16, 2005 in this pricing supplement under "The Basket--Historical
information about the common stocks included in the basket." It is impossible to
predict the future performance of any of the common stocks comprising the basket
or of the basket as a whole, or whether increases in the prices of any of the
common stocks comprising the basket will be offset by decreases in the prices of
other common stocks comprising the basket, based on historical performance. In
addition, there can be no assurance that the closing level of the basket will be
higher than the initial level of the basket so that you will receive at maturity
an amount in excess of the price at which the notes are initially being sold to
the public.

THERE ARE RISKS ASSOCIATED WITH A SECTOR INVESTMENT.

The performance of the notes is dependent upon the performance of six issuers in
a particular sector of the economy--namely, the media industry. Consequently,
the value of the notes may be subject to greater volatility and be more
adversely affected by a single economic, political or regulatory occurrence
affecting the media industry than an investment linked to a more broadly
diversified group of issuers.

THE COMMON STOCKS COMPRISING THE BASKET ARE NOT NECESSARILY REPRESENTATIVE OF
THE MEDIA INDUSTRY.

The performance of the basket may not correlate with the performance of the
entire media industry. The basket may decline in value even if the media
industry as a whole rises in value. Furthermore, one or more of the issuers of
the common stocks included the basket may engage in new lines of business or
cease to be involved in the media industry. Subject to adjustments to
multipliers and to securities included in the basket for specific corporate
events relating to a particular issuer, the basket is a static basket, and the
common stocks included in the basket will not vary even if one or more of the
issuers are no longer involved in the media industry.

PS-2

INDUSTRY CONSOLIDATION AND OTHER CORPORATE EVENTS MAY ALTER THE COMPOSITION OF
THE BASKET.

If the issuer of a common stock included in the basket is acquired in a
stock-for-stock transaction, the common stock of the acquiring company will
assume that common stock's place in the basket, including if the common stock of
the acquiror is already in the basket. Consequently, consolidation among issuers
of the common stock included in the basket will result in an increased weighting
for the surviving company. For the effect of consolidation transactions and
other reorganization events with respect to the common stocks included in the
basket on the multipliers and the basket, see "Description of the
Notes--Adjustments to multipliers and to securities included in the calculation
of the settlement value" in the prospectus supplement.

ADDITIONAL ADJUSTMENTS TO THE MULTIPLIERS

The initial multiplier is 0.48714 for the Clear Channel common stock, 0.49540
for the Comcast common stock, 0.96189 for the News Corp. common stock, 0.91605
for the Time Warner common stock, 0.48369 for the Viacom common stock and
0.58171 for the Walt Disney common stock. In addition to adjustments to the
multipliers described in the prospectus supplement, the applicable multiplier is
subject to adjustment if any of Clear Channel, News Corp., Viacom or Walt Disney
changes the per share amount of dividends it pays on its respective common stock
or if either Comcast or Time Warner pays dividends on its respective common
stock.

If, during the period from, but excluding, the date of this pricing supplement
to the valuation date, holders of record of shares of common stock of any of
Clear Channel, News Corp., Viacom or Walt Disney are entitled to receive a cash
dividend (other than an extraordinary cash dividend, as determined by the
calculation agent in its good faith judgment) from such company and the amount
of the respective dividend is less than the respective base dividend (as
described below) per share of common stock of such company (the amount of the
respective dividend per share of common stock most recently paid by such company
prior to the date of this pricing supplement), including if any such company
fails to declare or make a dividend payment on its respective shares of common
stock (as determined by the calculation agent in its sole and absolute
discretion), the applicable multiplier shall be reduced, effective at the close
of business on the business day immediately preceding the ex-dividend date for
the applicable dividend (such business day, the "effective adjustment date"), so
that the new multiplier equals the product of the then current multiplier and:

base dividend - new dividend
1 - ----------------------------
closing price

Any such downward adjustment to the applicable multiplier may decrease the
amount you receive upon maturity or upon repurchase or redemption. In no event,
however, will the applicable multiplier be reduced to less than zero. The "base
dividend" shall be $0.125 for Clear Channel, $0.05 for News Corp., $0.07 for
Viacom and $0.24 for Walt Disney, the amount of the respective dividend per
share of common stock most recently paid by such company prior to the date of
this pricing supplement, subject to adjustment in the event of certain events
affecting the applicable shares of common stock of any such company, such as
share splits, reverse share splits or reclassifications, as determined by the
calculation agent, in its good faith judgment. The "new dividend" shall be the
respective dividend per share of common stock of any such company, which may be
zero, giving rise to the adjustment. The "closing price" shall be the closing
price of the respective shares of common stock of such company on the effective
adjustment date for the applicable common stock dividend giving rise to the
adjustment. If the calculation agent determines in its sole and absolute
discretion that any such company has failed to declare or make a dividend
payment, the effective adjustment date for adjusting the applicable multiplier
will be (a) in the case of the Clear Channel common stock, the first business
day immediately following the 13th day of each February, May, August or November
and the valuation date, as applicable, (b) in the case of News Corp. common
stock, the first business day immediately following the 13th day of each June or
December and the valuation date, as applicable, (c) in the case of the Viacom
common stock, the first business day immediately following the 11th day of each
January, April, July or October and the valuation date, as applicable, and (d)
in the case of the Walt Disney common stock, the first business day immediately
following the 8th day of each June and the valuation date, as applicable.

If, during the period from, but excluding, the date of this pricing supplement
to the valuation date, holders of record of common stock of any of Clear
Channel,

PS-3

News Corp., Viacom or Walt Disney are entitled to receive a cash
dividend (other than an extraordinary cash dividend, as determined by the
calculation agent in its good faith judgment) from such company and the amount
of the respective dividend is more than the respective base dividend per share
of such company, the applicable multiplier shall be increased, effective at the
close of business on the effective adjustment date, so that the new multiplier
equals the product of the then current multiplier and:

new dividend - base dividend
1 + ----------------------------
closing price

Any such upward adjustment to the applicable multiplier may increase the amount
you receive upon maturity or upon repurchase or redemption.

If, during the period from, but excluding, the date of this pricing supplement
to the valuation date, holders of record of common stock of either Comcast or
Time Warner are entitled to receive a cash dividend (other than an extraordinary
cash dividend, as determined by the calculation agent in its good faith
judgment) from such company, the applicable multiplier shall be increased,
effective at the close of business on the effective adjustment date, so that the
new multiplier equals the product of the then current multiplier and:

dividend
1 + --------------
closing price

Any such upward adjustment to the multiplier may increase the amount you receive
upon maturity or upon repurchase or redemption.

The adjustments to the multipliers discussed above are in addition to any other
adjustments that may be made to the applicable multiplier for the reasons
described in the prospectus supplement under "Description of the
Notes--Adjustments to multipliers and to securities included in the calculation
of the settlement value."

You may call Lehman Brothers Inc. at 212-526-0905 to obtain the current values
of the multipliers.

MARKET DISRUPTION EVENTS; POSTPONEMENT OF VALUATION DATE BECAUSE OF A
MARKET DISRUPTION EVENT

Notwithstanding the description of market disruption events set forth in the
prospectus supplement under "Description of the Notes--Market disruption
events", the fact that Lehman Brothers Holdings, or any of its affiliates, is
unable, after using commercially reasonable efforts, to unwind or dispose of, or
realize, recover or remit the proceeds of, any transactions or assets it deems
necessary to hedge the equity price risk of entering into and performing its
obligations with respect to the notes shall not constitute a market disruption
event.

If a market disruption event occurs on a day that would otherwise be the
originally scheduled valuation date set forth on the cover page of this pricing
supplement, the valuation date will be postponed until the next scheduled
trading day on which no market disruption event occurs; provided, however, if a
market disruption event occurs on each of the eight scheduled trading days
following the originally scheduled valuation date, then (a) that eighth
scheduled trading day shall be deemed the valuation date and (b) the calculation
agent shall determine the closing price of the effected common stock based upon
its good faith estimate of the value of the effected common stock as of the
close of trading on the relevant exchange on that eighth scheduled trading day.

EXAMPLES OF AMOUNT PAYABLE AT MATURITY

Here are two examples of hypothetical alternative redemption amount
calculations. In each of these examples it is assumed that during the term of
the notes Clear Channel, News Corp., Viacom and Walt Disney do not change the
amount of the dividends that they pay on their common stock and that Comcast and
Time Warner do not pay any dividends on their common stock:

EXAMPLE 1. ASSUMING THE CLOSING LEVEL OF THE BASKET IS $80.00:

Alternative redemption amount per $1,000 note =

$80.00
$1,000 x ---------- = $691.74
$115.65

As a result, on the maturity date or upon redemption, you would receive $1,000,
plus accrued but unpaid

PS-4

interest, per $1,000 note because $1,000 is greater than $691.74. If you require
Lehman Brothers Holdings to repurchase your notes, you would only receive
$691.74, plus accrued but unpaid interest, per $1,000 note.

EXAMPLE 2. ASSUMING THE CLOSING LEVEL OF THE BASKET IS $140.00:

Alternative redemption amount per $1,000 note =

$140.00
$1,000 x ----------- = $1,210.55
$115.65

As a result, on the maturity date or upon redemption, you would receive
$1,210.55, plus accrued but unpaid interest, per $1,000 note because $1,210.55
is greater than $1,000. If you require Lehman Brothers Holdings to repurchase
your notes, you would also receive $1,210.55, plus accrued but unpaid interest,
per $1,000 note.

To the extent the actual closing level of the basket differs from the levels
assumed above or that either Clear Channel, News Corp., Viacom or Walt Disney
changes the amount of the dividends it pays or that either Comcast or Time
Warner pays any dividends, the results indicated above would be different.

SUPPLEMENTAL USE OF PROCEEDS AND HEDGING

An amount equal to approximately 57% of the proceeds to be received by Lehman
Brothers Holdings from the sale of the notes has been or will be used by Lehman
Brothers Holdings or one or more of its subsidiaries before and immediately
following the initial offering of the notes to acquire common stocks included in
the basket.

THE BASKET

THE SIX COMMON STOCKS COMPRISING THE BASKET

The basket will represent an equal-dollar weighted portfolio of the six common
stocks in the basket. The level of the basket will increase or decrease by the
performance of the common stocks that make up the basket. The following table
presents information with respect to the six common stocks in the basket. The
six common stocks of these media companies, the exchange on which each trades,
their stock symbols, their starting stock prices, the initial multiplier for
each common stock and the starting value for each stock are as follows:

INITIAL
STARTING MULTIPLIER
STOCK STOCK PRICE (NUMBER OF STARTING
ISSUER OF THE COMMON STOCK EXCHANGE SYMBOL PER SHARE SHARES) VALUE
- ----------------------------------- -------------- ----------- ------------- -------------- ------------

Clear Channel Communications, Inc.. NYSE CCU $ 34.213 0.48714 $ 16.667
Comcast Corporation................ NASDAQ CMCSA 33.643 0.49540 16.667
News Corporation................... NYSE NWS/A 17.327 0.96189 16.667
Time Warner Inc.................... NYSE TWX 18.194 0.91605 16.667
Viacom Inc......................... NYSE VIA/B 34.457 0.48369 16.667
The Walt Disney Company............ NYSE DIS 28.651 0.58171 16.667
--------
$100.00
========

All information in the table above was obtained from Bloomberg L.P., without
independent verification.

PS-5

Lehman Brothers Holdings has obtained the following information from the
respective companies' reports filed with the SEC:

Clear Channel Communications, Inc.

Clear Channel Communications, Inc. is a diversified media company with three
reportable business segments: Radio Broadcasting, Outdoor Advertising and Live
Entertainment.

o Radio Broadcasting. This segment consists of Radio Stations and Radio
Networks.

o Radio Stations. As of December 31, 2004, the company owned 367 AM and
822 FM domestic radio stations, of which 498 stations were in the top
100 markets according to the Arbitron Fall 2004 ranking of U.S.
markets. In addition, the company owns equity interests in various
international radio broadcasting companies, and

o Radio Networks. As of December 31, 2004, the company owned a national
radio network with a total audience of over 180 million weekly
listeners. The network syndicates talk programming including such
talent as Rush Limbaugh, Bob and Tom, John Boy and Billy, Glenn Beck
and Jim Rome, and music programming including such talent as Delilah,
Ryan Seacrest and Casey Kasem. The company also operates several news
and agricultural radio networks serving Georgia, Ohio, Oklahoma,
Texas, Iowa, Kentucky, Virginia, Alabama, Tennessee, Florida and
Pennsylvania.

o Outdoor Advertising. As of December 31, 2004, the company owned or operated
a total of 823,580 advertising display faces worldwide. The company
currently provides outdoor advertising services concentrated in over 49
domestic markets and over 63 foreign countries. Display faces include
billboards of various sizes, wallscapes, mall displays, transit displays
and street furniture displays. Additionally, the company currently owns
equity interests in various outdoor advertising companies.

o Live Entertainment. During 2004, the company promoted or produced over
28,500 events, including music concerts, theatrical shows, museum
exhibitions and specialized sporting events. The company reached over 61
million people through all of these activities during 2004. As of December
31, 2004, the company owned or operated a total of 75 domestic venues and
29 international venues. Additionally, the company currently owns equity
interests in various live entertainment companies.

Comcast Corporation

Comcast Corporation, through predecessors, has developed, managed and operated
broadband cable networks since 1963.

The company operates through the following segments: Cable Service, Content and
Other Businesses and Programming Interests.

o Cable Service. In this segment, the company is the largest cable operator
in the United States. As of December 31, 2004, consolidated cable
operations served 21.5 million subscribers in thirty-five states, passed
40.8 million homes, and provided digital cable to 8.7 million subscribers,
high-speed Internet to 7.0 million subscribers and phone to 1.2 million
subscribers.

o Content. In this segment, the company has made investments in national
cable television networks as a means of generating additional revenues and
subscriber interest, including E! Entertainment Television, Style Network,
The Golf Channel, Outdoor Life Network, G4 and International Channel
Networks.

o Other Businesses and Programming Interests. In this segment, the company
has a controlling interest in Comcast-Spectacor, the company's group of
businesses that perform live sporting events and own or manage facilities
for sporting events, concerts and other special events. The company also
owns other non-controlling interests in programming investments including
iN DEMAND, TV One, Sports Channel New England, New England Cable News,
Pittsburgh Cable News Channel and Music Choice.

News Corporation

News Corporation is a diversified international media and entertainment company
with operations in eight industry segments, including Filmed Entertainment,
Television Stations, Television Broadcast Network, Cable Network Programming and
Direct Broadcast

PS-6

Satellite Television, Magazines and Inserts, Newspapers, Book Publishing and
Other.

o Filmed Entertainment. Through subsidiaries, the company engages in feature
film and television production and distribution.

o Television Stations. Through subsidiaries, the company currently owns and
operates 35 full power stations including stations located in nine of the
top 10 largest designated market areas, including New York, Los Angeles,
and Chicago, the first, second, and third largest areas, respectively.

o Television Broadcast Network. A subsidiary of the company has 196
affiliated stations, including 25 full power television stations that are
owned by subsidiaries of the company, which reach, along with a
company-owned cable service which reaches areas not served by an
over-the-air affiliate, approximately 98% of all U.S. television
households.

o Cable Network Programming and Direct Broadcast Satellite Television.
Through subsidiaries, the company overseas the production and licensing of
programming distributed through cable television systems and direct
broadcast satellite operators.

o Magazines and Inserts. The company is the largest shareholder in Gemstar-TV
Guide International, the world's leading provider of interactive
programming guides and the TV Guide magazine. The company also owns News
America Marketing, a portfolio of consumer promotion media.

o Newspapers. The company is the world's leading publisher of
English-language newspapers, with operations in the UK, Australia, Fiji,
Papua New Guinea and the US. The company publishes more than 175 different
newspapers, employing approximately 15,000 people worldwide and printing
more than 40 million papers a week.

o Book Publishing. The company's book publishing division consists of
HarperCollins Publishers, William Morrow & Company, Avon Books, Amistad
Press, and Fourth Estate.

o Other. The company owns assorted media companies involved in marketing,
online publishing and radio, radio broadcasting, et al.

Time Warner Inc.

Time Warner Inc. is a leading media and entertainment company. The company was
formed in connection with the merger of America Online, Inc. and Time Warner
Inc., which was consummated on January 11, 2001.

The Company classifies its businesses into the following fundamental areas:
America Online, Cable, Filmed Entertainment, Networks and Publishing.

o America Online. This area is a subscription-based service with over 22.2
million members in the U.S. and 28.5 million members in the U.S. and
Europe, combined, at December 31, 2004, that provides members with access
to the Internet and a global, interactive community offering a wide variety
of content, features and tools.

o Cable. This area consists of Time Warner Cable Inc. and its subsidiaries
and is the second largest operator of cable systems in the U.S. in terms of
subscribers served.

o Filmed Entertainment. This area produces and distributes theatrical motion
pictures, television shows, animation and other programming.

o Networks. This area consists principally of domestic and international
basic cable networks, pay television programming services and a broadcast
television network.

o Publishing. This area consists principally of magazine and book publishing
that are conducted primarily by the company's subsidiaries. In addition,
Time Inc. operates certain direct marketing businesses.

Viacom Inc.

Viacom Inc. and its consolidated subsidiaries is a diversified worldwide
entertainment company with operations in the following segments: Cable Networks,
Television, Radio, Outdoor and Entertainment.

o Cable Networks. This segment consists of MTV Music Television, Nickelodeon,
Nick at Nite, VH1, MTV2, TV Land, Spike TV, Country Music Television,
Comedy Central, BET, BET Jazz, and Showtime, among other program services.

PS-7

o Television. This segment consists of the CBS and UPN Television Networks,
the company's 39 owned broadcast television stations, and its television
production and syndication business, including King World Productions and
Paramount Television.

o Radio. This segment consists of owning and operating 183 radio stations in
41 United States markets through Infinity Radio.

o Outdoor. This segment includes advertising displays on media, including
billboards, transit shelters, buses, rail systems (in-car, station
platforms and terminals), mall kiosks and stadium signage.

o Entertainment. This segment includes Paramount Pictures (producer and
distributor of theatrical motion pictures), Simon & Schuster (publishers
and distributor of consumer books) and Paramount Parks (owner and operator
of five theme parks and a themed attraction in the United States and Canada
and movie theater and music publishing operations).

The Walt Disney Company

The Walt Disney Company, together with its subsidiaries, is a diversified
worldwide entertainment company with operations in four business segments: Media
Networks, Parks and Resorts, Studio Entertainment and Consumer Products.

o Media Networks. The Media Networks segment is comprised of television
broadcast, radio and cable operations. The television broadcast businesses
include the ABC Television Network as well as ten owned stations. Radio
operations consist of the ABC Radio Networks and 71 owned stations. Cable
operations consist primarily of the ESPN and Disney Channel Networks.

o Parks And Resorts. The company owns and operates the Walt Disney World
Resort and Disney Cruise Line in Florida, the Disneyland Resort in
California, ESPN Zone facilities in several states and The Mighty Ducks of
Anaheim. The company manages and has ownership interests in the Disneyland
Resort Paris in France and Hong Kong Disneyland, which is under
construction and scheduled to open in fiscal 2005. The company also
licenses the operations of the Tokyo Disney Resort in Japan. The company's
Walt Disney Imagineering unit designs and develops new theme park concepts
and attractions as well as resort properties.

o Studio Entertainment. This segment produces and acquires live-action and
animated motion pictures, animated direct-to-video programming, musical
recordings and live stage plays. The company distributes produced and
acquired films (including its film and television library) to the
theatrical, home entertainment, pay-per-view, video-on-demand, pay
television and free-to-air television markets.

o Consumer Products. This segment partners with licensees, manufacturers,
publishers and retailers throughout the world to design, promote and sell a
wide variety of products based on existing and new Disney characters and
other intellectual property. In addition to promoting the company's film
and television programs, Consumer Products develops new intellectual
property within its publishing and interactive gaming divisions. The
company also engages in retail, direct mail and online distribution of
products based on the company's characters and films through the Disney
Stores, the Disney Catalog and DisneyDirect.com, respectively.

----------------------

Each company's common stock is registered under the Securities Exchange Act of
1934. Companies with securities registered under that Act are required to file
periodically certain financial and other information specified by the SEC.
Information provided to or filed with the SEC can be inspected and copied at the
public reference facilities maintained by the SEC or through the SEC's website
described under "Where You Can Find More Information" on page 6 of the base
prospectus. In addition, information regarding the companies may be obtained
from other sources including, but not limited to, press releases, newspaper
articles and other publicly disseminated documents. In connection with the
offering of the notes, neither Lehman Brothers Holdings nor any of its
affiliates has participated in the preparation of such documents or made any due
diligence inquiry with respect to any of the six companies. Neither Lehman
Brothers Holdings nor any of its affiliates makes any representation that such
publicly available documents are or any other publicly available information
regarding any of the companies is accurate or complete. Furthermore, Lehman
Brothers Holdings and its affiliates cannot give any assurance that all events
occurring prior to the date hereof (including

PS-8

events that would affect the accuracy or completeness of the publicly available
documents) that would affect the trading price of the stock of any of the six
companies have been publicly disclosed. Subsequent disclosure of any such events
or the disclosure of or failure to disclose material future events concerning
any of the six companies could affect the value received at maturity with
respect to the notes and therefore the trading prices of the notes. Neither
Lehman Brothers Holdings nor any of its affiliates makes any representation to
you as to the performance of any of the six companies.

Lehman Brothers Holdings and/or its affiliates may presently or from time to
time engage in business with any of the six companies, including extending loans
to, entering into loans with, or making equity investments in, any of the six
companies or providing advisory services to any of the six companies, including
merger and acquisition advisory services. In the course of such business, Lehman
Brothers Holdings and/or its affiliates may acquire non-public information with
respect to any of the six companies, and neither Lehman Brothers Holdings nor
any of its affiliates undertakes to disclose any such information to you.

In addition, one or more of Lehman Brothers Holdings' affiliates may publish
research reports with respect to any of the six companies, and these reports may
or may not recommend that investors buy or hold the applicable common stock. The
statements in the preceding two sentences are not intended to affect the rights
of investors in the notes under the securities laws. As an investor in your
note, you should undertake an independent investigation of the companies whose
common stock are included in the basket as in your judgment is appropriate to
make an informed decision with respect to an investment in these companies.

HISTORICAL INFORMATION ABOUT THE COMMON STOCKS INCLUDED IN THE BASKET

The following table presents the high and low closing prices for each of the
common stocks included in the basket, as reported on the primary exchange on
which such common stock trades during each fiscal quarter in 2002, 2003, 2004
and 2005 (through the date of this pricing supplement), and the closing price at
the end of each quarter in 2002, 2003, 2004 and 2005 (through the date of this
pricing supplement).

It is impossible to predict whether the prices of these common stocks will rise
or fall. The historical prices of these common stocks are not indications of
future performance. Lehman Brothers Holdings cannot assure you that the prices
of these common stocks included in the basket will increase enough so that the
alternative redemption amount will be greater than $1,000. The historical prices
below have been adjusted to reflect any stock splits or reverse stock splits.

All information in the table that follows was obtained from Bloomberg L.P.,
without independent verification.

PS-9

CLEAR CHANNEL COMMUNICATIONS, INC.

HIGH LOW PERIOD END
---------------- ----------------- --------------------

2002
First Quarter............................... $ 53.98 $ 42.90 $ 51.41
Second Quarter.............................. 53.24 31.20 32.02
Third Quarter............................... 37.16 22.62 34.75
Fourth Quarter.............................. 43.90 30.42 37.29

2003
First Quarter............................... $ 43.97 $ 32.35 $ 33.92
Second Quarter.............................. 43.10 34.10 42.39
Third Quarter............................... 45.79 36.98 38.30
Fourth Quarter.............................. 47.00 39.25 46.83

2004
First Quarter .............................. $ 47.37 $ 39.25 $ 42.35
Second Quarter.............................. 44.04 35.84 36.95
Third Quarter............................... 37.01 31.00 31.17
Fourth Quarter.............................. 34.81 30.27 33.49

2005
First Quarter (through the date of this
pricing supplement)....................... $ 34.60 $ 31.26 $ 34.16

COMCAST CORPORATION

HIGH LOW PERIOD END
---------------- ----------------- --------------------

2002
First Quarter............................... $ 37.13 $ 30.10 $ 33.45
Second Quarter.............................. 33.67 23.35 24.20
Third Quarter............................... 25.87 17.57 21.33
Fourth Quarter.............................. 26.78 17.40 23.57

2003
First Quarter............................... $ 30.80 $ 24.47 $ 28.59
Second Quarter.............................. 34.54 28.65 30.18
Third Quarter............................... 32.95 28.52 30.82
Fourth Quarter.............................. 33.87 30.76 32.79

2004
First Quarter .............................. $ 36.13 $ 28.00 $ 28.76
Second Quarter.............................. 30.66 27.63 28.10
Third Quarter............................... 28.75 26.48 28.24
Fourth Quarter.............................. 33.28 27.84 33.28

2005
First Quarter (through the date of this
pricing supplement)....................... $ 33.99 $ 31.31 $ 33.61

PS-10

NEWS CORPORATION

HIGH LOW PERIOD END
----------- ----------------- --------------------

2002
First Quarter............................... $ 13.58 $ 10.50 $ 12.00
Second Quarter.............................. 12.96 9.31 9.88
Third Quarter............................... 10.13 7.66 8.30
Fourth Quarter.............................. 11.98 8.00 11.33

2003
First Quarter............................... $ 12.30 $ 9.48 $ 10.70
Second Quarter.............................. 13.32 10.50 12.53
Third Quarter............................... 14.92 12.53 13.65
Fourth Quarter.............................. 15.51 13.80 15.13

2004
First Quarter .............................. $ 17.05 $ 15.08 $ 15.86
Second Quarter.............................. 18.05 16.12 16.44
Third Quarter............................... 16.63 14.60 15.67
Fourth Quarter.............................. 18.73 15.14 18.66

2005
First Quarter (through the date of this
pricing supplement)....................... $ 18.71 $ 16.40 $ 17.36

TIME WARNER INC.

HIGH LOW PERIOD END
----------- ----------------- --------------------

2002
First Quarter............................... $ 32.68 $ 23.00 $ 23.65
Second Quarter.............................. 23.62 13.63 14.71
Third Quarter............................... 14.61 9.64 11.70
Fourth Quarter.............................. 16.57 10.67 13.10

2003
First Quarter............................... $ 15.35 $ 10.06 $ 10.86
Second Quarter.............................. 16.18 10.91 16.09
Third Quarter............................... 16.85 14.85 15.11
Fourth Quarter.............................. 18.10 14.85 17.99

2004
First Quarter .............................. $ 19.07 $ 16.22 $ 16.86
Second Quarter.............................. 17.69 16.25 17.58
Third Quarter............................... 17.54 15.60 16.14
Fourth Quarter.............................. 19.55 16.23 19.45

2005
First Quarter (through the date of this
pricing supplement)....................... $ 19.41 $ 17.14 $ 18.10

PS-11

VIACOM INC.

HIGH LOW PERIOD END
----------- ----------------- --------------------

2002
First Quarter............................... $ 51.48 $ 36.78 $ 48.37
Second Quarter.............................. 50.64 41.84 44.37
Third Quarter............................... 44.90 31.94 40.55
Fourth Quarter.............................. 47.18 37.35 40.76

2003
First Quarter............................... $ 43.45 $ 33.60 $ 36.52
Second Quarter.............................. 47.45 37.81 43.66
Third Quarter............................... 46.49 38.19 38.30
Fourth Quarter.............................. 44.38 37.00 44.38

2004
First Quarter .............................. $ 44.55 $ 37.09 $ 39.21
Second Quarter.............................. 40.98 35.13 35.72
Third Quarter............................... 35.61 32.02 33.56
Fourth Quarter.............................. 37.00 33.50 36.39

2005
First Quarter (through the date of this
pricing supplement)....................... $ 38.85 $ 33.87 $ 36.00

THE WALT DISNEY COMPANY

HIGH LOW PERIOD END
----------- ----------------- --------------------

2002
First Quarter............................... $ 24.51 $ 20.50 $ 23.08
Second Quarter.............................. 25.00 18.90 18.90
Third Quarter............................... 19.79 13.77 15.14
Fourth Quarter.............................. 19.89 14.14 16.31

2003
First Quarter............................... $ 18.74 $ 15.02 $ 17.02
Second Quarter.............................. 21.28 17.10 19.75
Third Quarter............................... 22.56 19.81 20.17
Fourth Quarter.............................. 23.48 20.83 23.33

2004
First Quarter .............................. $ 28.00 $ 23.19 $ 24.99
Second Quarter.............................. 26.59 22.10 25.49
Third Quarter............................... 25.28 20.89 22.55
Fourth Quarter.............................. 27.99 23.08 27.80

2005
First Quarter (through the date of this
pricing supplement)....................... $ 29.88 $ 27.17 $ 28.65

PS-12

HYPOTHETICAL RETURNS

The table below illustrates, for a range of hypothetical closing levels of the
basket, calculated on the valuation date:

o the hypothetical alternative redemption amount per $1,000 note;

o the percentage change from the principal amount to the hypothetical
alternative redemption amount;

o the hypothetical total amount payable per $1,000 note without interest;

o the hypothetical total rate of return without interest;

o the hypothetical annualized pre-tax rate of return without interest;

o the hypothetical total rate of return including interest; and

o the hypothetical annualized pre-tax rate of return including interest.

PERCENTAGE HYPOTHETICAL
CHANGE OF TOTAL AMOUNT HYPOTHETICAL
HYPOTHETICAL PAYABLE AT HYPOTHETICAL ANNUALIZED
HYPOTHETICAL HYPOTHETICAL ALTERNATIVE STATED HYPOTHETICAL ANNUALIZED HYPOTHETICAL PRE-TAX
CLOSING LEVEL ALTERNATIVE REDEMPTION MATURITY PER TOTAL RATE PRE-TAX RATE TOTAL RATE RATE OF
OF THE BASKET REDEMPTION AMOUNT OVER $1,000 NOTE OF RETURN OF RETURN OF RETURN RETURN
ON THE AMOUNT PER THE PRINCIPAL (WITHOUT (WITHOUT (WITHOUT (WITH (WITH
VALUATION DATE $1,000 NOTE AMOUNT INTEREST) INTEREST) INTEREST) INTEREST) INTEREST)
- -------------- ------------ --------------- ------------- ------------- ------------ ------------- -------------

$ 20.00 $ 172.94 -82.71% $1,000.00 0.00% 0.00% 10.50% 1.44%
40.00 345.87 -65.41 1,000.00 0.00 0.00 10.50 1.44
80.00 691.74 -30.83 1,000.00 0.00 0.00 10.50 1.44
100.00 864.68 -13.53 1,000.00 0.00 0.00 10.50 1.44
115.65 1,000.00 0.00 1,000.00 0.00 0.00 10.50 1.44
120.00 1,037.61 3.76 1,037.61 3.76 0.53 14.26 1.92
140.00 1,210.55 21.05 1,210.55 21.05 2.77 31.55 4.00
160.00 1,383.48 38.35 1,383.48 38.35 4.75 48.85 5.85
200.00 1,729.36 72.94 1,729.36 72.94 8.14 83.44 9.05

- -----------------------
For purposes of this table, it is assumed that during the term of the notes
Clear Channel, News Corp., Viacom and Walt Disney do not change the amount of
the dividends that they pay on their common stock and that Comcast and Time
Warner do not pay any dividends on their common stock.

The above figures are for purposes of illustration only. The actual amount
received by investors and the resulting total and pre-tax rates of return will
depend entirely on the actual settlement value determined by the calculation
agent. In particular, the actual closing level of the basket could be lower or
higher than those reflected in the table.

The table above only provides hypothetical return information with regard to
notes held to maturity. It is not applicable in the case of notes repurchased or
redeemed prior to the stated maturity date.

You should compare the features of the notes to other available investments
before deciding to purchase the notes. Due to the uncertainty as to whether the
alternative redemption amount, at stated maturity or in connection with a
repurchase or redemption, will be greater than $1,000 per $1,000 note or whether
the notes will be redeemed prior to the stated maturity date, the return on
investment with respect to the notes may be higher or lower than the return
available on other securities issued by Lehman Brothers Holdings or by others
and available through Lehman Brothers Inc. You should reach an investment
decision only after carefully considering the suitability of the notes in light
of your particular circumstances.

PS-13

SUPPLEMENTAL UNITED STATES FEDERAL INCOME TAX CONSEQUENCES

Lehman Brothers Holdings is required to provide the comparable yield to you and,
solely for tax purposes, is also required to provide a projected payment
schedule that includes the actual interest payments on the notes and estimates
the amount and timing of contingent payments on the notes. Lehman Brothers
Holdings has determined that the comparable yield is an annual rate of 4.943%,
compounded semi-annually. Based on the comparable yield, the projected payment
schedule per $1,000 note is $7.50 semi-annually and $1,291.33 due at maturity,
which includes the final interest payment. Lehman Brothers Holdings agrees and,
by purchasing a note, you agree, for United States federal income tax purposes,
to be bound by Lehman Brothers Holdings' determination of the comparable yield
and projected payment schedule. As a consequence, for United States federal
income tax purposes, you must use the comparable yield determined by Lehman
Brothers Holdings and the projected payments set forth in the projected payment
schedule prepared by Lehman Brothers Holdings in determining your interest
accruals, and the adjustments thereto, in respect of the notes.

See "United States Federal Income Tax Consequences" in the accompanying
prospectus supplement.

SUPPLEMENTAL PLAN OF DISTRIBUTION

Lehman Brothers Holdings has agreed to sell to Lehman Brothers Inc., the agent,
as principal, and the agent has agreed to purchase, all of the notes at the
price indicated on the cover of this pricing supplement.

The agent will offer the notes initially at a public offering price equal to the
issue price set forth on the cover of this pricing supplement. After the initial
public offering, the public offering price may from time to time be varied by
the agent.

Lehman Brothers Holdings has granted to the underwriter an option to purchase,
at any time within 13 days of the original issuance of the notes, up to
$15,000,000 additional aggregate principal amount of notes solely to cover
over-allotments. To the extent that the option is exercised, the underwriter
will be committed, subject to certain conditions, to purchase the additional
notes. If this option is exercised in full, the total public offering price, the
underwriting discount and proceeds to Lehman Brothers Holdings would be
$115,000,000, $287,500 and $114,712,500, respectively.

Lehman Brothers Holdings expects to deliver the notes against payment on or
about March 23, 2005, which is the fifth business day following the date of this
pricing supplement.

Under Rule 15c6-1 of the Exchange Act, trades in the secondary market generally
are required to settle in three business days, unless the parties to any such
trade expressly agree otherwise. Accordingly, if any purchaser wishes to trade
the notes on the date of this pricing supplement, it will be required, by virtue
of the fact that the notes initially will settle on the fifth business day
following the date of this pricing supplement, to specify an alternate
settlement cycle at the time of any such trade to prevent a failed settlement.

PS-14

$100,000,000

LEHMAN BROTHERS HOLDINGS INC.
MEDIUM-TERM NOTES, SERIES G

1.50% NOTES DUE MARCH 23, 2012
PERFORMANCE LINKED TO A BASKET OF SIX MEDIA STOCKS

----------------------

PRICING SUPPLEMENT
MARCH 16, 2005

(INCLUDING PROSPECTUS SUPPLEMENT
DATED AUGUST 20, 2003,

PROSPECTUS SUPPLEMENT
DATED JUNE 14, 2001 AND

PROSPECTUS
DATED JUNE 14, 2001)

----------------------

LEHMAN BROTHERS

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