424B3 1 a06-17316_18424b3.htm PROSPECTUS FILED PURSUANT TO RULE 424(B)(3)

 

 

Filed Pursuant to Rule 424(b)(3)

 

 

Registration No. 333-134553

 

PRICING SUPPLEMENT NO. 16/B dated August 22, 2006

to Prospectus Supplement dated May 30, 2006

and Prospectus dated May 30, 2006

 

LEHMAN BROTHERS HOLDINGS INC.

Medium-Term Notes, Series I

This Pricing Supplement supplements the terms and conditions in, and incorporates by reference, the Prospectus, dated May 30, 2006, as supplemented by the Prospectus Supplement, dated May 30, 2006 (as so supplemented, together with all documents incorporated by reference therein, the “Prospectus”), and should be read in conjunction with the Prospectus. Unless otherwise defined in this Pricing Supplement, terms used herein have the same meanings as are given to them in the Prospectus.

CUSIP No.:

 

52517PK75

 

 

 

 

 

 

 

 

 

ISIN:

 

US52517PK759

 

 

 

 

 

 

 

 

 

Specified Currency:

 

Principal:

 

U.S. Dollars

 

 

 

Interest:

 

U.S. Dollars

 

 

 

 

 

 

 

Principal Amount:

 

$

5,000,000

 

 

 

 

 

Total

 

Per Note

 

Issue Price:

 

$

5,000,000

 

100

%

Agent’s Commission:

 

$

0

 

0

%

Proceeds to Lehman Brothers Holdings:

 

$

5,000,000

 

100

%

The Notes will be issued in an aggregate principal amount of $5,000,000 and will be a further issuance of, and will form a single tranche with, the $20,000,000 aggregate principal amount of Medium-Term Notes, Series I, due August 24, 2021, that Lehman Brothers Holdings will issue on August 24, 2006.  The Notes will have the same CUSIP and ISIN numbers as the other notes of this tranche and will settle on the same date as, and trade interchangeably with, the other notes of this tranche.  The issuance of the Notes will increase the aggregate principal amount of the outstanding notes of this tranche to $25,000,000.

On the Issue Date, we may, without the consent of the holders of the Notes, issue additional notes similar to these Notes in all respects except for the Issue Price. Following the Issue Date, we may, without the consent of the holders of Notes, create and issue additional notes similar to these Notes in all respects except for the Issue Date, Issue Price and the payment of interest accruing prior to the Issue Date of such additional notes. All such additional notes will be consolidated and form a single tranche with, have the same CUSIP and ISIN numbers as and trade interchangeably with these Notes.

1



 

Agent:

 

Lehman Brothers

 

 

 

Agent’s Capacity:

 

x As principal     o As agent

 

 

 

Issue Date:

 

August 24, 2006

 

 

 

Stated Maturity Date:

 

August 24, 2021, subject to Optional Redemption; provided that if such day is not a New York and London business day, then such day will be the following New York and London business day unless such day falls in the following month in which case it will be the preceding New York and London business day.

 

 

 

Date From Which Interest Accrues:

 

x Issue Date

 

 

o Other:           

 

 

 

o Fixed Rate Note

 

 

Interest Rate per Annum:

 

          %

 

 

 

x Floating Rate Note

 

o CD Rate

 

 

o Commercial Paper Rate

 

 

o Federal Funds (Effective) Rate

 

 

o Federal Funds (Open) Rate

 

 

o LIBOR Telerate

 

 

o LIBOR Reuters

 

 

o EURIBOR

 

 

o Treasury Rate: Constant Maturity   o Yes   o No

 

 

o Prime Rate

 

 

o Eleventh District Cost of Funds Rate

 

 

o CMS Rate

 

 

x Other: See “Interest Rate per Annum” below

 

 

 

Interest Rate per Annum:

 

9.125% times the Interest Accrual Factor

 

 

 

Maximum Rate:

 

Not applicable

 

 

 

Minimum Rate:

 

0%

 

 

 

Interest Period:

 

Quarterly, from and including each Interest Payment Date (or the Issue Date, in the case of the first Interest Period) to but excluding the next succeeding Interest Payment Date (or the Maturity Date, in the case of the final Interest Period).

 

2



 

Interest Payment Dates:

 

Each November 24, February 24, May 24 and August 24, commencing on November 24, 2006; provided that if such day is not a New York and London business day, then such day will be the following New York and London business day unless such day falls in the following month in which case it will be the preceding New York and London business day, and provided further that the final Interest Payment Date for any Notes shall be the Stated Maturity Date, subject to Optional Redemption.

 

 

 

Interest Accrual Factor:

 

The number of calendar days in each Interest Period on which the Spread is equal to or greater than 0%, divided by the total number of calendar days in each such Interest Period.

 

 

 

Spread:

 

30-Year CMS Rate minus the 2-Year CMS Rate, subject to the Rate Cut Off

 

 

 

Rate Cut Off:

 

The Spread for Saturday, Sunday or a day which is not a New York and London business day will be the Spread for the immediately preceding New York and London business day. The Spread applicable to the day five New York and London business days prior to an Interest Payment Date will remain in effect until the Interest Payment Date.

 

 

 

30-Year CMS Rate:

 

On any day during any Interest Period, the rate that appears on Reuters Screen ISDAFIX1 under the heading “30YR” as of 11:00 a.m., New York city time. If such rate does not appear on Reuters Screen ISDAFIX1, the rate for such date shall be determined as if the parties had specified “USD-CMS-Reference Banks” as the applicable rate, as described under “Description of the Notes—Floating Rate Notes—CMS Rate Notes” in the Prospectus.

 

 

 

2-Year CMS Rate:

 

On any day during any Interest Period, the rate that appears on Reuters Screen ISDAFIX1 under the heading “2YR” as of 11:00 a.m., New York city time. If such rate does not appear on Reuters Screen ISDAFIX1, the rate for such date shall be determined as if the parties had specified “USD-CMS-Reference Banks” as the applicable rate, as described under “Description of the Notes—Floating Rate Notes—CMS Rate Notes” in the Prospectus.

 

 

 

 

3



 

Interest Computation:

 

Interest will be computed on the basis of a 360-day year of twelve 30-day months or, in the case of an incomplete month, the number of days elapsed.

 

 

 

Adjusted:

 

o Yes     x No

 

 

 

Interest Rate Calculation Agent:

 

Lehman Brothers Special Financing

 

 

 

Optional Redemption:

 

The Notes may be redeemed prior to the Stated Maturity Date at the option of Lehman Brothers Holdings in whole or in part at a price equal to 100% of the principal amount being redeemed, on each Interest Payment Date, commencing on or after November 24, 2006. Notice of redemption will be given not less than five New York and London business days prior to the redemption date.

 

 

 

Form of Note:

 

x Book-entry only (global)     o Certificated

 

 

CERTAIN UNITED STATES FEDERAL INCOME TAX CONSEQUENCES

We intend to treat the notes as variable rate debt instruments, as described under “Supplemental United States Federal Income Tax Consequences—Variable Rate Debt Instruments” in the Prospectus.

 

HISTORICAL LEVELS OF THE 30-YEAR CMS RATE AND THE 2-YEAR CMS RATE

The following shows for illustrative purposed the 30-Year CMS Rate and the 2-Year CMS Rate in effect on hypothetical Interest Payment Dates listed below; the Interest Rate payable on any Interest Payment Date for the Notes, however, will be determined on each day during the related Interest Period.  The historical experience of the 30-Year CMS Rate and the 2-Year CMS Rate should not be taken as an indication of the future performance of the 30-Year CMS Rate and the 2-Year CMS Rate during the term of the Notes.  Fluctuations in the level of the 30-Year CMS Rate and the 2-Year CMS Rate 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.

4



 

Hypothetical
Interest Payment Dates

 

30yr CMS Rate (in %)

 

2yr CMS Rate (in %)

 

SPREAD REF:
30yr CMS Rate —
2yr CMS Rate
(in %)

 

5/24/2006

 

5.429

 

5.237

 

0.192

 

2/24/2006

 

5.070

 

4.829

 

0.241

 

11/25/2005

 

5.193

 

4.749

 

0.444

 

8/24/2005

 

4.854

 

4.373

 

0.481

 

5/24/2005

 

4.815

 

3.980

 

0.835

 

2/24/2005

 

5.084

 

3.868

 

1.216

 

11/24/2004

 

5.192

 

3.362

 

1.83

 

8/24/2004

 

5.425

 

2.857

 

2.568

 

5/24/2004

 

5.818

 

2.984

 

2.834

 

2/24/2004

 

5.224

 

2.000

 

3.224

 

11/24/2003

 

5.374

 

2.235

 

3.139

 

6/30/2003

 

4.826

 

1.524

 

3.302

 

3/31/2003

 

5.130

 

1.772

 

3.358

 

12/30/2002

 

5.122

 

1.903

 

3.219

 

9/30/2002

 

5.109

 

2.098

 

3.011

 

6/28/2002

 

6.010

 

3.242

 

2.768

 

3/28/2002

 

6.401

 

4.142

 

2.259

 

12/30/2002

 

5.122

 

1.903

 

3.219

 

9/30/2002

 

5.109

 

2.098

 

3.011

 

8/24/2001

 

6.131

 

4.270

 

1.861

 

5/24/2001

 

6.594

 

4.909

 

1.685

 

2/23/2001

 

6.364

 

5.187

 

1.177

 

11/24/2000

 

6.842

 

6.560

 

0.282

 

8/24/2000

 

6.970

 

6.918

 

0.052

 

5/24/2000

 

7.741

 

7.602

 

0.139

 

2/24/2000

 

7.366

 

7.079

 

0.287

 

11/24/1999

 

7.106

 

6.477

 

0.629

 

8/24/1999

 

7.035

 

6.202

 

0.833

 

5/24/1999

 

6.461

 

5.748

 

0.713

 

2/24/1999

 

6.137

 

5.542

 

0.595

 

11/24/1998

 

5.854

 

5.205

 

0.649

 

8/24/1998

 

6.234

 

5.689

 

0.545

 

3/30/1998

 

6.370

 

5.999

 

0.371

 

2/24/1998

 

6.346

 

5.872

 

0.474

 

11/24/1997

 

6.468

 

6.071

 

0.397

 

6/30/1997

 

7.124

 

6.363

 

0.761

 

3/31/1997

 

7.433

 

6.675

 

0.758

 

12/30/1996

 

6.899

 

5.983

 

0.916

 

9/30/1996

 

7.328

 

6.284

 

1.044

 

6/28/1996

 

7.292

 

6.314

 

0.978

 

 

5



 

5/24/1996

 

7.244

 

6.218

 

1.026

 

2/23/1996

 

6.841

 

5.318

 

1.523

 

11/24/1995

 

6.646

 

5.641

 

1.005

 

8/24/1995

 

7.261

 

6.178

 

1.083

 

5/24/1995

 

7.199

 

6.153

 

1.046

 

2/24/1995

 

8.029

 

7.139

 

0.89

 

11/25/1994

 

8.462

 

7.489

 

0.973

 

8/24/1994

 

8.014

 

6.374

 

1.64

 

5/24/1994

 

7.976

 

6.174

 

1.802

 

2/24/1994

 

7.303

 

4.916

 

2.387

 

11/24/1993

 

6.999

 

4.318

 

2.681

 

8/24/1993

 

6.819

 

4.031

 

2.788

 

5/24/1993

 

7.656

 

4.413

 

3.243

 

2/24/1993

 

7.254

 

4.124

 

3.13

 

11/24/1992

 

7.917

 

4.967

 

2.95

 

 

SUPPLEMENTAL INFORMATION CONCERNING THE PLAN OF DISTRIBUTION

Lehman Brothers Holdings has agreed to sell to Lehman Brothers Inc. (the “Agent”), and the Agent has agreed to purchase from Lehman Brothers Holdings Inc. the principal amount of the Notes at the price specified on the cover of this pricing supplement.  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.

If the Notes are sold in a market-making transaction after their initial sale, information about the purchase price and the date of the sale will be provided in a separate confirmation of sale.

 

6