[R]8:45AM New York – Lehman reported revenue decline of 31% and net income fall of 57% on weaker market conditions.[/R]

Lehman Brothers Holdings Inc. (LEH: chart) today reported net income of $489 million, or $0.81 per diluted share for the first quarter ended February 29, 2008, a 57% decline compared to net income of $1.15 billion, or $1.96 per share in the first quarter of fiscal 2007. Fourth quarter fiscal 2007 net income was $886 million, or $1.54 per common share.

Lehman has been the focus of latest worries among investors after a crisis of confidence engulfed the fifth largest investment bank Bear Stearns. Lehman said that it has a “pool of $34 billion and unencumbered assets of $64 billion, with an additional $99 billion at our regulated entities, at quarter end.”

Net revenues (total revenues less interest expense) for the first quarter of fiscal 2008 were $3.5 billion, a decrease of 31% from $5.0 billion in the first quarter of fiscal 2007 and 20% from $4.4 billion in the fourth quarter of fiscal 2007.

Net revenues for the first quarter of fiscal 2008 reflect negative mark to market adjustments of $1.8 billion, net of gains on certain risk mitigation strategies and certain debt liabilities.

Capital markets net revenues declined 52% from a year ago to $1.7 billion, fixed income capital markets revenues decreased 88% to $262 million, and equities capital markets revenues edged 6% higher to $1.4 billion on higher prime brokerage and trading executions.

Investment banking revenues increased 2% to $876 million on 34% rise in merger advisory revenue and 23% increase in stock offering revenue.

Investment Management reported record net revenues of $968 million, an increase of 39% from $695 million in the first quarter of fiscal 2007 driven by record revenues in both asset management, which increased 49% to $618 million from $416 million in the first quarter of fiscal 2007, and private investment management, which increased 25% to $350 million from $279 million in the first quarter of fiscal 2007.

The Firm reported assets under management of $277 billion, compared to $282 billion at November 30, 2007.

Compensation and benefits as a percentage of net revenues was 52.5% during the first quarter of fiscal 2008, compared to 49.3% for both the first and fourth quarters of fiscal 2007.

The Firm''s pre-tax margin was 18.9% for the first quarter of fiscal 2008, compared to 33.7% a year ago. Return on average common equity was 8.6% for the first quarter of fiscal 2008, compared to 24.4% a year ago. Return on average tangible common equity was 10.6% for the first quarter of fiscal 2008, compared with 29.9% for the first quarter of fiscal 2007.

As of February 29, 2008, Lehman Brothers'' total stockholders'' equity was $24.8 billion, and total long-term capital (stockholders'' equity and long-term borrowings, excluding any borrowings with remaining maturities of less than twelve months) was $153.2 billion.