SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 11-K
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[X] ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 2000
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from _____________ to ______________
--------------------------------
COMMISSION FILE NUMBER 1-7657
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A. Full title of the plan and the address of the plan, if different from
that of the issuer named below:
LEHMAN BROTHERS HOLDINGS INC.
TAX DEFERRED SAVINGS PLAN
LEHMAN BROTHERS HOLDINGS INC.
3 WORLD FINANCIAL CENTER
NEW YORK, NY 10285
B. Name of issuer of the securities held pursuant to the plan and the
address of its principal executive office:
LEHMAN BROTHERS HOLDINGS INC.
3 WORLD FINANCIAL CENTER
NEW YORK, NY 10285
FINANCIAL STATEMENTS AND SUPPLEMENTAL INFORMATION
LEHMAN BROTHERS HOLDINGS INC.
TAX DEFERRED SAVINGS PLAN
YEARS ENDED DECEMBER 31, 2000, AND DECEMBER 30, 1999
WITH REPORT OF INDEPENDENT AUDITORS
Lehman Brothers Holdings Inc.
Tax Deferred Savings Plan
Financial Statements
and Supplemental Information
Years ended December 31, 2000, and December 30, 1999
CONTENTS
Report of Independent Auditors....................................... 1
Financial Statements
Statements of Net Assets Available for Plan Benefits................. 2
Statements of Changes in Net Assets Available for Plan Benefits...... 3
Notes to Financial Statements........................................ 4
Supplemental Information
Schedule H, Line 4(i)--Schedule of Assets Held for Investment
Purposes at End of Year............................................. 13
Schedule H, Line 4(j)--Schedule of Reportable Transactions............ 14
Report of Independent Auditors
Employee Benefit Plans Committee
Lehman Brothers Holdings Inc.
We have audited the accompanying statements of net assets available for plan
benefits of the Lehman Brothers Holdings Inc. Tax Deferred Savings Plan (the
"Plan") as of December 31, 2000 and December 30, 1999, and the related
statements of changes in net assets available for plan benefits for the years
then ended. These financial statements are the responsibility of the Plan's
management. Our responsibility is to express an opinion on these financial
statements based on our audits.
We conducted our audits in accordance with auditing standards generally accepted
in the United States. Those standards require that we plan and perform the audit
to obtain reasonable assurance whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the net assets available for plan benefits of the Plan at
December 31, 2000 and December 30, 1999, and the changes in its net assets
available for plan benefits for the years then ended in conformity with
accounting principles generally accepted in the United States.
Our audits were performed for the purpose of forming an opinion on the financial
statements taken as a whole. The accompanying supplemental schedules of assets
held for investment purposes at end of year as of December 31, 2000, and
reportable transactions for the year then ended, are presented for purposes of
additional analysis and not a required part of the financial statements but are
supplementary information required by the Department of Labor's Rules and
Regulations for Reporting and Disclosure under the Employee Retirement Income
Security Act of 1974. These supplemental schedules are the responsibility of the
Plan's management. The supplemental schedules have been subjected to the
auditing procedures applied in our audits of the financial statements and, in
our opinion, are fairly stated in all material respects in relation to the
financial statements taken as a whole.
June 22, 2001
/s/ Ernst & Young LLP
1
Lehman Brothers Holdings Inc.
Tax Deferred Savings Plan
Statements of Net Assets Available for Plan Benefits
DECEMBER DECEMBER
31, 2000 30, 1999
-----------------------------
ASSETS
Investments, at fair value $605,595,107 $590,603,557
Cash and short-term investments 3,176,308 17,092,954
Participant loans 4,939,962 5,084,521
Other receivables 2,223,678 2,137,116
Interest and dividends receivable 18,507 383,872
-----------------------------
Total assets 615,953,562 615,302,020
LIABILITIES
Accrued and other liabilities 248,224 229,229
-----------------------------
Net assets available for plan benefits $615,705,338 $615,072,791
=============================
SEE NOTES TO FINANCIAL STATEMENTS.
2
Lehman Brothers Holdings Inc.
Tax Deferred Savings Plan
Statements of Changes in Net Assets Available for Plan Benefits
YEARS ENDED
DECEMBER DECEMBER
31, 2000 30, 1999
--------------------------------
Investment income:
Interest and dividends $ 15,374,959 $ 16,384,590
Net realized and unrealized appreciation
(depreciation) in fair value of investments (18,416,542) 119,640,104
--------------------------------
(3,041,583) 136,024,694
Contributions:
Employer 1,970,878 2,045,136
Participants 39,967,370 34,215,645
Rollovers 6,454,020 5,728,220
--------------------------------
48,392,268 41,989,001
Administrative fees (699,131) (183,453)
Participant withdrawals (44,019,007) (40,785,732)
--------------------------------
(44,718,138) (40,969,185)
Net increase 632,547 137,044,510
Net assets available for plan benefits,
beginning of year 615,072,791 478,028,281
--------------------------------
Net assets available for plan benefits,
end of year $ 615,705,338 $ 615,072,791
================================
SEE NOTES TO FINANCIAL STATEMENTS.
3
Lehman Brothers Holdings Inc.
Tax Deferred Savings Plan
Notes to Financial Statements
December 31, 2000
1. DESCRIPTION OF THE PLAN
GENERAL
The Lehman Brothers Holdings Inc. Tax Deferred Savings Plan (the "Plan") is a
defined contribution plan. The Plan, which became effective January 1, 1984, was
amended and restated effective March 29, 2001. Under the terms of the Plan,
qualified employees of Lehman Brothers Holdings Inc. ("Lehman") and its
participating subsidiaries (collectively, the "Company") are eligible to
participate in the plan as soon as administratively possible after their date of
employment.
Effective January 1, 2001 the plan year and related trust fiscal and taxable
years were changed to the calendar year, with an intervening short plan year
beginning and ending on December 31, 2000. Prior to this, the plan year and
related trust and fiscal years ran from December 31 through December 30.
For the short plan year beginning and ending on December 31, 2000 there were no
employee contributions, employer contributions, transfers between funds or
investment experience. The short-term interest earned on December 31, 2000 has
been deemed de minimis. This interest was included with the interest earnings
for the month of December 2000 as part of the December 30, 2000 valuation of the
Plan. As such, the opening and closing balances for the short plan year
beginning and ending on December 31, 2000 are identical to closing balances for
the plan year ending on December 30, 2000.
The Plan is subject to the provisions of ERISA. A complete description of the
Plan is contained in the Plan document available to all participants from the
Plan Administrator.
CONTRIBUTIONS
Upon enrollment, a participant may elect to contribute, on a pre-tax basis,
between one and fifteen percent of eligible compensation, as defined in the Plan
document. The Company may make a contribution, in Lehman stock or cash, on
behalf of eligible participants who have completed 12 months of service and are
employees on the last day of the Plan year. The amount of the contribution, if
any, will be determined by the Company's Board of Directors. If a Company
contribution is made it will be allocated as follows:
4
Lehman Brothers Holdings Inc.
Tax Deferred Savings Plan
Notes to Financial Statements (continued)
1. DESCRIPTION OF THE PLAN (CONTINUED)
1. Participants whose compensation is below $37,800 per year and are not
Investment Representatives, Investment Representative Trainees, Branch
Managers, or Institutional Salespeople will receive a Company contribution
of $400 plus a matching contribution of 100 percent of the first $600 of
the employee's Before-Tax contributions.
2. Participants whose compensation is between $37,800 and $100,000 per year
will receive a matching contribution of up to 100 percent of the first
$1,000 of the employee's Before-Tax contributions. Company contributions to
participants whose compensation is between $37,800 and $100,000 per year
will be made only if there are funds remaining after contributions are made
for participants making less than $37,800 per year.
3. Company contributions are not made for participants whose compensation
exceeds $100,000 per year.
In 2000 and 1999, Company contributions were made in cash which was used to
purchase common stock in the Company.
Participant's Before-Tax Contributions are not subject to tax until
distribution. The Internal Revenue Code of 1986, as amended (the "Code"),
provides that Before-Tax Contributions (and any elective deferrals to other
plans containing a cash or deferred arrangement) will be included in a
participant's gross income to the extent such contributions exceed the statutory
limitation, which is indexed for inflation. The maximum limitation amount was
$10,500 for 2000 and $10,000 for 1999. The Company's contributions on behalf of
a participant, as well as the income and appreciation on amounts invested in the
investment funds offered under the Plan, are not includable in the participant's
taxable income until distributed.
Rollover contributions represent from contributions to the Plan of certain
assets previously held on behalf of participants by other qualified plans.
5
Lehman Brothers Holdings Inc.
Tax Deferred Savings Plan
Notes to Financial Statements (continued)
1. DESCRIPTION OF THE PLAN (CONTINUED)
VALUATION OF PARTICIPANT ACCOUNTS
Separate accounts are maintained for each participant whereby the participant's
account is credited for contributions and credited or charged, as appropriate,
for investment experience. Participant accounts are also charged for withdrawals
and loans. The periodic allocation of investment experience is based upon the
participant's beneficial interest in each of the investment funds on the
valuation date.
INVESTMENTS
Investment of contributions among the investment funds can be made in increments
of 10%, with a maximum of 50% of contributions permitted to be invested in the
Lehman Brothers Holdings Inc. Common Stock Fund. Participants can elect to
change their contribution rate and investment direction of new contributions on
a monthly basis. Participants may also elect to transfer existing fund balances
among investment funds, generally on a monthly basis.
The following table presents the fair value of investments held by the plan at
December 31, 2000 and December 30, 1999, respectively:
DECEMBER DECEMBER
31, 2000 30, 1999
-----------------------------
Investments, at fair value:
Mutual Funds $356,317,214 $380,837,885
Fixed Income Fund 95,868,260 85,479,027
American Express Company Common Stock 57,438,077 62,884,140
Lehman Brothers Holdings Inc. Common Stock 95,971,556 61,402,505
-----------------------------
Total $605,595,107 $590,603,557
=============================
6
Lehman Brothers Holdings Inc.
Tax Deferred Savings Plan
Notes to Financial Statements (continued)
1. DESCRIPTION OF THE PLAN (CONTINUED)
YEAR ENDED YEAR ENDED
DECEMBER 31, 2000 DECEMBER 30, 1999
------------------------------------
Net appreciation (depreciation) in fair value
of investments:
Mutual Funds $ (51,274,490) $ 67,148,527
American Express Company Common Stock (2,152,704) 22,398,898
Lehman Brothers Holdings Inc.
Common Stock 35,010,652 30,092,679
------------------------------------
$ (18,416,542) $ 119,640,104
====================================
INVESTMENTS IN EXCESS OF 5% OF NET ASSETS AVAILABLE FOR PLAN BENEFITS
The following is a schedule of investments held in excess of 5% of the net
assets available for plan benefits at the end of 2000 and 1999:
FAIR VALUE AT FAIR VALUE AT
DECEMBER DECEMBER
Funds 31, 2000 30, 1999
------------------------------
Lehman Brothers Holdings Inc. Common
Stock $ 95,971,556 $ 61,402,505
Twentieth Century Ultra Investors Fund 94,871,177 114,308,128
Vanguard Institutional Index Fund 77,808,442 85,662,574
American Express Company Common Stock 57,438,077 62,884,140
10 Uncommon Values Fund 46,281,565 47,434,807
Templeton Foreign Fund 40,290,941 42,905,230
7
Lehman Brothers Holdings Inc.
Tax Deferred Savings Plan
Notes to Financial Statements (continued)
1. DESCRIPTION OF THE PLAN (CONTINUED)
BENEFITS
A participant may elect, after attaining the age of 59-1/2, to withdraw all or a
portion of the value of his accounts, provided that each withdrawal is at least
$1,000 (or is 100% of the value of his account if less than $1,000). Withdrawals
by actively employed participants before the age of 59-1/2 are permitted for
before-tax contributions and pre-1989 earnings thereon, only after meeting
specified financial hardship criteria and after obtaining approval by the
Employee Benefit Plans Committee of the Company. A participant can elect to
withdraw all or a portion of their rollover contribution made to the Plan.
Although hardship and rollover withdrawals are allowed, a participant may be
subject to an additional 10% tax imposed by the Code. If a participant's
employment with the Company terminates for a reason other than death, any
distributions made before age 59 1/2 must be in the form of a lump-sum payment.
However, if the balance in a participant's account exceeds $5,000, payment will
not be made before age 65 without prior consent. Upon death, the balance in the
participant's account is paid to the designated beneficiary (as provided by the
Plan) in a lump-sum payment.
BENEFITS PAYABLE
Benefits payable to those participants who have elected to receive a
distribution (or be paid automatically as described above) from the Plan but
have not yet been paid was $5,931,157 and $7,166,446 in 2000 and 1999,
respectively.
VESTING
Plan participants are 100 percent vested in all amounts in their respective Plan
accounts.
8
Lehman Brothers Holdings Inc.
Tax Deferred Savings Plan
Notes to Financial Statements (continued)
1. DESCRIPTION OF THE PLAN (CONTINUED)
INCOME TAX STATUS
The Plan received a determination letter from the Internal Revenue Service
("IRS") dated February 14, 1995, stating that the Plan is qualified under
Section 401(a) of the Internal Revenue Code ("Code") and, therefore, the related
trust is exempt from taxation. The Plan has been amended subsequent to the
receipt of the determination letter. The Employee Benefit Plans Committee
intends to apply for a new determination letter from the IRS. Once qualified,
the Plan is required to operate in conformity with the Code to maintain its
qualification. The Employee Benefit Plans Committee believes the Plan is being
operated in compliance with the applicable requirements of the Code and,
therefore, believes that the Plan is qualified and the related trust is tax
exempt.
9
Lehman Brothers Holdings Inc.
Tax Deferred Savings Plan
Notes to Financial Statements (continued)
1. DESCRIPTION OF THE PLAN (CONTINUED)
PARTICIPANT LOANS RECEIVABLE
Participants may borrow from their plan accounts a minimum of $1,000 up to a
maximum of $50,000 or 50% of their vested account balance, whichever is less.
Loan transactions are treated as a transfer from (to) the investment fund to
(from) the loan account. Loan terms range from 1 year to 5 years or up to 10
years for the purchase of a primary residence as long as documentation is
provided. The loans are secured by one half of the balance in the participant's
accounts and bear interest at the rate of prime plus one. Principal and interest
are paid ratably through biweekly or monthly payroll deductions, depending on
the frequency with which the employee is paid. Participants who terminate with
outstanding loan balances have until the end of the quarter following the
quarter in which they terminate to pay the balance of their loan in full, in one
lump sum payment. Loans not repaid in that timeframe will be reported as taxable
distributions. Outstanding loan balances will also be treated as taxable
distributions for those participants who request a distribution of their account
prior to repaying their loan. For the year ended December 31, 2000, $681,389 in
outstanding loan balances have been reported as taxable distributions to
participants.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
VALUATION OF INVESTMENTS
Investments in mutual funds are valued at the quoted redemption prices on the
last business day of the Plan year; investments in the common stock of American
Express and the Company are valued at the quoted market price on the last
business day of the Plan year; short-term investments and deposits with
insurance companies in connection with contracts are valued at cost plus accrued
interest.
Purchase and sales of securities are reflected on a trade-date basis.
OTHER
Dividend income is recorded on the ex-dividend date. Income from other
investments is recorded on the accrual basis.
10
Lehman Brothers Holdings Inc.
Tax Deferred Savings Plan
Notes to Financial Statements (continued)
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
USE OF ESTIMATES
The preparation of financial statements in accordance with generally accepted
accounting principles requires the use of estimates and assumptions that affect
the amounts reported in the financial statements and accompanying notes. Actual
results may differ from those estimates. Certain financial statement items for
the year ended December 31, 1999 have been reclassified to conform to the 2000
presentation.
3. THIRD PARTY ADMINISTRATIVE FEES
Except to the extent paid by the Company, all expenses of the Plan are paid by
the Plan. In 2000 and 1999, the Plan was charged $699,131 and $183,453 for third
party administrative expenses incurred during the respective years. The Company
paid all expenses not directly relating to the administration of the Plan.
4. PLAN TERMINATION
While it has not expressed any intent to do so, the Company has the right to
terminate the Plan at any time subject to the provisions set forth in ERISA and
the Code.
5. SUBSEQUENT EVENTS
Effective February 1, 2001 Fidelity Investments became the Recordkeeping,
Trustee and Investment Services provider for the Plan. Fidelity was selected by
the Employee Benefit Plans Committee following an extensive review of the
top-tier 401(k) providers in the Large Corporate Plan marketplace. New services
and enhancements available to participants (effective March 29, 2001) include
daily valuation of accounts, an expanded menu of investment options and access
to online planning tools.
11
Supplemental Information
12
EIN: #13-3216325
Plan #003
Lehman Brothers Holdings Inc.
Tax Deferred Savings Plan
Schedule H, Line 4(i)--Schedule of Assets Held for Investment Purposes
at End of Year
December 31, 2000
PAR VALUE/ CURRENT VALUE COST AT
NUMBER OF AT DECEMBER DECEMBER
SHARES 31, 2000 31, 2000
-----------------------------------------------------
FIXED INCOME FUND
Allstate Life Insurance Co.:
Contract #GICA5584 8,727,332 $ 8,727,332 $ 8,727,332
Contract #GICA5806 2,891,337 2,891,337 2,891,337
American International Life Assurance Company of New York:
Contract #18180T 4,968,231 4,968,231 4,968,231
Bank of America:
Contract #99-238 14,235,459 14,235,459 14,235,459
Chase Manhattan Bank:
Contract #431429-T 13,774,517 13,774,517 13,774,517
People's Security Insurance Co.:
Contract #BDA00473FR 16,082,508 16,082,508 16,082,508
Contract #BDA00568FR 6,364,402 6,364,402 6,364,402
The Principal Financial Group
Contract #4-26575-01 12,769,496 12,769,496 12,769,496
New York Life Insurance Co.:
Contract #30727 2,347,041 2,347,041 2,347,041
TransAmerica Life Insurance Co.:
Contract #51499 2,258,044 2,258,044 2,258,044
Travelers Life Insurance Co.:
Contract #GA16953 5,725,089 5,725,089 5,725,089
UBS AG:
Contract #5085 5,724,804 5,724,804 5,724,804
-----------------------------
95,868,260 95,868,260
STOCK FUNDS
American Express Company Common Stock 1,045,511 57,438,077 9,606,352
Lehman Brothers Holdings Inc. Common Stock 1,416,417 95,971,556 27,916,119
-----------------------------
153,409,633 37,522,471
MUTUAL FUNDS
Twentieth Century Ultra Investors Fund 2,930,836 94,871,177 86,059,327
Prime Value Obligations Fund 14,152,260 14,152,260 14,152,260
Templeton Foreign Fund 3,896,609 40,290,941 37,481,144
Income Fund of America 1,183,955 18,872,246 18,554,184
Fidelity Capital & Income Fund 2,445,645 18,904,833 23,026,752
Vanguard Institutional Index Fund 644,536 77,808,442 78,410,439
PIMCO Total Return Fund 1,324,243 13,758,887 13,576,564
Vanguard Fixed Income Long-Term Corporate Portfolio 1,234,828 10,434,298 10,729,730
ICM Small Company Portfolio Fund 208,602 4,701,893 4,797,345
10 Uncommon Values Fund 5,637,219 46,281,565 56,230,795
Brandywine Blue Fund 589,070 16,240,672 18,436,325
-----------------------------
-- 356,317,214 361,454,865
LOAN ACCOUNT -- 4,939,962 --
-----------------------------
Total Investments -- $610,535,069 $494,845,596
=============================
13
EIN: #13-3216325
Plan #003
Lehman Brothers Holdings Inc.
Tax Deferred Savings Plan
Schedule H, Line 4(j)--Schedule of Reportable Transactions
Year ended December 31, 2000
NUMBER NUMBER COST OF
OF COST OF OF PROCEEDS ASSETS GAIN
DESCRIPTION TRANSACTIONS PURCHASES TRANSACTIONS FROM SALES DISPOSED (LOSS)
- --------------------------------------------------------------------------------------------------------------------------
CATEGORY (III)--SERIES OF
TRANSACTIONS IN EXCESS OF
5% OF PLAN ASSETS
TBC Inc. Pooled Employee Funds 478 $104,855,446 344 $ 106,983,661 $106,983,661 $ -
BSDT-Late Money Deposit Account 55 23,796,287 59 31,803,123 31,803,123 -
14
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Lehman Brothers Holdings Inc. Employee Benefit Plans Committee has duly caused
this annual report to be signed on its behalf by the undersigned hereunto duly
authorized.
LEHMAN BROTHERS HOLDINGS INC.
TAX DEFERRED SAVINGS PLAN
By: /s/ Wendy M. Uvino
------------------------------------
Wendy M. Uvino
Lehman Brothers Holdings Inc.
Employee Benefit Plans Committee
June 29, 2001
15
EXHIBIT INDEX
Exhibit No. Description
- ----------- -----------
23 Consent of Independent Auditors
16