1 Exhibit 12 2 LEHMAN BROTHERS HOLDINGS INC. AND SUBSIDIARIES COMPUTATION IN SUPPORT OF RATIO OF EARNINGS TO FIXED CHARGES (DOLLARS IN MILLIONS) (UNAUDITED) For the Three Months Ended For the Year Ended December 31, March 31, ---------------------------------------------------------------- ------------ 1989 1990 1991 1992 1993 1994 ---- ---- ---- ---- ---- ---- Fixed charges: Interest expense: Subordinated indebtedness $ 259 $ 203 $ 170 $ 150 $ 144 $ 35 Bank loans and other borrowings* 5,625 4,531 4,755 5,035 5,224 1,418 Interest component of rentals of office and equipment 68 62 70 74 76 11 Other adjustments** 25 8 2 2 7 ------ ------- ------- ------ ------ ------ TOTAL (A) $5,977 $ 4,804 $ 4,997 $5,261 $5,451 $1,464 ====== ======= ======= ====== ====== ====== Earnings: Pre-tax income (loss) from continuing operations $ 107 $ (749) $ 150 $ (247) $ 27 $ 88 Fixed charges 5,977 4,804 4,997 5,261 5,451 1,464 Other adjustments*** (39) (17) 7 (6) ------ ------- ------- ------ ------ ------ TOTAL (B) $6,045 $ 4,038 $ 5,154 $5,014 $5,472 $1,552 ====== ======= ======= ====== ====== ====== (B / A) 1.01 **** 1.03 **** 1.00 1.06 * Includes amortization of long-term debt discount. ** Other adjustments include capitalized interest and debt issuance costs and amortization of capitalized interest. *** Other adjustments include adding the net loss of affiliates accounted for at equity whose debt is not guaranteed by the Company and subtracting capitalized interest and debt issuance costs and undistributed net income of affiliates accounted for at equity. **** Earnings were inadequate to cover fixed charges and would have had to increase approximately $766 million in 1990 and $247 million in 1992 in order to cover the deficiency.