424B5 1 file001.htm FORM 424B5

The information in this preliminary pricing supplement is not complete and may
be changed. This preliminary pricing supplement and the accompanying prospectus
supplements and prospectus are not an offer to sell these securities and we are
not soliciting an offer to buy these securities in any jurisdiction where the
offer or sale is not permitted.

Filed Pursuant to Rule 424(b)(5)
Registration No. 333-121067

SUBJECT TO COMPLETION, DATED DECEMBER 9, 2005

PRELIMINARY PRICING SUPPLEMENT No. 7
to Prospectus Supplement dated May 18, 2005
to Prospectus Supplement dated May 18, 2005
and Prospectus dated May 18, 2005

[ ] YEELDS(R)
LEHMAN BROTHERS HOLDINGS INC.
MEDIUM-TERM NOTES, SERIES H
26.90% Yield Enhanced Equity Linked Debt Securities Due December 17, 2006
Performance Linked to AtheroGenics, Inc. (AGIX) Common Stock
Because these notes are part of a series of Lehman Brothers Holdings' debt
securities called Medium-Term Notes, Series H, this preliminary pricing
supplement and the accompanying prospectus supplement, dated May 18, 2005 (the
"YEELDS prospectus supplement") should also be read with the accompanying
prospectus supplement, dated May 18, 2005 (the "MTN prospectus supplement") and
the accompanying prospectus dated May 18, 2005 (the "base prospectus"). Terms
used here have the meanings given them in the YEELDS prospectus supplement, the
MTN prospectus supplement or the base prospectus, unless the context requires
otherwise.

o INDEX STOCK ISSUER: AtheroGenics, Inc. ("AGIX"). AGIX is not involved in
this offering and has no obligation with respect to the notes.
o INDEX STOCK: The common stock of the index stock issuer.
o STATED MATURITY DATE: December 17, 2006, subject to postponement if the
valuation date is postponed.
o VALUATION DATE: December 11, 2006, subject to postponement if a market
disruption event occurs or if such day is not a scheduled trading day, as
described under the caption "Description of the Notes--Settlement value" on
page SS-12 of the YEELDS prospectus supplement.
o DETERMINATION PERIOD: Five business days.
o COUPON RATE: 26.90% per annum.
o COUPON PAYMENT DATES: Quarterly on the 17th day of each March, June,
September and December, starting from March 17, 2006
o COUPON RECORD DATES: 15 calendar days prior to each coupon payment date.
o PRINCIPAL AMOUNT: An amount per YEELDS equal to the initial value and, in
the aggregate, $[ ].
o LISTING: The YEELDS will not be listed on any exchange.
o EQUITY CAP PRICE: 150% of the initial value.
o INITIAL VALUE: The average execution price per share for the index stock
that an affiliate of Lehman Brothers Holdings will pay to hedge Lehman
Brothers Holdings' obligations under the notes.
o DENOMINATIONS: An amount equal to the initial value and integral
multiples thereof.
o PAYMENT AT MATURITY: On the stated maturity date, Lehman Brothers
Holdings will pay you, per YEELDS, the lesser of:
(1) the alternative redemption amount; and
(2) the equity cap price

Because the principal amount is equal to the initial value, the alternative
redemption amount per YEELDS will equal the settlement value.

The settlement value will be based upon the adjusted closing price of the
index stock on the valuation date, and shall generally be equal to the
adjusted closing price multiplied by the multiplier, as described beginning
on page PS-2 of this preliminary pricing supplement under "Settlement Value
Based Upon Adjusted Closing Price".

o STOCK SETTLEMENT OPTION: Yes, at the option of Lehman Brothers Holdings
at maturity, as described under the caption "Description of the Notes--
Stock Settlement" on page SS-16 of the YEELDS prospectus supplement. Lehman
Brothers Holdings will provide the trustee with not less than 15 calendar
days' prior written notice if it elects the stock settlement option.

Investing in the notes involves risks. Risk Factors begin on page SS-6 of the
YEELDS prospectus supplement.
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities or determined if this
preliminary pricing supplement, any accompanying YEELDS prospectus supplement or
any accompanying prospectus is truthful or complete. Any representation to the
contrary is a criminal offense.

Per YEELDS Total
---------------- -----------

Public offering price.................................................. $ $
Underwriting discount.................................................. $ $
Proceeds to Lehman Brothers Holdings................................... $ $

----------------------

Lehman Brothers Holdings has granted the underwriter an option to purchase,
within 13 days of the original issuance, up to an additional YEELDS on the
same terms and conditions set forth above solely to cover over-allotments, if
any.

----------------------

The notes are expected to be ready for delivery in book-entry form only through
The Depository Trust Company on or about December 16, 2005.

LEHMAN BROTHERS

SETTLEMENT VALUE BASED UPON ADJUSTED CLOSING PRICE

Notwithstanding the statement in the YEELDS prospectus supplement in the first
sentence under "Description of Notes--Settlement value" that the settlement
value will be based upon the closing price of the index stock, in the case of
the YEELDS offered hereby, the settlement value will be based upon the adjusted
closing price of the index stock on the valuation date, and shall generally be
equal to such adjusted closing price multiplied by the multiplier then in
effect. Adjustments to the closing price will occur, as described below, if
AtheroGenics, Inc. pays dividends on its shares of common stock during the term
of the YEELDS.

The adjusted closing price of AtheroGenics, Inc. common stock on any scheduled
trading day will equal the closing price of such common stock on such scheduled
trading day, plus the dividend adjustment amount (which may be a negative
number) in effect on such scheduled trading day. The dividend adjustment amount
shall initially be zero.

The "base dividend" shall be $0.00, the amount of the quarterly dividend per
share of common stock most recently paid by AtheroGenics, Inc. prior to the date
of this preliminary pricing supplement. The base dividend is subject to
adjustment in the event of certain events affecting the shares of common stock
of AtheroGenics, Inc. such as share splits, reverse share splits or
reclassifications, as determined by the calculation agent, in its good faith
judgment. If the calculation agent determines in its sole and absolute
discretion that AtheroGenics, Inc. has failed to declare or make a quarterly
dividend payment, the effective adjustment date for adjusting the dividend
adjustment amount will be the first business day immediately following April 24,
2006, July 24, 2006, October 24, 2006 and the valuation date, as applicable.

If, during the period from, but excluding, the date of this preliminary pricing
supplement to the valuation date, holders of record of AtheroGenics, Inc. common
stock are entitled to receive a cash dividend (other than an extraordinary cash
dividend, as determined by the calculation agent in its good faith judgment)
from AtheroGenics, Inc., the dividend adjustment amount then in effect shall be
increased on the effective adjustment date by an amount equal to the new
dividend. Any such upward adjustment to the dividend adjustment amount may
increase the amount you receive upon maturity.

The dividend adjustment amount in effect at any time shall be adjusted in the
event of certain events affecting the shares of common stock of AtheroGenics,
Inc., such as share splits, reverse share splits or reclassifications, as
determined by the calculation agent, in its good faith judgment.

You may call Lehman Brothers Inc. at 212-526-0905 to obtain the current value of
the dividend adjustment amount.

PS-2

EXAMPLES OF AMOUNT PAYABLE AT MATURITY

Here are three examples of the amount that may be payable on the stated maturity
date. In each of these examples it is assumed that AtheroGenics, Inc. does not
pay any cash dividends on its shares of common stock during the term of the
YEELDS. In each of these examples, it is assumed that the initial value is
$15.50 and the equity cap price is $23.25.

EXAMPLE 1. ASSUMING THE SETTLEMENT VALUE IS $10.00:

As a result, because (i) the settlement value of $10.00 is less than $23.25, on
the stated maturity date, you would receive $10.00 per YEELDS, plus accrued but
unpaid coupon payments.

In the case of stock settlement in this example, you would receive on the stated
maturity date the number of shares of the index stock and cash having a value on
the valuation date equal to $10.00 per YEELDS, plus accrued but unpaid coupon
payments. Accordingly, you would receive on the stated maturity date if you held
one YEELDS, one share of index stock, plus accrued but unpaid coupon payments.

EXAMPLE 2. ASSUMING THE SETTLEMENT VALUE IS $20.00:

As a result, because (i) the settlement value of $20.00 is less than $23.25, on
the stated maturity date, you would receive $20.00 per YEELDS, plus accrued but
unpaid coupon payments.

EXAMPLE 3. ASSUMING THE SETTLEMENT VALUE IS $30.00:

As a result, because $23.25 is less than the settlement value of $30.00, on the
stated maturity date, you would receive $23.25 per YEELDS, plus accrued but
unpaid coupon payments.

In the case of stock settlement in this example, you would receive on the stated
maturity date a number of shares of the index stock and cash having a value on
the valuation date equal to $23.25 per YEELDS, plus accrued but unpaid coupon
payments. Accordingly, you would receive on the stated maturity date if you held
one YEELDS, $23.25 in cash, plus accrued but unpaid coupon payments. To the
extent that you hold more than one YEELDS, the calculations of cash payments in
lieu of fractional shares would be made on an aggregate, rather than on a per
YEELDS, basis. For example, if you held [806,452] YEELDS, you would receive on
the stated maturity date in total, [625,000] shares of index stock and $[9.00]
in cash, plus accrued but unpaid coupon payments.

To the extent the actual settlement value, initial value, equity cap price or
trigger price differs from the values assumed above or that AtheroGenics, Inc.
begins to pay cash dividends, the results indicated above would be different.

PS-3

INDEX STOCK ISSUER AND INDEX STOCK

ATHEROGENICS, INC.

Lehman Brothers Holdings has obtained the following information regarding
AtheroGenics, Inc. from AtheroGenics, Inc.'s reports filed with the SEC.

AtheroGenics is a research-based pharmaceutical company focused on the
discovery, development and commercialization of novel drugs for the treatment of
chronic inflammatory diseases, including coronary heart disease, organ
transplant rejection, rheumatoid arthritis and asthma. AtheroGenics has
developed a proprietary vascular protectant, or v-protectant(R), technology
platform to discover drugs to treat these types of diseases. Based on the
company's v-protectant(R) platform, it has two drug development programs in
clinical trials and is pursuing a number of other preclinical programs.

The index stock is registered under the Securities Exchange Act of 1934.
Companies with securities registered under that Act are required to file
periodically certain financial and other information specified by the SEC.
Information provided to or filed with the SEC can be inspected and copied at the
public reference facilities maintained by the SEC or through the SEC's website
described under "Where You Can Find More Information" on page 58 of the
accompanying base prospectus. In addition, information regarding the index stock
issuer may be obtained from other sources including, but not limited to, press
releases, newspaper articles and other publicly disseminated documents.

HISTORICAL INFORMATION ABOUT THE INDEX STOCK

The shares of common stock of AtheroGenics, Inc. are quoted on The NASDAQ Stock
Market under the symbol "AGIX".

The following table presents the high and low closing prices for the shares of
common stock of AtheroGenics, Inc., as reported on The NASDAQ Stock Market
during each fiscal quarter in 2002, 2003, 2004 and 2005 (through the business
day immediately prior to the date of this preliminary pricing supplement), and
the closing price at the end of each quarter in 2002, 2003, 2004 and 2005
(through the business day immediately prior to the date of this preliminary
pricing supplement).

It is impossible to predict whether the price of the index stock will rise or
fall. The historical prices of the index stock are not indications of future
performance. Lehman Brothers Holdings cannot assure you that the prices of the
index stock will remain at, or increase above, the initial value; accordingly,
there can be no assurance that the payment you receive at maturity will equal or
exceed the principal amount. The historical prices below have been adjusted to
reflect any stock splits or reverse stock splits.

All information in the table that follows was obtained from Bloomberg L.P.,
without independent verification.

PS-4

HIGH LOW PERIOD END
---- --- ----------
2002
First Quarter ...................... $ 7.71 $ 5.51 $ 7.24
Second Quarter ..................... 8.35 6.27 7.17
Third Quarter ...................... 7.47 4.71 6.26
Fourth Quarter ..................... 7.41 5.65 7.41
2003
First Quarter ...................... $ 9.85 $ 6.41 $ 9.36
Second Quarter ..................... 15.11 8.79 14.93
Third Quarter ...................... 18.65 12.12 16.65
Fourth Quarter ..................... 18.43 13.15 14.86
2004
First Quarter ...................... $ 23.00 $ 14.60 $ 22.87
Second Quarter ..................... 25.91 18.41 19.03
Third Quarter ...................... 38.00 13.50 32.95
Fourth Quarter ..................... 36.73 23.43 23.56
2005
First Quarter ...................... $ 20.61 $ 13.00 $ 13.09
Second Quarter ..................... 16.87 10.66 15.98
Third Quarter ...................... 18.25 15.76 16.03
Fourth Quarter (through 12/08/05) .. 16.60 14.42 15.41

PS-5

HYPOTHETICAL RETURNS

The tables below illustrate, for a range of hypothetical settlement values on
the valuation date, in each case assuming that (a) the investment is held from
the date on which the YEELDS are first issued until the stated maturity date,
(b) AtheroGenics, Inc. does not pay any cash dividends on its shares of common
stock during the term of the YEELDS, (c) the initial value is $15.50, and (d)
the equity cap price is $23.25:

o the percentage change from the issue price to the hypothetical settlement
value on the valuation date;

o the total coupon payments paid or payable on or before the stated maturity
date per YEELDS;

o the hypothetical total amount payable per YEELDS on the stated maturity
date;

o the hypothetical total annualized yield on the YEELDS on the stated
maturity date; and

o the hypothetical total annualized yield from direct ownership of the index
stock.

PERCENTAGE CHANGE
FROM $22.06 TO THE TOTAL INTEREST
HYPOTHETICAL HYPOTHETICAL PAYMENTS PAID OR HYPOTHETICAL AMOUNT HYPOTHETICAL TOTAL HYPOTHETICAL TOTAL
SETTLEMENT SETTLEMENT VALUE PAYABLE ON OR BEFORE PAYABLE ON THE STATED ANNUALIZED YIELD ON THE ANNUALIZED YIELD FROM
VALUE ON THE ON THE VALUATION THE STATED MATURITY MATURITY DATE PER $1,000 NOTES AT THE STATED DIRECT OWNERSHIP OF
VALUATION DATE DATE DATE PER $1,000 NOTE NOTE(1) MATURITY DATE(2) COMMON STOCKS(3)

$9.300 -40% $4.1811 $9.300 -14.5% -39.9%
$12.400 -20% $4.1811 $12.400 7.7% -20.0%
$13.950 -10% $4.1811 $13.950 18.8% -10.0%
$15.500 0% $4.1811 $15.500 29.7% 0.0%
$17.050 10% $4.1811 $17.050 40.7% 10.0%
$18.600 20% $4.1811 $18.600 51.6% 19.9%
$21.700 40% $4.1811 $21.700 73.3% 39.9%
$24.800 60% $4.1811 $23.250 84.1% 59.8%
$27.900 80% $4.1811 $23.250 84.1% 79.7%
$31.000 100% $4.1811 $23.250 84.1% 99.6%

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(1) Excludes accrued but unpaid coupon payments payable on the stated maturity
date.
(2) The hypothetical total annualized yield on the stated maturity date
represents the coupon rate per year used in determining the present values,
discounted to the original issue date (computed on the basis of a 360-day
year of twelve 30-day months compounded annually), of all payments made or
to be made on the YEELDS, including the amount payable on the stated
maturity date and all coupon payments through the stated maturity date, the
sum of these present values being equal to the original issue price.

The above figures are for purposes of illustration only. The actual amount
received by investors and the resulting total and pre-tax rates of return will
depend entirely on the actual settlement value determined by the calculation
agent. In particular, the actual settlement value could be lower or higher than
those reflected in the tables.

You should compare the features of the YEELDS to other available investments
before deciding to purchase the YEELDS. Due to the uncertainty concerning the
settlement value on the valuation date, the return on investment with respect to
the YEELDS may be higher or lower than the return available on other securities
issued by Lehman Brothers Holdings or by others. You should reach an investment
decision only after carefully considering the suitability of the YEELDS in light
of your particular circumstances.

PS-6

SUPPLEMENTAL PLAN OF DISTRIBUTION

Lehman Brothers Holdings has agreed to sell to Lehman Brothers Inc. and Lehman
Brothers Inc. has agreed to purchase, all of the YEELDS at the price indicated
on the cover of this preliminary pricing supplement.

Lehman Brothers Holdings has agreed to indemnify Lehman Brothers Inc. against
liabilities, including liabilities under the Securities Act of 1933, as amended,
or to contribute to payments that Lehman Brothers Inc. may be required to make
relating to these liabilities as described in the MTN prospectus supplement and
the base prospectus.

Lehman Brothers Inc. will offer the YEELDS initially at a public offering price
equal to the issue price set forth on the cover of this preliminary pricing
supplement. After the initial public offering, the public offering price may
from time to time be varied by Lehman Brothers Inc.

Lehman Brothers Holdings has granted to Lehman Brothers Inc. an option to
purchase, at any time within 13 days of the original issuance of the YEELDS, up
to additional YEELDS solely to cover over-allotments. To the extent that
the option is exercised, Lehman Brothers Inc. will be committed, subject to
certain conditions, to purchase the additional YEELDS. If this option is
exercised in full, the total public offering price, the underwriting discount
and proceeds to Lehman Brothers Holdings would be approximately $ , $
and $ , respectively.

Lehman Brothers Holdings expects to deliver the YEELDS against payment on or
about December 16, 2005, which is the fifth business day following the date of
this preliminary pricing supplement.

Under Rule 15c6-1 of the Exchange Act, trades in the secondary market generally
are required to settle in three business days, unless the parties to any such
trade expressly agree otherwise. Accordingly, if any purchaser wishes to trade
the YEELDS on the date of this preliminary pricing supplement, it will be
required, by virtue of the fact that the YEELDS initially will settle on the
fifth business day following the date of this preliminary pricing supplement, to
specify an alternate settlement cycle at the time of any such trade to prevent a
failed settlement.

An affiliate of Lehman Brothers Holdings will enter into a swap transaction in
connection with the notes and will receive customary compensation for that
transaction.

PS-7

[ ] YEELDS(R)

LEHMAN BROTHERS HOLDINGS INC.
MEDIUM-TERM NOTES, SERIES H

26.90 % YIELD ENHANCED EQUITY LINKED DEBT SECURITIES
DUE DECEMBER 17, 2006
PERFORMANCE LINKED TO ATHEROGENICS, INC. (AGIX) COMMON STOCK

----------------------

PRELIMINARY PRICING SUPPLEMENT
DECEMBER 8, 2005

(INCLUDING PROSPECTUS SUPPLEMENT
DATED MAY 18, 2005,

PROSPECTUS SUPPLEMENT
DATED MAY 18, 2005 AND

PROSPECTUS
DATED MAY 18, 2005)

----------------------

LEHMAN BROTHERS