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, 2001
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from _____________ to ______________
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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 SAVINGS PLAN
B. Name of issuer of the securities held pursuant to the plan and
the address of its principal executive office:
LEHMAN BROTHERS HOLDINGS INC.
745 Seventh Avenue
NEW YORK, NY 10019
1
Lehman Brothers Savings Plan
(formerly, Lehman Brothers Holdings Inc. Tax Deferred Savings Plan)
Financial Statements
and Supplemental Schedules
Years ended December 31, 2001 and 2000
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 Schedules
Schedule H, Line 4(i)--Schedule of Assets Held at End of Year......... 11
Schedule H, Line 4(j)--Schedule of Reportable Transactions............ 13
1
[Letterhead of Ernst & Young LLP]
[New York, New York]
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 Savings Plan (formerly, Lehman Brothers Holdings
Inc. Tax Deferred Savings Plan) (the "Plan") as of December 31, 2001 and 2000,
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, 2001 and 2000, 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 at end of year as of December 31, 2001, 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.
/s/ Ernst & Young LLP
July 2, 2002
1
Lehman Brothers Savings Plan
(formerly, Lehman Brothers Holdings Inc. Tax Deferred Savings Plan)
Statements of Net Assets Available for Plan Benefits
December 31,
2001 2000
-------- --------
(in thousands)
Assets
Investments, at fair value $582,217 $605,595
Cash and short-term investments 27 3,176
Participant loans 6,487 4,940
Other receivables 2,120 2,224
Interest and dividends receivable -- 19
-------- --------
Total assets 590,851 615,954
Liabilities
Accrued and other liabilities -- 249
------- --------
Net assets available for plan benefits $590,851 $615,705
======== ========
See notes to financial statements.
2
Lehman Brothers Savings Plan
(formerly, Lehman Brothers Holdings Inc. Tax Deferred Savings Plan)
Statements of Changes in Net Assets Available for Plan Benefits
Years ended December 31,
2001 2000
--------- ----------
(in thousands)
Investment income:
Interest and dividends $ 13,485 $ 15,375
Net realized and unrealized depreciation in
fair value of investments (83,964) (18,417)
--------- ---------
(70,479) (3,042)
Contributions:
Employer 2,120 1,971
Participants 49,695 39,967
Rollovers 7,472 6,454
--------- ---------
59,287 48,392
Transfer-in from USA Plan 3,976 --
Transfer-in from Former Employees Plan 7,663 --
--------- ---------
11,639 --
Administrative fees (279) (699)
Participant withdrawals (25,022) (44,019)
--------- ---------
(25,301) (44,718)
Net (decrease)/increase (24,854) 632
Net assets available for plan benefits,
beginning of year 615,705 615,073
--------- ---------
Net assets available for plan benefits,
end of year $ 590,851 $ 615,705
========= =========
See notes to financial statements.
3
Lehman Brothers Savings Plan
(formerly, Lehman Brothers Holdings Inc. Tax Deferred Savings Plan)
Notes to Financial Statements (continued)
December 31, 2001
1. Description of the Plan
General
The Lehman Brothers Savings Plan (the "Plan"), formerly know as Lehman Brothers
Holdings Inc. Tax Deferred Savings Plan, is a defined contribution plan. The
Plan became effective January 1, 1984 and was amended and restated 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 February 1, 2001 Fidelity Investments became the Recordkeeping,
Trustee and Investment Services provider for the Plan. New services and
enhancements became available to participants on March 29, 2001, including daily
valuation of accounts, an expanded menu of investment options and access to on
line financial planning tools.
The E.F. Hutton & Company Universal Savings Account Plan (the "USA Plan") and
the Lehman Brother Savings Plan for Former Employees of E.F. Hutton & Company
Inc. (the "Former Employees Plan") were merged into the Plan on June 20, 2001.
The Plan is subject to the provisions of the Employee Retirement Income Security
Act of 1974, as amended ("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:
1. Participants whose annual 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.
4
Lehman Brothers Savings Plan
(formerly, Lehman Brothers Holdings Inc. Tax Deferred Savings Plan)
Notes to Financial Statements (continued)
1. Description of the Plan (continued)
2. Participants whose annual 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, 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 annual
compensation exceeds $100,000 per year.
In 2001 and 2000, 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. The maximum limitation amount was $10,500 for 2001 and 2000. 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 also not subject to tax until distributed.
Rollover contributions represent contributions to the Plan of certain assets
previously held on behalf of participants by other qualified plans.
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.
5
Lehman Brothers Savings Plan
(formerly, Lehman Brothers Holdings Inc. Tax Deferred Savings Plan)
Notes to Financial Statements (continued)
1. Description of the Plan (continued)
Investments
Investment of contributions among the investment funds can be made in increments
of 1%, with a maximum of 50% of contributions permitted to be invested in Lehman
Brothers Common Stock Fund. Participants can elect to change their contribution
rate and investment direction of new contributions on a daily basis.
Participants may also elect to transfer existing fund balances among investment
funds on a daily basis.
The following table presents the fair value of investments held by the Plan at
December 31, 2001 and 2000, respectively:
December 31,
2001 2000
--------- ---------
(in thousands)
Investments, at fair value:
Mutual Funds $ 324,368 $ 356,317
Stable Value Fund 130,147 95,868
Lehman Brothers Common Stock Fund 92,397 95,972
American Express Company Common Stock Fund 35,305 57,438
--------- ---------
Total $ 582,217 $ 605,595
========= =========
The following table presents the net appreciation and depreciation in fair value
of investments held by the Plan at December 31, 2001 and 2000, respectively:
Years ended December 31,
2001 2000
-------- ---------
(in thousands)
Net appreciation (depreciation) in fair value
of investments:
Mutual Funds $ (64,184) $ (51,275)
American Express Company Common Stock Fund (19,532) (2,153)
Lehman Brothers Common Stock Fund (248) 35,011
--------- ---------
$ (83,964) $ (18,417)
========= =========
6
Lehman Brothers Savings Plan
(formerly, Lehman Brothers Holdings Inc. Tax Deferred Savings Plan)
Notes to Financial Statements (continued)
1. Description of the Plan (continued)
The following is a schedule of investments held in excess of 5% of the net
assets available for plan benefits at the end of 2001 and 2000:
Funds Fair Value at December 31,
2001 2000
-------------------------
(in thousands)
Lehman Brothers Common Stock Fund $92,397 $95,972
Fidelity Large-Cap Stock Fund 82,699 -
Vanguard Institutional Index Fund 78,621 77,808
American Express Company Common Stock Fund 35,305 57,438
Putnam International Growth Fund 34,446 -
Lehman Brothers 10 Uncommon Values N/A 46,282
American Century Ultra Fund - 94,871
Templeton Foreign Fund - 40,291
Benefits
A participant may elect, after attaining the age of 59-1/2, to withdraw all or a
portion of the value of their accounts, provided that each withdrawal is at
least $1,000 (or is 100% of the value of their 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. Participants can elect to
withdraw all or a portion of their rollover contributions 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 70-1/2 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.
7
Lehman Brothers Savings Plan
(formerly, Lehman Brothers Holdings Inc. Tax Deferred Savings Plan)
Notes to Financial Statements (continued)
1. Description of the Plan (continued)
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 $0 and $5,931,157 in 2001 and 2000, respectively.
Vesting
Plan participants are 100% vested in all amounts in their respective Plan
accounts.
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 Code and, therefore, the related trust is exempt from
taxation. The Plan has been amended and restated in its entirety 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.
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 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
8
Lehman Brothers Savings Plan
(formerly, Lehman Brothers Holdings Inc. Tax Deferred Savings Plan)
Notes to Financial Statements (continued)
1. Description of the Plan (continued)
taxable distributions for those participants who request a distribution of their
account prior to repaying their loan. For the years ended December 31, 2001 and
2000, $154,015 and $681,389 respectively 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, which approximate fair value. Interest rates on deposits with
insurance companies were 6.05% in 2001 and 7.01% in 2000. The Funds invested in
deposits with insurance companies are guaranteed by the insurer as to principle
plus interest.
There are securities contained in the self directed accounts that are classified
as "unpriced securities." Currently, these securities are not traded on any
public exchange and are valued at $0.
Purchase and sales of securities are reflected on a trade-date basis.
Dividend and Interest Income
Dividend income is recorded on the ex-dividend date. Income from other
investments is recorded on the accrual basis.
9
Lehman Brothers Savings Plan
(formerly, 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.
3. Third Party Administrative Fees
Except to the extent paid by the Company, all expenses of the Plan are paid by
the Plan. In 2001 and 2000, the Plan was charged $279,002 and $699,131 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
Lehman Brothers Bank FSB Employee 401(k) Plan (the "Bank Plan") was merged into
the Plan, effective January 02, 2002.
During 2002 Lehman filed a restated Plan with the IRS. The restated Plan
incorporates all amendments enacted through January 11, 2002 and any further
changes deemed necessary or advisable to comply with changes in applicable law.
The Plan expects to receive a new determination letter from the IRS once the
restatement is accepted.
10
SUPPLEMENTAL SCHEDULES
EIN: #13-3216325
Plan #003
Lehman Brothers Savings Plan
(formerly, Lehman Brothers Holdings Inc. Tax Deferred Savings Plan)
Schedule H, Line 4(i)--Schedule of Assets Held At End of Year
December 31, 2001
Par Value/ Current Value
Number of at December
Shares 31, 2001
-----------------------------------
Stable Value Fund
Allstate Life Insurance Co.:
Contract #GICA5584 3,121,476 $ 3,121,476
Contract #GICA5806 1,544,118 1,544,118
Bank of America:
Contract #99-238 26,667,411 26,667,411
Continental Assurance Co.:
Contract # 63205001 14,425,278 14,425,278
Chase Manhattan Bank::
Contract #431429-T 27,137,124 27,137,124
People's Security Insurance Co.:
Contract #BDA00568FR 6,800,364 6,800,364
State Street Bank & Trust:
Contract # 101060 10,168,562 10,168,562
The Principal Financial Group:
Contract #4-26575-01 10,869,395 10,869,395
New York Life Insurance Co.:
Contract #30727 2,500,069 2,500,069
TransAmerica Life Insurance Co.:
Contract #51499 2,394,362 2,394,362
Travelers Life Insurance Co.:
Contract #GA16953 6,069,739 6,069,739
UBS AG:
Contract #5085 12,927,031 12,927,031
Boston Safe Dep. & Trust:
Contract #GDLE 5,521,653 5,521,653
------------
130,146,582
------------
Stock Funds
American Express Company Common Stock Fund 4,609,046.668 35,305,297
Lehman Brothers Common Stock Fund* 11,267,930.014 92,397,026
------------
127,702,323
------------
Mutual Funds
Pimco Total Return 322,731.869 3,375,775
Dreyfus Founders Discovery 6,045.299 171,989
NB Genesis Trust 37,237.940 1,083,996
Strong Opportunity 38,076.855 1,496,040
Templeton Developing Markets 7,031.690 69,473
Janus Adv Worldwide 19,741.853 578,831
Pimco Micro Cap Growth 13,079.952 279,388
Vanguard Institutional Index 749,553.425 78,620,659
Lehman Brothers 10 Uncommon Values* 5,057,062.261 26,701,289
Putnam International Growth 1,737,951.038 34,446,190
Putnam New Opps 5,600.500 229,508
11
EIN: #13-3216325
Plan #003
Lehman Brothers Savings Plan
(formerly, Lehman Brothers Holdings Inc. Tax Deferred Savings Plan)
Schedule H, Line 4(i)--Schedule of Assets Held At End of Year (continued)
December 31, 2001
Par Value/ Current Value
Number of at December
Shares 31, 2001
---------------------------------
Mutual Funds (continued)
Putnam Vista A 5,508.362 47,592
Vanguard Total Stock market 38,910.172 1,001,548
Fid Select Computers* 1,009.868 $ 38,405
Fid Select Electronics* 12,793.658 630,344
Fidelity Equity Inc.* 20,225.911 986,418
Fid Select Software* 4,817.177 229,249
Fidelity Cap & Income* 2,954,053.822 20,028,485
Fid Select Biotech* 16,641.252 $ 1,083,678
Fid Select Healthcare* 5,076.448 646,029
Fid Select Technology* 14,771.322 895,142
Fid Select Telecomm* 4,872.040 176,465
Fid Asset Manager* 1,225,761.337 18,999,301
Fidelity Low-Pr iced Stock* 334,229.532 9,164,574
Fidelity Aggressive Growth* 559,506.666 10,641,817
Fidelity Large-Cap Stock* 5,679,852.787 82,698,657
Fid Freedom 2010* 26,873.031 338,869
Fid Freedom 2020* 68,401.222 860,487
Fid Freedom 2030* 18,393.422 231,021
Fid Select Develop Comm* 11,975.159 226,330
Fidelity US Bd Index* 2,615,232.128 28,244,507
Fid Freedom 2040* 14,903.907 110,140
------------
324,332,196
Self Directed Accounts** Various 36,006
------------
324,368,202
------------
Total investments before Loan account 582,217,107
------------
Loan account 6,487,479
------------
Total investments $588,704,586
============
12
EIN: #13-3216325
Plan #003
Lehman Brothers Savings Plan
(formerly, Lehman Brothers Holdings Inc. Tax Deferred Savings Plan)
Schedule H, Line 4(j)--Schedule of Reportable Transactions
Year ended December 31, 2001
Number Cost of
Number of Cost of of Proceeds Assets Gain
Description Transactions Purchases Transactions from Sales Disposed (Loss)
- ------------------------------------------------------------------------------------------------------------------
Category (i) Single
transactions in excess of 5%
of plan assets
American Century Ultra Fund -- $ -- 1 $104,430,201 $ 91,017,149 $ 13,413,052
Templeton Foreign Fund -- -- 1 42,455,734 39,282,459 3,173,275
Category (iii)--Series of
transactions in excess of 5%
of plan assets
American Century Ultra Fund 10 5,418,986 3 104,941,759 91,478,313 13,463,446
Templeton Foreign Fund 8 2,307,415 4 42,992,252 39,786,559 3,205,693
13
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 SAVINGS PLAN
By: /s/ Wendy M. Uvino
---------------------------------
Wendy M. Uvino
Lehman Brothers Holdings Inc.
Employee Benefit Plans Committee
July 15, 2002
14
EXHIBIT INDEX
Exhibit No. Description
- ----------- -----------
23 Consent of Independent Auditors
15